Shopify (TSX: SHOP) posts Q1 revenue surge of 22% YoY. Time to buy?

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Shopify (TSX: SHOP) posts Q1 revenue surge of 22% YoY. Time to buy?

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Shopify (TSX: SHOP) posts Q1 revenue surge of 22% YoY. Time to buy?
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Highlights

  • Shopify Inc (TSX: SHOP) has been turning heads on the stock markets in the wake of its first-quarter results for fiscal 2022 released on Thursday, May 5.
  • The e-commerce infrastructure company announced the plan to acquire Deliverr Inc, a fulfilment technology firm.
  • The tech company also saw YoY growth of 29 per cent in its merchant solution revenue in Q1 FY2022.

Shopify Inc (TSX: SHOP) has been turning heads on the stock markets in the wake of its first-quarter results for fiscal 2022 released on Thursday, May 5.

The e-commerce company underwent massive macro transformation since the onset of the COVID-19 pandemic and earned merchant trust, said Shopify's President Harley Finkelstein. He also announced Shopify's plan to acquire Deliverr Inc, a fulfilment technology firm, for a transactional value of about US$ 2.1 billion.

With this acquisition, Shopify expects to simplify and scale millions of merchants and eliminate supply chain complexities, which will help it gain visibility, enhance supply chain movements, and improve merchant experience.

Let us look at Shopify's financial performance in Q1 FY2022 and its stock performance.

Shopify Inc (TSX: SHOP) Q1 FY2022 results

Shopify Inc recorded a subscription solutions revenue of US$ 344.76 million in the first three months of FY2022 compared to US$ 320.68 million a year ago. This year-over-year (YoY) rise of eight per cent came as more merchants joined the platform in the latest quarter.

The tech company also saw YoY growth of 29 per cent in its merchant solution revenue to US$ 858.86 million in the latest quarter, underpinned by a YoY growth of 57 per cent in gross merchandise value (GMV) to US$ 43.2 billion during the quarter.

The software company reported total revenue of US$ 1.2 billion in Q1 FY2022, marking a YoY growth of 22 per cent. Its gross profit rose to US$ 637.63 million in the latest quarter from US$ 558.71 million a year ago. However, the e-commerce platform recorded a net loss of US$ 1.47 billion in Q1 FY2022 compared to an income of US$ 1.25 billion a year ago.

Shopify posted US$ 2.45 billion in cash and cash equivalents (CCE) at the end of Q1 FY2021, down from US$ 2.5 billion a year ago.

Shopify (TSX: SHOP)’s Q1FY2022 results

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Shopify Inc's stock performance

Shopify's stock lost approximately 56 per cent in value in 12 months to close at C$ 618.3 per share on Wednesday, May 4. The tech stock has been on a bearish trend since November 2021 and declined by over 72 per cent from its 52-week high of C$ 2,228.73 (November 19, 2021). However, it held a Relative Strength Index (RSI) value of 41.11 when writing this.

Bottomline

Shopify is said to have made cross border commerce easier for merchants globally by rolling out Shopify Markets in Q1 FY2022. The e-commerce infrastructure company also launched a customized link-in-bio tool, LinkPop, that allows its users to sell products with shoppable links. However, the company expects its YoY revenue surge to be lower in the first two-quarters of 2022 and highest in the remaining half-year compared to 2021.

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Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.  

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