Shopify Shares Are Surging Today: What's Going On

Shopify Inc. SHOP shares are on the move following a strong earnings report and an optimistic outlook for third-quarter 2024. Here’s what you need to know.

Q2 Earnings Recap: Shopify reported a strong second quarter, with revenue growing 21% year-over-year to $2.05 billion, beating the analyst consensus estimate of $2.01 billion. Adjusting for the sale of its logistics businesses, revenue grew by 25% year-over-year. The company also reported an adjusted EPS of 26 cents, surpassing the analyst estimate of 20 cents.

For the third quarter of 2024, Shopify expects revenue to grow at a low-to-mid-twenties percentage rate on a year-over-year basis. The company anticipates a 50 basis point improvement in gross margin compared to second-quarter 2024 and projects GAAP operating expenses to account for 41% to 42% of revenue.

“We drove strong growth in GMV, revenue, and gross profit, all amidst a mixed consumer spend environment, continued to take share and concurrently expanded our free cash flow margin,” said Jeff Hoffmeister, CFO of Shopify.

To revive growth, Shopify’s President, Harley Finkelstein, has committed to substantial marketing investments, even if it affects profit margins.

What Else: Reginald L. Smith and Charles Pearce from J.P. Morgan commented on Shopify’s second-quarter 2024 performance, noting that the company’s revenue growth exceeded the important 20% threshold, with profit margins expanding sequentially.

They highlighted that GMV and GPV decelerated modestly sequentially but remained strong. Monthly recurring revenue (MRR) increased by 12% sequentially, signaling that recent price increases or new additions are performing better than expected.

SHOP Price Action: Shopify shares were up by 20.4% at $65.31 at the time of writing, according to Benzinga Pro.