Shopify’s SHOP stock has soared over +20% since exceeding its Q2 top and bottom line expectations on Tuesday and investors may ponder chasing the rally.
Let’s see if it’s still time to buy SHOP with Shopify having notable clients such as Target TGT while helping a broad range of companies scale their businesses through its multi-channel commerce platform.
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Shopify’s Q2 Results
Shopify's Q2 sales increased 21% to $2.04 billion versus $1.69 billion in the comparative quarter. This also beat estimates of $2 billion by 2%. On the bottom line, earnings of $0.26 per share was up from EPS of $0.14 in Q2 2023 and exceeded estimates of $0.20 a share.
Another highlight was Q2 free cash flow of $333 million which was 16% of Shopify’s revenue and more than doubled from a 6% margin in the prior year quarter.
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Revenue Guidance & EPS Outlook
For the third quarter, Shopify expects year-over-year revenue growth at a low to mid-20s percentage rate which fell in line with Zacks Q3 sales estimates of $2.06 billion or 20% growth (Current Qtr below). Overall, Shopify’s total sales are now projected to rise 20% in fiscal 2024 and are slated to climb another 19% in FY25 to $10.19 billion.
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Even better, Shopify’s annual earnings are expected to soar 34% this year to $0.99 per share versus EPS of $0.74 in 2023. Plus, FY25 EPS is slated to increase another 24% to $1.23.
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Bottom Line
Shopify’s operational performance is vastly improving which has continued to catapult the company's growth with SHOP sporting a Zacks Rank #2 (Buy). To that point, the post-earnings rally in Shopify’s stock could continue as earnings estimate revisions are likely to trend higher in the coming weeks.
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