Wrapping up Q3 earnings, we look at the numbers and key takeaways for the e-commerce software stocks, including VeriSign (NASDAQ:VRSN) 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 21.4% on average since the latest earnings results.
VeriSign (NASDAQ:VRSN)
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, but overall, it was a mixed quarter for the company.
“By continuing to deliver on our mission of maintaining the security, stability, and resiliency of the critical internet infrastructure we operate, we deliver for all our stakeholders,” said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.
VeriSign Total Revenue
VeriSign delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Interestingly, the stock is up 7.6% since reporting and currently trades at $199.20.
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, outperforming analysts’ expectations by 2.2%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates and revenue guidance for next quarter beating analysts’ expectations.
Shopify Total Revenue
Shopify pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 26.3% since reporting. It currently trades at $113.70.
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 30.9% since the results and currently trades at $7.45.
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 number met analysts’ expectations. It was a satisfactory quarter as it also recorded a decent beat of analysts’ EBITDA estimates.
Wix pulled off the highest full-year guidance raise among its peers. The stock is up 15.8% since reporting and currently trades at $212.92.
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. This number was in line with analysts’ expectations. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ bookings estimates.
The stock is up 26.1% since reporting and currently trades at $203.90.
As a result of the Fed's rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed's 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump's victory in the US Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain. Said differently, there's still much uncertainty around 2025.
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