Shopify Posts Better-Than-Expected Q4; Shares Dip

Shopify (TSE: SHOP) (NYSE: SHOP) fourth-quarter revenue and adjusted EPS beat expectations.

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Revenue & Earnings

Revenue came in at $1.38 billion for the quarter ended December 31, an increase of 40% from $977.7 million in the prior-year quarter.

Net loss was $371.3 million (-$2.95 per diluted share) in Q4 2021, compared to a net income of $123.9 million ($0.99 per diluted share) in Q4 2020. The e-commerce company incurred a loss as it recorded an unrealized loss on its stocks and other investments.

On an adjusted basis, Shopify earned $1.36 per share, down from $1.58 in the prior-year period.

According to Zacks, Shopify was expected to post adjusted EPS of $1.33 on revenue of $1.34 billion.

Shopify generated $351.2 million in subscription solutions revenue, up 26% year-over-year, with the growth primarily driven by more merchants joining the platform.

In addition, merchant solutions revenue amounted to $1,028.8 million, up 47%, mostly driven by the growth of GMV. GMV was $54.1 billion in the fourth quarter, up 31% from the previous year.

Management Commentary

Shopify CFO Amy Shapiro said, “Our merchants had an incredible holiday selling season, which powered Shopify’s strong fourth-quarter results, with their collective sales growing significantly faster than the overall ecommerce industry over the Black Friday Cyber Monday weekend. Our focus on building for the long term means that merchants have access to the most modern commerce technology, which gives them superpowers to compete globally while focusing on what matters most to them – their products and their customers. In 2022, we remain steadfast on making commerce easier for entrepreneurs by continuing to build high-performing infrastructure and innovative features, which combined yield a powerful and trusted commerce solution that future-proofs our merchants in the years to come and benefits Shopify over time.”

Shopify expects full-year 2022 revenue growth to be below the 57% revenue growth achieved in 2021, but still rapid and above e-commerce growth.

Wall Street’s Take

On February 15, KeyBanc analyst Josh Beck kept a Buy rating on SHOP and lowered its price target to $1,150 (C$1,462.53). This implies 55.8% upside potential.

Overall, consensus on the Street is that SHOP is a Moderate Buy based on 13 Buys and 10 Holds. The average Shopify price target of C$1,785.02 implies upside potential of about 90.2% to current levels.

TipRanks’ Smart Score

SHOP scores a 5 out of 10 on the TipRanks Smart Score rating system, indicating that the stock should perform in line with the overall market.

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