Shopify (SHOP) Q3 Earnings: What To Expect

Jabin Bastian /
2023/11/01 3:04 am EDT

E-Commerce software platform Shopify (NYSE:SHOP) will be reporting results tomorrow before market hours. Here's what to expect.

Last quarter Shopify reported revenues of $1.69 billion, up 30.8% year on year, beating analyst revenue expectations by 4.27%. It was a very strong quarter for the company, with a significant improvement in its gross margin and a decent beat of analysts' revenue estimates.

Is Shopify buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Shopify's revenue to grow 22.2% year on year to $1.67 billion, in line with the 21.6% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.14 per share.

Shopify Total Revenue

The analysts covering the company have had mixed opinions about the business heading into the earnings, with revenue estimates seeing four upward and four downward revisions over the last thirty days. The company missed Wall St's revenue estimates three times over the last two years.

Looking at Shopify's peers in the sales and marketing software segment, some of them have already reported Q3 earnings results, giving us a hint of what we can expect. VeriSign delivered top-line growth of 5.44% year on year, missing analyst estimates by 0.75%,  and ZoomInfo reported revenues up 9.11% year on year, exceeding estimates by 1.06%. VeriSign traded flat on the results, and ZoomInfo was up 1.5%.

Read our full analysis of VeriSign's results here and ZoomInfo's results here.

The fears around raising interest rates have been putting pressure on tech stocks, and while some of the sales and marketing software stocks have fared somewhat better, they have not been spared, with share price declining 4.45% over the last month. Shopify is down 8.52% during the same time, and is heading into the earnings with analyst price target of $57.9, compared to share price of $47.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned.