Hello all, I was just looking through the boards to try to find any current discussions of SHOP and it is amazingly silent out there. Since many of us find a need to replace some of the SAAS names in our ports, I offer up Shopify (maybe again?) for consideration.
They apparently killed it on earnings, and they are WAY up today. I’ve seen it at 25% up at times!!! I think the earnings were good, but not that good…sheesh.
Margins are returning to the low 50’s, so it seems to match or beat some other stocks being posted about here. Their revenue continues to grow, international expansion continues and their ARR (or as they call it monthly reoccuring revenue - MRR) continues to grow.
Doing up the spreadsheet for today’s post, I only just realized that they hit profitability in Q3 2023. It was very difficult to actually find as there was none of the usual hoopla when darling companies turn profitable. Odd to me that it wasn’t celebrated more.
Anyway, here are the numbers, more notes afterward.
Looking at Q2 2023 there is a HUGE jump in the income loss number. This was related to the markdown of the delivery(?) company they bought as part of their attempt to get deeper into logistics. But, having that logistics arm was dragging down margins from low 50’s to mid 40’s. Notice that after the logistics unit was sold the margins come right back up to low 50’s. That seems to imply the base business is fine.
Another note I came across in the research is that Q2 2024 was first time that gross profit came in at ONE BILLION dollars. Income from operations (gross) was up from $86mil previous quarter to $241 in Q2. That growth in income from operations appears to continue to the most recently posted quarter.
They currently plan for continued mid 20’s growth in revenue and similar expansion in margins for the remainder of the year.
Overall, I like the trends and I love that the business is still strong. What I need to do now is dig into valuations. This is the largest position in my portfolio, only matched by MSFT (Microsoft). (MSFT is not technically a Sauldom candidate, but it is part of my own risk leverage decisions.)
Anyone else have notes to promote, or delete Shopify from the Saul universe? I will keep posting update if it adds to our investing options and meets the rules.