Shopify (SHOP) to Report Q2 Earnings: What's in the Cards?
Shopify SHOP is scheduled to report its second-quarter 2023 results on Aug 2.
For the second quarter of 2023, Shopify expects revenue growth at a similar rate to the first quarter on a year-over-year basis. The Zacks Consensus Estimate for revenues is currently pegged at $1.62 billion, suggesting growth of 25.22% from the year-ago quarter’s reported figure.
The consensus mark for earnings is pegged at 6 cents per share, unchanged over the past 30 days. Shopify reported a loss of 3 cents per share in the year-ago quarter.
The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in the remaining quarter.
Shopify Inc. Price and EPS Surprise
Shopify Inc. price-eps-surprise | Shopify Inc. Quote
Let’s see how things have shaped up for the upcoming announcement.
Factors to Note
Shopify’s second-quarter 2023 results are expected to reflect the adverse effects of a challenging macro environment, raging inflation and higher interest expenses. Moreover, cautious consumer spending is expected to have hurt top-line growth.
Nevertheless, Shopify’s investments in developing the best solutions for modern e-commerce are expected to have helped it to expand its merchant base. Shopify’s Point-of-Sale (POS) Pro solution has been gaining traction among leading retailers and top-tier brands. These factors are expected to have driven top-line growth in the to-be-reported quarter.
In the last reported quarter, Monthly Recurring Revenues (MRR) were up 10% year over year, reaching $116 million as new merchants joined the platform and the number of retail locations using POS Pro increased.
Our model suggests an MRR of $115.6 million, indicating 7.9% growth from the figure reported in the year-ago quarter.
In first-quarter 2023, Shopify Plus revenues accounted for roughly 34% of MRR. Our model estimate for second-quarter Plus MRR is pegged at $42.8 million, suggesting 27.1% year-over-year growth.
Meanwhile, the continued adoption of Shopify products, such as Shop Pay, Shop Pay Installments and Shopify Balance, is likely to have driven the company’s top line. Solutions like Shopify Audiences, Shopify Collabs, POSGo, Tap to Pay, integrated Twitter Shopping and YouTube channels are expected to have strengthened its relationships with buyers.
The company’s initiatives to modernize the offline retail experience with the addition of Tap to Pay on iPhone and Google Local Inventory have been noteworthy.
These factors are expected to have aided Gross Merchandise Volume (GMV) growth in the to-be-reported quarter. Our model for GMV is pegged at $50.25 billion, indicating 7.3% growth from the figure reported in the year-ago quarter.
Moreover, our model suggests second-quarter Subscription solutions revenues to grow 12.6% year over year to $412.5 million. In first-quarter 2023, Subscription Solutions revenues climbed 10.7% year over year to $382 million.
Merchant Solutions revenues improved 31.1% year over year to $1.13 billion, driven by strong GMV in first-quarter 2023. Our model estimate for the second quarter is pegged at $1.20 billion, indicating 29.4% year-over-year growth.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Shopify has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:
Itron ITRI has an Earnings ESP of +7.61% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Itron shares have gained 51.1% year to date. ITRI is set to report its second-quarter 2023 results on Aug 3.
Super Micro Computer SMCI has an Earnings ESP of +15.84% and a Zacks Rank of 1, at present.
Super Micro shares have surged 307.4% year to date. SMCI is set to report its fourth-quarter fiscal 2023 results on Aug 8.
Vertiv VRT has an Earnings ESP of +4.65% and a Zacks Rank #1.
Vertiv shares have gained 90.3% in the year-to-date period. VRT is set to report its second-quarter 2023 results on Aug 2.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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