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  5. SHOP: How would you digest SHOP earnings? [Shopify Inc. Class A Subordinate Voting Shares]
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Q: How would you digest SHOP earnings? How did they do on key metrics? What do you see happening to stock going forward over the next 6 months and longer? Is the story still intact and moving in the right direction?
Asked on February 13, 2024
5i Research Answer:

SHOP beat estimates on nearly every metric, except a small miss on margins. However, the beat was not huge, and probably not enough to keep investors fully happy after such big gains. 4Q EPS was 34c, vs 30c estimated; sales $2.14B vs $2.08B; Gross Merchandise volume (GMV) $75.1B vs $71.6B est. GMV rose 23%. Margin is forecast to increase 1.5 percentage points, and sales were forecast to grow in the 'low twenties' percentage rate. Recurring monthly revenue rose 36% to $149M. Subscription revenue rose 31%. EPS rose nearly five-fold. Margins were 50%, higher than 47% in the similar prior quarter, but just missing estimates of 50.1%. It is hard to argue with the growth and earnings, and the focus on cost control is working. Six months is a short focus time but we see nothing wrong with the quarter and would expect continued growth. The stock will do its thing in the short term and may see profit-taking but we think it works higher longer term. Nothing in the release would cause us to change a positive view.