Shopify's Q2 Earnings: Revenue And EPS Beat, Gross Merchandise Volume Up 22%, Strong Q3 Outlook And More

Shopify Inc SHOP clocked fiscal second-quarter 2024 revenue growth of 21% year-over-year to $2.05 billion, which beat the analyst consensus estimate of $2.01 billion. Revenue grew by 25% Y/Y after adjusting for the sale of its logistics businesses.

The stock gained after it reported its quarterly results on Wednesday.

The e-commerce platform company reported adjusted EPS of $0.26, which beat analyst consensus estimate of $0.20. The company reported a net income of $171 million compared to a loss of $(1.31) billion a year ago.

Gross merchandise volume increased 22% year-over-year to $67.2 billion. Gross payments volume came in at $41.1 billion. Merchant solutions revenue increased 19% year-over-year to $1.5 billion. 

The gross margin for the quarter was 51.1% compared to 49.3% a year ago, driven primarily by the lack of the dilutive impact of the logistics businesses and changes in pricing plans.

Free cash flow totaled $333 million in the quarter compared to $97 million in the same quarter last year. 

“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.

Shopify has faced slowing revenue growth in recent quarters. To revive growth, President Harley Finkelstein has committed to substantial marketing investments, even if it affects profit margins, Bloomberg reports.

Q3 Outlook: Shopify expects revenue growth of low-to-mid-twenties percentage rate on a Y/Y basis versus a $2.07 billion consensus.

The company expects the gross margin to be higher by 50 bps sequentially. It projects a free cash flow margin to be similar sequentially. 

SHOP Price Action: Shopify shares traded higher by 18.4% at $64.18 premarket at last check Wednesday.

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