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Shopify Inc (NYSE:SHOP) reported mixed third-quarter results in which revenue beat expectations but the company reported an EPS loss due to a tax provision tied to a capital gain.
The Analysts
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Raymond James analyst Brian Peterson maintains an Outperform rating on Shopify's stock with a $365 price target.
Baird Equity Research analyst Colin Sebastian maintains at Outperform, price target lowered from $410 to $400.
Raymond James: 'Elite Growth' Status Maintained
Shopify's earnings report marks a continuation of impressive growth across key segments, ongoing ramping of the international business, Peterson said. Momentum in the Plus business sustained in the quarter with monthly recurring revenue (MRR) growth of 47% year-over-year while overall MRR growth came in at a "solid" 34%.
Peterson said management lifted its 2019 revenue outlook by 2% at the midpoint and implies fourth-quarter revenue growth of 39%. This outlook could prove to be conservative as it suggests a slowdown in revenue growth from 45% in the third quarter.
Looking forward to 2020, Peterson said management is expected to continue investing in growth in terms of both products and go-to-market initiatives. This should result in margins and other financial metrics falling short of Street estimates but the company's reputation as an "elite growth" SaaS asset remains unchanged.
Related Link: Shopify Reports Mixed Q3 Earnings
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Baird: Growth Fueled By Merchant Adds
Shopify's revenue beat was driven by a combination of merchant adds and stable monetization trends, Sebastian said. Subscription Solutions revenue totaled $166 million and rose 37% year-over-year, while MRR of $50.7 million and Merchant Solutions revenue grew 50% to $225 million.
Gross merchandise volume (GMV) in the third quarter rose 48% to $14.8 billion, although this does mark a slowdown from 52% growth in the second quarter.
The company said it now boasts more than 1 million merchants on its platform. Ongoing investments in international growth and Merchant Services implies the potential for further growth in merchants along with improving take rates.
"We view Shopify's pace of platform development, international expansion, and improving Enterprise penetration as laying the groundwork for incremental growth opportunities, take rate expansion, and ultimately operating leverage," the analyst wrote in a note.
Cramer To Investors: You Will Regret Selling
Shopify's stock sold off despite reporting "good" results, CNBC's Jim Cramer said Tuesday. The e-commerce company continues to invest to fuel growth, but this is something Wall Street "hates."
"You will regret that you sold it," Cramer told viewers who dumped the stock. "You don't know what you are doing. I like the stock. Unless you are Ray Dalio, you shouldn't sell it."
Price Action
Shopify's stock traded Wednesday around $312.52 per share.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.