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Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Shopify (NYSE:SHOP) and the best and worst performers in the e-commerce software industry.
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 mixed Q4. As a group, revenues beat analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was in line.
While some e-commerce software stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.1% since the latest earnings results.
Best Q4: 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 $2.81 billion, up 31.2% year on year. This print exceeded analysts’ expectations by 3%. Overall, it was a strong quarter for the company with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ total payment volume estimates.
Shopify pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 6.5% since reporting and currently trades at $112.18.
We think Shopify is a good business, but is it a buy today? Read our full report here, it’s free.
GoDaddy (NYSE:GDDY)
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 $1.19 billion, up 8.4% year on year, outperforming analysts’ expectations by 1.4%. The business had a satisfactory quarter with a solid beat of analysts’ EBITDA estimates.
GoDaddy achieved the highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 15.5% since reporting. It currently trades at $179.75.