Shopify stock popped on Wednesday after the e-commerce firm reported second quarter earnings and revenue that topped estimates amid strong growth in the subscription business. Guidance for Shopify stock came in above expectations.
On the stock market today, Shopify stock surged 17.8% to close at 63.89.
"Operating margin stole the show, sharply beating consensus," said Jefferies analyst Samad Samana in a report. "The Q3 outlook for growth and margins was better than expected as well. Shopify's Q2 showed the topline is more resilient than feared and management is more committed to margin expansion than expected."
Released before the market open, Shopify earnings for the quarter ending June 30 were 26 cents on an adjusted basis. Also, revenue climbed 21% to $2 billion.
Shopify stock analysts polled by Factset predicted profit of 20 cents on revenue of $1.996 billion.
Further, Shopify said Q2 gross merchandise volume from merchant transactions rose 22% to $67.2 billion vs. estimates of $65.34 billion.
Subscription Business A Bright Spot
Merchant solutions revenue rose 19% to $1.5 billion billion vs. estimates of $1.47 billion. Subscription revenue climbed 27% to $563 million versus estimates of $529 million. Shopify recently hiked prices for premium services that target bigger companies.
Heading into the Shopify earnings report, shares were down 27% in 2024.
For the current September quarter, Shopify said it expects "revenue to grow at a low-to-mid-twenties percentage rate on a year-over-year basis." For the third quarter, analysts estimated $2.057 billion in revenue.
Shopify Stock: Technical Ratings
The company in 2023 sold its delivery and logistics business to Flexport, easing Wall Street worries over rising capital spending.
Further, Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping.
Meanwhile, Shopify stock holds a Relative Strength Rating of 13 out of a best-possible 99, according to IBD Stock Check-up.
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