Shopify stock soars 20% on rosy guidance as CFO says tariff hit 'did not materialize'
Shopify shares soared 20% Wednesday after the company topped analysts' estimates for the second quarter, and gave rosy guidance for the third quarter.
Here's how the company did, compared with estimates from analysts polled by LSEG:
- Earnings per share: 35 cents adj. vs. 29 cents
- Revenue: $2.68 billion vs. $2.55 billion
Second-quarter sales surged 31% year over year to $2.68 billion, an acceleration from a year ago, when revenue expanded roughly 20%.
The Canadian e-commerce company also offered third-quarter guidance that surpassed expectations. Shopify said it expects revenue to grow at a "mid-to-high twenties percentage rate" year over year, which is higher than the 21.7% growth projected by analysts, according to StreetAccount.
The upbeat report and guidance suggested Shopify, which sells software for e-commerce businesses, is navigating President Donald Trump's trade war better than feared. Last quarter, the company noted there was macroeconomic "uncertainty ahead," but that it wasn't seeing significant price increases among its merchants due to the tariffs.
"We had factored into our guidance some potential impact from tariffs, which did not materialize," Shopify CFO Jeff Hoffmeister said on a conference call with investors.
Online retail peers Amazon and eBay last week reported strong revenue growth, indicating that consumers kept buying despite concerns of tariffs and rising prices.
The company hasn't seen any "drops in U.S. demand, whether inbound, outbound or local" and instead saw the market accelerate in the second quarter, Hoffmeister said. Many Shopify merchants have raised prices, he added.
Shoppers don't appear to be stocking up or pulling forward demand in anticipation of the tariffs, he said.
"So far we're seeing no slowdown from the tariffs and that includes up until early August, where we are today," Shopify President Harley Finkelstein said in an interview on CNBC's "Squawk on the Street." "The millions of stores on Shopify are doing really, really well."
Shopify's gross merchandise sales, or the total volume of merchandise sold on the platform, also came in higher than expected. GMS grew 29% year over year to $87.8 billion, surpassing Wall Street's projected $81.5 billion, according to StreetAccount.
The company said it expects operating expenses as a percentage of revenue to be 38% to 39%, compared to 39% to 40% in the previous quarter.
Shopify has been investing heavily in adding more artificial intelligence tools to its platform as a way to attract and retain merchants. In May, the company released an "AI store builder" that generates webstores based on a few keywords. Shopify on Tuesday launched a set of tools to support shopping via AI agents.
Company executives said these investments appear to be paying off.
"As we continue to expand our platforms capabilities, add new products, and build for where commerce is heading, Shopify is becoming even more compelling to a wider range of businesses than ever before," Hoffmeister said.
CNBC
