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Shopify Q3 Earnings Report on Deck: What Can Investors Expect?
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Shopify (SHOP - Free Report) is set to report its Q3 earnings on Tuesday, October 29 before the opening bell. The e-commerce company has risen 22.1% in 2019 thus far, and its shares are up over 1000% since its 2015 IPO. Shopify has been able succeed in the saturated e-commerce market because its unique services distinguishes itself from its rival competitors.
However, the company’s innovative business model inevitably led to rival competitors attempting to copy and beat Shopify at its own game. Let’s take a closer look at what Shopify has been up to lately and how they might close out its fiscal 2019.
Shopify Responds to Rising Competition
The features that have distinguished Shopify in the e-commerce space have also made the company susceptible to bigger companies copying the aspects of its business model that have made it successful.
Facebook made a move to get in on the act as it launched in-app checkouts via its subsidiary Instagram, where users can purchase an item directly on the app. Square (SQ - Free Report) also launched its own online store where it gives business owners the opportunity to sell items directly through customizable digital storefronts.
Shopify has made its own moves in response to rival tech companies gunning for its market share. Shopify recently unveiled a list of innovations it will add to its platform, including new language capabilities and a faster point-of-sales system, among others.
Shopify’s fulfillment network initiative helps business owners get their orders to their customers in a faster and more cost-effective way. Another announcement followed the unveiling of the fulfillment network when Shopify reported that it acquired privately held 6 River Systems, a leading provider of collaborative warehouse fulfillment solutions, in a deal valued at $450 million.
Outlook
6 River Systems is said to provide "flexible and scalable warehouse automation powered by collaborative robots and artificial intelligence." The fulfillment network initiative makes it clear that Shopify is trying to establish itself in the same logistics and delivery space that Amazon (AMZN - Free Report) has taken ahold of.
The ambitious move shows that Shopify won’t hesitate to take on the established kingpins of the e-commerce space. However, Shopify is spending a significant amount of cash for its fulfillment network, which can put pressure on its bottom-line as it expects expenses to increase by about $25 million.
Our Q3 consensus estimates forecast Shopify’s bottom line to surge 175% to $0.11 per share on top of a 42.21% revenue rally to $384.05 million. The subscription solution segment is projected to see a 34.76% hike to $162.4 million while merchant solutions soars 48.3% to $221.8 million. Looking ahead to the firm’s full fiscal 2019 figures, estimates call for earnings to increase 63.16% to $0.62 per share while net sales come in at $1.54 billion for a 43.46% gain from the year ago quarter.
Takeaway
Shopify has shown with its response to the heightened competition in the e-commerce space that it trusts its innovative abilities to not only hold but expand its presence in the industry. The company isn’t afraid of taking negative short-term impacts to its profitability if it means potentially securing a competitive advantage in the long-term.
The global e-commerce industry is projected to become a $6.5 trillion market, which gives companies like Shopify a lot of room to grow. Shopify is listed as a Zacks Rank #3 (Hold) and has crushed estimates over the past four quarters with an average EPS surprise of a whopping 217.62%.
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Image: Bigstock
Shopify Q3 Earnings Report on Deck: What Can Investors Expect?
Shopify (SHOP - Free Report) is set to report its Q3 earnings on Tuesday, October 29 before the opening bell. The e-commerce company has risen 22.1% in 2019 thus far, and its shares are up over 1000% since its 2015 IPO. Shopify has been able succeed in the saturated e-commerce market because its unique services distinguishes itself from its rival competitors.
However, the company’s innovative business model inevitably led to rival competitors attempting to copy and beat Shopify at its own game. Let’s take a closer look at what Shopify has been up to lately and how they might close out its fiscal 2019.
Shopify Responds to Rising Competition
The features that have distinguished Shopify in the e-commerce space have also made the company susceptible to bigger companies copying the aspects of its business model that have made it successful.
Facebook made a move to get in on the act as it launched in-app checkouts via its subsidiary Instagram, where users can purchase an item directly on the app. Square (SQ - Free Report) also launched its own online store where it gives business owners the opportunity to sell items directly through customizable digital storefronts.
Shopify has made its own moves in response to rival tech companies gunning for its market share. Shopify recently unveiled a list of innovations it will add to its platform, including new language capabilities and a faster point-of-sales system, among others.
Shopify’s fulfillment network initiative helps business owners get their orders to their customers in a faster and more cost-effective way. Another announcement followed the unveiling of the fulfillment network when Shopify reported that it acquired privately held 6 River Systems, a leading provider of collaborative warehouse fulfillment solutions, in a deal valued at $450 million.
Outlook
6 River Systems is said to provide "flexible and scalable warehouse automation powered by collaborative robots and artificial intelligence." The fulfillment network initiative makes it clear that Shopify is trying to establish itself in the same logistics and delivery space that Amazon (AMZN - Free Report) has taken ahold of.
The ambitious move shows that Shopify won’t hesitate to take on the established kingpins of the e-commerce space. However, Shopify is spending a significant amount of cash for its fulfillment network, which can put pressure on its bottom-line as it expects expenses to increase by about $25 million.
Our Q3 consensus estimates forecast Shopify’s bottom line to surge 175% to $0.11 per share on top of a 42.21% revenue rally to $384.05 million. The subscription solution segment is projected to see a 34.76% hike to $162.4 million while merchant solutions soars 48.3% to $221.8 million. Looking ahead to the firm’s full fiscal 2019 figures, estimates call for earnings to increase 63.16% to $0.62 per share while net sales come in at $1.54 billion for a 43.46% gain from the year ago quarter.
Takeaway
Shopify has shown with its response to the heightened competition in the e-commerce space that it trusts its innovative abilities to not only hold but expand its presence in the industry. The company isn’t afraid of taking negative short-term impacts to its profitability if it means potentially securing a competitive advantage in the long-term.
The global e-commerce industry is projected to become a $6.5 trillion market, which gives companies like Shopify a lot of room to grow. Shopify is listed as a Zacks Rank #3 (Hold) and has crushed estimates over the past four quarters with an average EPS surprise of a whopping 217.62%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>