TipRanks
5 min read
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Shopify (SHOP) is firing on all cylinders, recording awe-inspiring results that show zero sign of slowing down. Merchant adoption continues to climb, and Shopify Payments is gaining notable traction. On top of that, the company is generating solid free cash flow as it tightens costs and introduces more high-margin products. To symbolize the company’s coming of age, Shopify is set to join the Nasdaq 100 (NDX) and the Nasdaq-100 Equal Weighted Index (NDXE) later this month.
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With global growth, smarter AI tools, and a leaner operation, Shopify looks well-positioned to maintain this momentum. I’m stoically bullish on SHOP stock and have initiated a long position.
Shopify’s recent earnings report, which included a 27% YoY rise in revenues and a 22% rise in profit, further entrenches my bullish stance.
Shopify’s Q1 earnings, which the company posted last Thursday, were nothing short of excellent. Quarterly revenues reached $2.36 billion, with Gross Merchandise Volume (GMV) climbing 23% to $74.75 billion, powered by a 32% surge in international GMV and a staggering 109% leap in B2B GMV. Speaking on the post-earnings call, President Harley Finkelstein pointed to Shopify’s unified commerce platform (now live in 39 countries) as a magnet for merchants worldwide. Moreover, Shopify Payments penetration hit 64%, up from 60%, processing $47.5 billion, a 31% jump.
The numbers tell a broader story. Offline GMV grew 23%, proving Shopify’s not just an online play, while Monthly Recurring Revenue (MRR) advanced 21% to $182 million, driven by Shopify Plus and subscription plans. Management noted the platform’s adaptability, with AI tools streamlining merchant operations and cross-border trade holding steady at 15% of GMV.
All in all, the writing on the wall is that Shopify’s multi-channel prowess spreads at a breakneck pace from mom-and-pop shops to global brands.
However, besides Shopifty’s impressive top-line growth, its profitability metrics were downright dazzling. Gross profit rose 22% to $1.17 billion, with operating income doubling to $203 million for a 9% margin, up from 5% a year ago. Free cash flow stole the spotlight, surging 56% to $363 million, delivering a 15% margin, marking seven straight quarters of double-digit margins. So, beyond growth, we see disciplined capital and spending controls.
