Shopify Clocks 22% Q3 Sales Growth Aided By GMV Momentum, Expects to Outperform Broader US Retail In Q4

Shopify Inc SHOP reported third-quarter FY22 sales growth of 22% year-on-year, to $1.40 billion, missing the consensus of $1.83 billion. 

Revenue from Subscription Solutions rose 12% Y/Y to $376.3 million, primarily due to more merchants joining the platform and Merchant Solutions increased 26% Y/Y to $989.9 million, driven primarily by the growth of Gross Merchandise Volume (GMV).

GMV rose 11% Y/Y to $46.2 billion. Monthly Recurring Revenue (MRR) rose 8% Y/Y to $107 million.

Margin: The non-GAAP gross margin contracted 500 bps to 50%, reflecting a higher mix of lower-margin Merchant Solutions revenue, lower margins in Shopify Payments and Deliverr due to the mix, and increased investments in its cloud infrastructure.

The adjusted operating margin loss was (3)%. The shrinkage reflected the expansion of its R&D, sales, and marketing teams.

Adjusted EPS loss of $(0.02) missed the consensus of $(0.10).

Shopify held $4.9 billion in cash and equivalents.

"In Q3, we delivered another solid quarter of GMV, revenue, and gross profit dollar growth against the high inflationary environment," said Amy Shapero, Shopify's CFO.

Shopify sees GMV Growth outperforming the broader U.S. retail market in Q4 aided by omnichannel capabilities.

The company continues to anticipate that operating expense growth year-over-year in Q4 will sequentially decelerate from Q3.

Price action: SHOP shares traded higher by 11.70% at $32.45 on the last check Thursday.