Shopify's Key Metrics May Exceed First-Quarter Expectations, RBC Says
15:38:14 PM ET, 04/18/2024 - MT Newswires
03:38 PM EDT, 04/18/2024 (MT Newswires) -- Shopify's (SHOP) key metrics likely trended positively in the first quarter amid vendor demand for premium services and an acceleration in US consumer spending, RBC Capital Markets said Thursday.
Monthly recurring revenue, or MRR, will likely meet or exceed consensus expectations in the first quarter amid continued momentum in premiere services Shopify Plus and POS, its system for taking in-person card payments, RBC analyst Paul Treiber said.
The brokerage, which reiterated an outperform rating and a $100 price target on the stock, said data from several third-party sources suggest a "healthy uptake" of the subscription services.
Websites using Shopify Plus likely increased 59% year over year to 42,000 in the first quarter, data from BuiltWith showed. Sensor Tower data pointed to a 78% year over year increase in Shopify POS app monthly active users, accelerating from the fourth quarter's annual rate.
Their momentum gives "us increased confidence that Shopify will meet our outlook for MRR to increase 32% (year over year in the first quarter), which is slightly above consensus at 29%," Treiber said. Plus price increases go into effect for existing merchants on April 24.
Based on Census Bureau data showing US e-commerce spending rose 8.7% year over year in the first quarter, Shopify's gross merchandise volume, or GMV, would be up 23.8% on an annual basis to $61.4 billion in the first quarter, outperforming the consensus' $59.9 billion, RBC said.
The brokerage is guiding for first-quarter revenue of $1.86 billion, implying growth from $1.51 billion the year earlier and above the $1.84 billion average analyst estimate on Capital IQ. Adjusted earnings per share is seen climbing $0.14 year over year in RBC's model to $0.15, which is below the $0.17 consensus.
"We believe Shopify is one of the most compelling growth stories in our coverage," Treiber said. The stock is trading at multiples that are below both its three-year pre-COVID average and fast-growing software-as-a-service peers.
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