As we reflect back on the just completed Q3 e-commerce software sector earnings season, we dig into the relative performance of 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 slower Q3; on average, revenues beat analyst consensus estimates by 1.49%, while on average next quarter revenue guidance was 1.93% under consensus. Increasing interest rates hurt growth companies as investors search for near-term cash flows, but e-commerce software stocks held their ground better than others, with the share prices up 0.47% since the previous earnings results, on average.
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 $1.36 billion, up 21.5% year on year, beating analyst expectations by 2.27%. It was a decent quarter for the company, with a solid beat of analyst estimates.
"Shopify is the central nervous system that powers millions of businesses around the world. During Q3, merchants continued to recognize Shopify's exceptional value and increased their adoption of our essential tools and innovative solutions. Our merchant solutions revenue as a percentage of GMV - or Merchant Solutions attach rate - climbed to 2.14%, the highest level in Shopify's history," said Harley Finkelstein, Shopify's President.
The stock is up 23.8% since the results and currently trades at $36.05.
Is now the time to buy Shopify? Access our full analysis of the earnings results here, it's free.
Wix (NASDAQ:WIX)
Founded in 2006 in Tel Aviv, Wix.com (NASDAQ:WIX) offers a free and easy to operate website building platform.
Wix reported revenues of $345.8 million, up 7.79% year on year, in line with analyst expectations. It was a mixed quarter for the company, with a significant improvement in gross margin but slow revenue growth.
The stock is up 8.17% since the results and currently trades at $75.2.
Is now the time to buy Wix? Access our full analysis of the earnings results here, it's free.
Weakest Q3: 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 $1.03 billion, up 7.17% year on year, missing analyst expectations by 0.33%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and slow revenue growth.
GoDaddy had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 1.4% since the results and currently trades at $73.72.
Read our full analysis of GoDaddy's results here.
BigCommerce (NASDAQ:BIGC)
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 $72.3 million, up 22.1% year on year, beating analyst expectations by 3.97%. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter.
BigCommerce delivered the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise among the peers. The stock is down 38.1% since the results and currently trades at $8.19.
Read our full, actionable report on BigCommerce here, it's free.
Squarespace (NYSE:SQSP)
Founded in New York City in 2003, Squarespace (NYSE:SQSP) is a platform for small businesses and creators to build their digital presences online.
Squarespace reported revenues of $217.6 million, up 8.32% year on year, in line with analyst expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and slow revenue growth.
Squarespace had the weakest full year guidance update among the peers. The stock is up 7.12% since the results and currently trades at $21.04.
Read our full, actionable report on Squarespace here, it's free.
The author has no position in any of the stocks mentioned