Shopify Q2 2019 Results

Shopify (NYSE:SHOP):
Q2 Non-GAAP EPS of $0.14 beats by $0.12; GAAP EPS of -$0.26 beats by $0.07.
Revenue of $361.98M (+47.8% Y/Y) beats by $11.39M.…

Another beat and beat by the usual amounts!

The results at first glance look great however most importantly, for those who still hold but wondering when we would reach terminal velocity in growth rate decline and start to see some levelling off - that point has arrived. The growth rate declined by <2 percentage points this time from Q1. That’s the smallest sequential QoQ decline since Q3’17 to Q4’17 (from 72.18% to 70.89%).

If you get over the declines in growth rates that are tailing off anyhow and just compare head to head with other holdings - this is a $1.5bn+ run rate company growing at an organic rate of 47.8%!

GMV grew by $4.6Bn to $13.8Bn or an increase of 51%! This is a serious ecommerce market place that is in the second largest TAM on the planet (eCommerce TAM is $25 Trillion - the only TAM I have seen higher is the financial payments TAM of over $100 Trillion and to a degree Shopify is in that as well - their Gross Payments Volume was $5.8Bn). Shopify is looking like a serious challenger to the Amazon market place and has to be taken seriously - the cheap Chinese trinket drop shipping typecasting is just plain FUD).

Shopify Plus continues to increase in its contribution - now at $12.4 million, or 26%, of MRR compared with 23% of MRR as of June 30, 2018. Although Shopify is now much much more than Shopify Plus these days. MRR as of June 30, 2019 was $47.1 million, up 34% compared with $35.3 million as of June 30, 2018.

Shopify launched in 11 more languages in the quarter and advanced its Shipped by Shopify to 42% of eligible merchants (US & Canada). A new Shopify Plus platform was released as well as a new POS. Fulfilment by Shopify is now already available for early access.

I’m happy I have held and I feel it deserves a re-evaluation.



Here with the share price at about $348, with right around 100M shares outstanding and just under $1.3B of TTM sales, Shopify has a P/S of about 27.

Is that too high?
Many folks would say yes.

no SHOP position presently (closed out a short position on Monday at $319.something from $329.something)

No comment on the P/S of 27 although that’s not outstanding than plenty on our portfolios. I don’t short however I note that SBC has increased 60% over the last year which seems ridiculous.


This was interesting for a couple of reasons:-

  1. It highlights the point of how Shopify has become a retail operating system

  2. Shopify’s merchants’sales altogether in the US make it in aggregate the 3rd largest online retailer in the country

  3. Shopify is more an exporter to China than importer and not so affected by tariffs

I was speaking with one of our business partners who runs a “Teledoc” like Asian digital health company here in Singapore last week. Without knowing my interest in Shopify he showed me the Shopify site he has built for the telehealth business that can e-tail digital health service packages on a B2B2C basis.

He said he had researched all of the providers heavily -Shopify, Wix, big commerce, we-commerce etc. He chose Shopify for 4 reasons.

  1. They have the largest ecosystem of allied apps and solutions making it more complete than anything else

  2. They have a large HQ base here in Singapore already established

  3. It worked the best

  4. It has so many payment options

Just 1 datapoint but it just serves to show how broadly Shopify can extend itself (selling digital services in Asia on a B2B basis as opposed to consumer packaged goods in North America).

He literally said effectively it’s an Amazon in its own right.