Shopify Q4 2018 results ER beat and beat…

Non-GAAP EPS of $0.26 beats by $0.05; GAAP EPS of -$0.01 beats by $0.07.

Revenue of $343.86M (+54.3% Y/Y) beats by $16.43M.

Waiting for the conf call for guidance.

So far the pre-market us up but that doesn’t mean anything. Shopify always beats usually guides ok but usually always gets whacked. We will see this time.



Ok - whilst we waiting for the conf call and for guidance reaction… some more thoughts.

The ER guidance has them growing revenue at 43.5% at the mid point which is slightly below expectations although the annual growth guidance mid point is in line.

They managed to keep their growth above 50% for another quarter but this is going to be a scrape for them to achieve going forwards - which probably explains them stressing the $1bn milestone and lining up the law of big numbers in analysts’ minds (and to be fair there aren’t that many companies passed the $1bn stage that are growing >50% with the recent exceptions of Ali Baba and Facebook finally succumbing in the last year or so.

Interestingly they didn’t mention MJ! Nor their cloud infrastructure cost base.

They did stress their international expansion along with their value added services take up - which I’m convinced are both flanking strategies that get them ahead of Amazon.

Overall - it seems like good progress.

I liked:
revenue growth holding up above 50%
continued growth in MRR, penetration progress for Shopify plus
increased merchant volumes
geo expansion
value added services take up (capital and shipping)
Non-Gaap Net Inc progress which almost doubled and on a per share basis was up 73%

I didn’t like:
stronger growth in lower margin business lines - merchant solutions (although I’m not too upset about it - it is an ecommerce company after all so it’s core to what they do and should become higher margin over time)
low balling guidance
not disclosing their MJ and cloud infrastructure stories
continued high levels of SBC



Merchant count.

820,000 total up from 600,000(+37%)

5,300 Shop Plus up from 3600 (+47%)

For comparison they had 377,500 total and 2,500 Plus at end of 2017. So customer acquisition is still very strong.

Looks good. They still have strong growth even at scale. Not a blowout but better than expected.



Back in October I predicted the MRR, and non MRR revs based on a model. Take a look:

I thought this was a good Q for SHOP. Stock price movements of course tempered by high P/S of 17.2 and recent run up of 42% since Dec lows. I am curious to see how other stocks fare.


Interesting - it leaves Shopify and Twilio on almost identical P/S levels. One posting 54% growth the other 77% growth but both forecasting ~44% organic growth levels going forwards.

Shopify is about 1 year ahead of Twilio in terms of revenues right now. If you either time shift Shopify back one year it would be matching Twilio’s current growth rates and if you time shifted forwards Twilio they would be matching Shopify’s current growth rates (including Twilio’s future inorganic revenues).

Some rough numbers as most sources are laggards at updating their data tables around earnings season…


Market Caps
Shop: $19.38Bn
TWLO: $14.06Bn

Shop: 487
TWLO: 1045

Fwd P/E estimates
SHOP: 250*
TWLO: 689*

*(By their own company forecasts Shopify’s forward P/E would be ~350 Twilio’s forward P/E would be 1045 again).

Either way I think we maybe guilty of over penalising Shopify for its prior year growth comparators when on any other basis including:

1) Peer to peer it is doing as well as one of this board’s favourites (Twilio) and at the top of any global $1bn peer comparison.

2) SaaS players growth rates (not many are higher than 54% with a growing proportion of recurring revs - it is on a par or in touch with growth rates with Square, MungoDB, Alteryx and way ahead of ZenDesk, ServiceNow, Veeva, Cloudera, SalesForce etc)

3) eCommerce players growth rates (much higher than Wix, MercadoLibre, eBay, Amazon, Ali Baba or any other player out there)

Of course that’s not to say if Twilio’s year on year growth rate comparison materialise as they themselves forecast and head in the same direction as Shopify’s has already, then Saul and others wouldn’t cut Twilio loose just as ruthlessly (barring any other factor like recurring revenues or margins - but having looked at the earnings forecasts and forward P/E levels I don’t see these measures favouring Twilio any better than Shopify and if anything a little less favourably).

No disrespect to decisions taken and positions held.

Holding both Shopify at a ~10% holding and Twilio at a ~2% holding (which I might top up if it drops substantially tomorrow).


Hi Ant,

Here is what I believe

SHOP will likely deliver near their forecast and their GM% likely deteriorate from here… and their 2020 forecast will go <40%…

where as TWLO will likely deliver huge beat to their forecast, GM% will improve and will continue to grow above 50%… may be even above 60% in 2020…

and so I have TWLO at 3x of SHOP position


Shopify, while we don’t argue the unfavorable short term GM and Sales growth direction, we should keep in mind if this company is successful in building a retail operation system, which could prove to be big long-term winner. Notice the company is spending all they make to grow business, still with $2B cash in bank. This really reminds me early time Amazon.