Shopify stock jumped on Tuesday after the e-commerce firm reported third-quarter earnings and revenue that topped estimates amid strong growth in the subscription business. Revenue guidance for Shopify stock came in above expectations. Shopify stock surged.
The company released Shopify earnings for the quarter ending Sept. 30 before the market open. Adjusted earnings rose 16% to 28 cents, topping consensus estimates by a penny.
Net income doubled to $344 million, topping estimates of $332 million.
Also, revenue climbed 26% to $2.16 billion. Shopify stock analysts polled by Factset predicted revenue of $2.09 billion.
Also, merchant solutions revenue rose 26% to $1.55 billion, topping estimates of $1.52 billion. Shopify recently hiked prices for premium services that target bigger companies.
At Jefferies, analyst Samad Samana said in a report: "Shopify did not disclose non-GAAP operating margin, which we believe was an important barometer for investors, but margins impressed on a GAAP basis."
Further, Shopify said Q3 gross merchandise volume from merchant transactions rose 24% to $69.71 billion vs. estimates of $67.47 billion.
For the current December quarter, Shopify said it expects "revenues to grow at a mid-to-high-twenties percentage rate on a year-over-year basis and gross profit dollars to grow at a year-over-year rate similar to Q3."
For the fourth quarter, analysts estimated $2.63 billion in revenue, up 23%.
Shopify Stock Surges
On the stock market today, Shopify stock popped 23% to near 111 in morning trading. That would be the highest price since early 2022.
SHOP stock already cleared an 84.37 handle buy point from a deep, nine-month consolidation. It's set to vault above the top of the base at 91.57.
Heading into the Shopify earnings report, shares had advanced 16% in 2024.
Shopify Moves, Deals
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.
Shopify recently announced expanded partnerships with PayPal Holdings and Google-parent Alphabet's YouTube.
Also, Shopify in August hired a new chief technology officer, Mikhail Parakhin, formerly at Microsoft.
Shopify Stock: Technical Ratings
Meanwhile, Shopify stock holds a Relative Strength Rating of 82 out of a best-possible 99, according to IBD Stock Checkup. The EPS Rating is a near-perfect 98 while the overall Composite Rating also is a 98.
The Accumulation/Distribution Rating is an A.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
