E-commerce Software Q3 Earnings: Shopify (NYSE:SHOP) Simply the Best
Wrapping up Q3 earnings, we look at the numbers and key takeaways for the e-commerce software stocks, including Shopify (NYSE:SHOP) and its peers.
While e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.
The 5 e-commerce software stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 0.8% above.
Luckily, e-commerce software stocks have performed well with share prices up 20.5% on average since the latest earnings results.
Best Q3: Shopify (NYSE:SHOP)
Originally created as an internal tool for a snowboarding company, Shopify (NYSE:SHOP) provides a software platform for building and operating e-commerce businesses.
Shopify reported revenues of $2.16 billion, up 26.1% year on year. This print exceeded analysts’ expectations by 2.2%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and revenue guidance for next quarter beating analysts’ expectations.
"Q3 was outstanding, further establishing Shopify as a leader in powering commerce anywhere, anytime. Our unified commerce platform is becoming the go-to choice for merchants of all sizes," said Harley Finkelstein, President of Shopify.
Shopify Total Revenue
Shopify achieved the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 26.9% since reporting and currently trades at $114.21.
Founded by Bob Parsons after selling his first company to Intuit, GoDaddy (NYSE:GDDY) provides small and mid-sized businesses with the ability to buy a web domain and tools to create and manage a website.
GoDaddy reported revenues of $1.15 billion, up 7.3% year on year, in line with analysts’ expectations. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ bookings estimates.
GoDaddy Total Revenue
The market seems happy with the results as the stock is up 23.3% since reporting. It currently trades at $199.34.
Founded in Sydney, Australia in 2009 by Mitchell Harper and Eddie Machaalani, BigCommerce (NASDAQ:BIGC) provides software for businesses to easily create online stores.
BigCommerce reported revenues of $83.71 million, up 7.3% year on year, exceeding analysts’ expectations by 0.7%. Still, it was a mixed quarter as it posted a slight miss of analysts’ annual recurring revenue estimates.
BigCommerce delivered the weakest full-year guidance update in the group. Interestingly, the stock is up 17.2% since the results and currently trades at $6.67.
Founded in 2006 in Tel Aviv, Wix.com (NASDAQ:WIX) offers a free and easy to operate website building platform.
Wix reported revenues of $444.7 million, up 12.9% year on year. This result met analysts’ expectations. Overall, it was a satisfactory quarter as it also put up a decent beat of analysts’ EBITDA estimates.
Wix scored the highest full-year guidance raise among its peers. The stock is up 21.5% since reporting and currently trades at $223.35.
While the company is not a domain registrar and does not directly sell domain names to end users, Verisign (NASDAQ:VRSN) operates and maintains the infrastructure to support domain names such as .com and .net.
VeriSign reported revenues of $390.6 million, up 3.8% year on year. This print was in line with analysts’ expectations. Aside from that, it was a mixed quarter as it failed to impress in some other areas of the business.
VeriSign had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is up 13.8% since reporting and currently trades at $210.70.
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
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