Shopify Q3 Earnings Preview: Stock Hits 52-Week Highs, Analysts Expect Second Best Revenue Quarterly Total In Company History

E-commerce platform company Shopify Inc SHOP is hitting new 52-week highs ahead of third-quarter financial results set for Tuesday, Nov. 12 before the market opens.

Here's a look at the earnings estimates from analysts and key items for investors and analysts to watch in the financial results.

Earnings Estimates: Analysts expect Shopify to report third-quarter revenue of $2.11 billion, up from $1.71 billion in last year's third quarter, according to data from Benzinga Pro.

The company has beaten analyst estimates for revenue in seven straight quarters. The $2.11 billion estimate would be the company's second-largest total ever, trailing only the 2023 fourth-quarter total of $2.14 billion.

Analysts expect the company to report quarterly earnings per share of 27 cents, up from 24 cents per share in last year's third quarter. The company has beaten analyst estimates for earnings per share in eight straight quarters.

Guidance from the company calls for revenue to be up low-to-mid 20s percentage rate on a year-over-year basis, which translates to a range of $2.06 billion to $2.16 billion based on 20% to 26% growth.

Key Items to Watch: Among the biggest items investors will be watching is Shopify's gross merchandise volume (GMV). In the second quarter, the company reported GMV of $67.2 billion, up 22% year-over-year and a company record.

The company also reported several other double-digit year-over-year increases in the second quarter including gross payments volume up 22% to $67.2 billion and merchant solutions revenue up 19% to $1.5 billion.

Analysts and investors will be looking for continued year-over-year growth and GMV to hit or come close to company records.

"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," Shopify CFO Jeff Hoffmeister said after third-quarter results.

Another item to watch could be margins with Shopify President Harley Finkelstein saying on the company's second-quarter earnings conference call that Shopify was investing in marketing to help with revenue growth. Finkelstein said the marketing investments could impact profit margins.

"We've always been a company that builds for the long term," Finkelstein said. "We can achieve a seriously meaningful combination of growth and profitability."

Partnerships could be another area to watch in the earnings report and company commentary on the earnings call.

In September, PayPal Holdings Inc PYPL announced it was expanding its strategic partnership with Shopify. The deal will see PayPal become an additional credit and debit card processor on the Shopify Payments platform.

The partnership could increase the growth opportunities for Shopify merchants.

Analysts have been raising their price targets on Shopify in recent weeks. Here are recent analyst ratings on Shopify and their price target:

Scotiabank: Maintained Sector Perform rating and raised the price target from $75 to $80
RBC Capital: Maintained Outperform rating and raised the price target from $85 to $100
Loop Capital: Maintained Hold rating and raised the price target from $80 to $90

Investors will be closely watching to see if analysts continue raising price targets after the company's third-quarter financial results.

SHOP Price Action: Shopify stock is up 3.47% to $90.14 on Monday. The stock hit a new 52-week high of $92.16 in early trading and shares have now traded between $48.56 and $92.16 over the past 52 weeks. Shopify stock is up 24.3% year-to-date.

Read Next: