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Why Shopify Stock Climbed 18% in April

John Ballard, The Motley Fool

What happened

Shares of Shopify (NYSE: SHOP) soared 17.9% in value last month, according to data from S&P Global Market Intelligence.

After a roller-coaster ride in 2018, the stock took off in January. Investors have enjoyed a return of 89% as of this writing, as the company continues to post 50% or better growth on the top line. Shopify reported its first-quarter results in late April, and once again, the robust operating performance validated the long-term opportunity in front of the company.

A digital checkout register sitting on a counter in a store.

The new Shopify retail kit. IMAGE SOURCE: SHOPIFY.  

So what

Here are the first-quarter highlights: 

  • Total revenue increased 50% year over year to $320.5 million.
  • Subscription solutions increased 40% year over year to $140.5 million, driven by growth in monthly recurring revenue.
  • Gross merchandise volume climbed 50% year over year to reach $11.9 billion.
  • Net loss for the quarter was $24.2 million, or $0.22 per share, compared with $0.16 per share in the year-ago quarter.
  • On a non-GAAP basis, Shopify reported $0.09 in earnings per share, representing a significant improvement over a loss of $0.04 per share in the year-ago quarter.

Merchants continue to flock to the company's Shopify Plus service, which "had a fantastic quarter," according to COO Harley Finkelstein. Shopify Plus comprised 26% of MRR during the quarter, up from 22% in the year-ago quarter. 

Shopify's shipping and loan service also saw "solid year-over-year growth." These services contributed to merchant solutions growth of 58% in the quarter, reaching $180 million in revenue. 

Now what

Shopify is off to an excellent start for the year. What's more, the company has only just begun to get its feet wet internationally, where Shopify has only been investing there for over a year. CFO Amy Shapero suggested that international is a growth driver for the long term: 

It is early days in international. We are still learning, but you know, we feel really positive with our continued investments in international and brand. So we are optimistic, and that is one of the reasons why we increased our guidance for 2019.

As for guidance, management is now calling for 2019 revenue to rise between 38% and 40% year over year. GAAP operating loss is expected to be in the range of $130 million to $140 million, while adjusted operating income is expected to be between $20 million to $30 million, which excludes $160 million of stock-based compensation expense.

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John Ballard has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Shopify. The Motley Fool has a disclosure policy.