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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.
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Fool contributor Joseph Solitro has no position in any stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Shopify and SHOPIFY INC. Shopify is a recommendation of Stock Advisor Canada.