Shopify Inc. (TSX:SHOP)(NYSE:SHOP), the leading cloud-based, multi-channel commerce platform for small- and medium-sized businesses, released its fiscal 2017 fourth-quarter and full-year earnings results this morning, and its NYSE-listed shares have responded by falling over 2% in pre-market trading. Let’s break down the results to determine if we should consider using this weakness as a long-term buying opportunity.
A phenomenal financial performance
Here’s a quick breakdown of 10 of the most notable statistics from Shopify’s three-month period ended December 31, 2017, compared with the same period in 2016:
| Metric | Q4 2017 | Q4 2016 | Change |
| Subscription solutions revenues | US$93.92 million | US$56.39 million | 66.6% |
| Merchant solutions revenues | US$128.90 million | US$74.00 million | 74.2% |
| Total revenues | US$222.81 million | US$130.38 million | 70.9% |
| Gross profit | US$121.52 million | US$68.35 million | 77.8% |
| Adjusted operating income (loss) | US$11.58 million | (US$807,000) | >100% |
| Adjusted net income (loss) | US$14.71 million | (US$369,000) | >100% |
| Adjusted net income (loss) per share attributable to shareholders | US$0.15 | US$0.00 | >100% |
| Monthly recurring revenue (MRR) | US$29.9 million | US$18.5 million | 61.6% |
| Gross merchandise volume (GMV) | US$9.1 billion | US$5.5 billion | 65.5% |
| Shopify Capital cash advances | US$39.7 million | US$14.7 million | 170.0% |
And here’s a quick breakdown of eight notable statistics from Shopify’s 12-month period ended December 31, 2017, compared with the same period in 2016:
| Metric | Fiscal 2017 | Fiscal 2016 | Change |
| Subscription solutions revenues | US$310.03 million | US$188.61 million | 64.4% |
| Merchant solutions revenues | US$363.27 million | US$200.72 million | 81.0% |
| Total revenues | US$673.30 million | US$389.33 million | 72.9% |
| Non-GAAP gross profit | US$381.53 million | US$210.21 million | 81.5% |
| Adjusted operating income (loss) | US$6.05 million | (US$12.14 million) | >100% |
| Adjusted net income (loss) | US$15.21 million | (US$10.33 million) | >100% |
| Adjusted net income (loss) per share attributable to shareholders | US$0.16 | (US$0.12) | >100% |
| GMV | US$26.3 billion | US$15.4 billion | 70.8% |
Outlook on 2018
In the press release, Shopify also provided its outlook on the first quarter and full year of fiscal 2018; here’s a breakdown of what the company expects to accomplish:
| Metric | Q1 2018 Outlook | Fiscal 2018 |
| Total revenues | US$198 million to US$202 million | US$970 million to US$990 million |
| GAAP operating loss | US$25 million to US$27 million | US$95 million to US$105 million |
| Adjusted operating income (loss) | (US$6 million to US$8 million) | (US$5 million) to US$5 million |
What should you do with Shopify now?
The fourth quarter was outstanding in every way for Shopify, and the results surpassed analysts’ expectations, which called for adjusted EPS of US$0.05 on revenue of US$209.7 billion.
The fourth quarter also capped off a phenomenal year for the company, in which it grew its revenue by over 70% and it swung to a solid adjusted profit, and its outlook calls for very strong growth going forward, so I think the market should have responded by sending its stock significantly higher; that being said, I think any weakness in today’s trading session represents an attractive entry point for long-term investors, because Shopify is one of the best growth stocks in the market today, and because I think its growth will accelerate when recreational cannabis is legalized later this year.
With all of the information provided above in mind, I think all Foolish investors should strongly consider using the post-earnings weakness in Shopify to initiate long-term positions with the intention of adding to those positions on any further weakness in the trading sessions ahead.
