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Shopify Q4 Earnings Meet Estimates, Revenues Up Y/Y, Shares Rise
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Shopify (SHOP - Free Report) reported fourth-quarter 2024 non-GAAP earnings of 44 cents per share, in line with the Zacks Consensus Estimate. The figure jumped 29.4% year over year.
Revenues of $2.81 billion surpassed the Zacks Consensus Estimate by 3.26%. The top line soared 31.2% year over year.
Following fourth-quarter 2024 results, SHOP shares increased 3.08% to close at $123.59 on Tuesday. Shopify shares have appreciated 37.6% in the trailing 12 months, outperforming the Zacks Computer and Technology sector’s return of 22.1%.
Gross Merchandise Volume (GMV) in the fourth quarter was $94.46 billion, which increased 25.7% year over year. Same-store sales growth from existing merchants, particularly Plus merchants, a higher number of merchants on SHOP’s platform and strong international growth drove GMV in the reported quarter.
International GMV grew 33% in the fourth quarter, driven by 37% growth in Europe, the Middle East and Africa. Shopify saw higher same-store sales growth from existing merchants in the region than new merchants.
Point of sales GMV increased 26% year over year in the reported quarter.
Shopify is benefiting from strong growth in its merchant base. Merchant solutions revenues in the fourth quarter were $2.15 billion and accounted for 76.3% of Shopify’s total revenues. On a year over year basis, merchant revenues increased 32.6% year over year driven by strong GMV and increased penetration of Shopify payments.
The company processed $61 billion of GMV (64% of GMV versus 60% in fourth-quarter 2023) on Shopify Payments, up 35% year over year.
Shop Pay was 41% of Gross Payments Volume in the reported quarter.
Subscription solutions revenues in the fourth quarter were $666 million and accounted for 23.7% of Shopify’s total revenues. On a year-over-year basis, subscription solutions revenues increased 26.9%.
Monthly Recurring Revenue (MRR) in the fourth quarter was $178 million, which increased 23.6% on a year-over-year basis. Plus category accounted for 33% of MRR in the reported quarter, unchanged sequentially.
SHOP’s Operating Expenses Rise Y/Y
In the fourth quarter of 2024, gross profit was $1.4 billion, up 27% year over year.
Subscription Solutions gross margin was 79.9%, down from 81.5% reported in the year-ago quarter due to higher cloud and infrastructure hosting costs. Merchant Solutions’ gross margin was 38.2%, down from 39.2% in the year-ago quarter due to lower non-cash revenues from certain partnerships and the negative impact of an expanded partnership with PayPal.
Total operating expenses were $887 million, up 14.7% year over year. As a percentage of revenues, total operating expenses declined 450 basis points (bps) to 31.5%.
Sales & Marketing (S&M) expenses increased 9.8% year over year to $348 million. As a percentage of revenues, S&M expenses decreased 240 bps year over year to 12.4%
Research & Development (R&D) expenses increased 12.9% year over year to $351 million. As a percentage of revenues, R&D expenses decreased 200 bps year over year to 12.5%.
General & Administrative (G&A) expenses increased 12% year over year to $112 million. As a percentage of revenues, G&A expenses decreased 70 bps to 4%.
Consequently, SHOP reported an operating income of $465 million compared with an operating income of $289 million reported in the year-ago quarter.
SHOP’s Balance Sheet Details
As of Dec. 31, 2024, cash and cash equivalents (including marketable securities) totaled $5.48 billion, which decreased from $4.9 billion as of Sept. 30, 2024.
Free cash flow increased 37% year over year to $611 million. The free cash flow margin expanded 100 bps to 22% in the reported quarter.
SHOP’s Q1 Guidance Positive
For the first quarter of 2025, Shopify expects revenues to grow at a mid-twenties percentage rate on a year-over-year basis.
Gross profit is anticipated to grow at a low-twenties percentage rate on a year-over-year basis.
Shopify expects GAAP operating expense as a percentage of revenues to be in the 41% - 42% range.
Free cash flow margin is expected to be in the mid-teens.
Zacks Rank & Stocks to Consider
Shopify carries a Zacks Rank #3 (Hold) at present.
Arista Networks is scheduled to report its fourth-quarter 2024 results on Feb. 18. Twilio is set to report fourth-quarter 2024 results on Feb. 13, while Five9 is scheduled to report its fourth-quarter 2024 results on Feb. 20.
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Shopify Q4 Earnings Meet Estimates, Revenues Up Y/Y, Shares Rise
Shopify (SHOP - Free Report) reported fourth-quarter 2024 non-GAAP earnings of 44 cents per share, in line with the Zacks Consensus Estimate. The figure jumped 29.4% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $2.81 billion surpassed the Zacks Consensus Estimate by 3.26%. The top line soared 31.2% year over year.
Following fourth-quarter 2024 results, SHOP shares increased 3.08% to close at $123.59 on Tuesday. Shopify shares have appreciated 37.6% in the trailing 12 months, outperforming the Zacks Computer and Technology sector’s return of 22.1%.
Shopify Inc. Price, Consensus and EPS Surprise
Shopify Inc. price-consensus-eps-surprise-chart | Shopify Inc. Quote
SHOP’s Top Line Rides on Growing Merchant Base
Gross Merchandise Volume (GMV) in the fourth quarter was $94.46 billion, which increased 25.7% year over year. Same-store sales growth from existing merchants, particularly Plus merchants, a higher number of merchants on SHOP’s platform and strong international growth drove GMV in the reported quarter.
International GMV grew 33% in the fourth quarter, driven by 37% growth in Europe, the Middle East and Africa. Shopify saw higher same-store sales growth from existing merchants in the region than new merchants.
Point of sales GMV increased 26% year over year in the reported quarter.
Shopify is benefiting from strong growth in its merchant base. Merchant solutions revenues in the fourth quarter were $2.15 billion and accounted for 76.3% of Shopify’s total revenues. On a year over year basis, merchant revenues increased 32.6% year over year driven by strong GMV and increased penetration of Shopify payments.
The company processed $61 billion of GMV (64% of GMV versus 60% in fourth-quarter 2023) on Shopify Payments, up 35% year over year.
Shop Pay was 41% of Gross Payments Volume in the reported quarter.
Subscription solutions revenues in the fourth quarter were $666 million and accounted for 23.7% of Shopify’s total revenues. On a year-over-year basis, subscription solutions revenues increased 26.9%.
Monthly Recurring Revenue (MRR) in the fourth quarter was $178 million, which increased 23.6% on a year-over-year basis. Plus category accounted for 33% of MRR in the reported quarter, unchanged sequentially.
SHOP’s Operating Expenses Rise Y/Y
In the fourth quarter of 2024, gross profit was $1.4 billion, up 27% year over year.
Subscription Solutions gross margin was 79.9%, down from 81.5% reported in the year-ago quarter due to higher cloud and infrastructure hosting costs. Merchant Solutions’ gross margin was 38.2%, down from 39.2% in the year-ago quarter due to lower non-cash revenues from certain partnerships and the negative impact of an expanded partnership with PayPal.
Total operating expenses were $887 million, up 14.7% year over year. As a percentage of revenues, total operating expenses declined 450 basis points (bps) to 31.5%.
Sales & Marketing (S&M) expenses increased 9.8% year over year to $348 million. As a percentage of revenues, S&M expenses decreased 240 bps year over year to 12.4%
Research & Development (R&D) expenses increased 12.9% year over year to $351 million. As a percentage of revenues, R&D expenses decreased 200 bps year over year to 12.5%.
General & Administrative (G&A) expenses increased 12% year over year to $112 million. As a percentage of revenues, G&A expenses decreased 70 bps to 4%.
Consequently, SHOP reported an operating income of $465 million compared with an operating income of $289 million reported in the year-ago quarter.
SHOP’s Balance Sheet Details
As of Dec. 31, 2024, cash and cash equivalents (including marketable securities) totaled $5.48 billion, which decreased from $4.9 billion as of Sept. 30, 2024.
Free cash flow increased 37% year over year to $611 million. The free cash flow margin expanded 100 bps to 22% in the reported quarter.
SHOP’s Q1 Guidance Positive
For the first quarter of 2025, Shopify expects revenues to grow at a mid-twenties percentage rate on a year-over-year basis.
Gross profit is anticipated to grow at a low-twenties percentage rate on a year-over-year basis.
Shopify expects GAAP operating expense as a percentage of revenues to be in the 41% - 42% range.
Free cash flow margin is expected to be in the mid-teens.
Zacks Rank & Stocks to Consider
Shopify carries a Zacks Rank #3 (Hold) at present.
Arista Networks (ANET - Free Report) , Twilio (TWLO - Free Report) and Five9 (FIVN - Free Report) are some better-ranked stocks in the broader sector. While ANET and TWLO sport a Zacks Rank #1 (Strong Buy) each, FIVN carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks is scheduled to report its fourth-quarter 2024 results on Feb. 18. Twilio is set to report fourth-quarter 2024 results on Feb. 13, while Five9 is scheduled to report its fourth-quarter 2024 results on Feb. 20.