Shopify (SHOP) Q2 Earnings Beat Estimates, Revenues Rise Y/Y

Core Insights - Shopify reported second-quarter 2024 adjusted earnings of 26 cents per share, exceeding the Zacks Consensus Estimate by 30% and reflecting an 85.7% year-over-year increase [1] - Total revenues rose 20.7% year over year to $2.05 billion, surpassing the Zacks Consensus Estimate by 2.03% [1] Revenue Breakdown - Subscription Solutions revenues increased 26.8% year over year to$ 563 million, driven by more merchants joining the platform and pricing changes [2] - Merchant Solutions revenues improved 18.6% year over year to $1.48 billion, supported by a 22% year-over-year increase in Gross Merchandise Volume (GMV) to$ 67.2 billion [2] - GMV growth was fueled by strong same-store sales growth, a 32% year-over-year increase in Europe, and a 27% growth in offline GMV [2] Payment Processing - Shopify Payments processed $41 billion of GMV in the second quarter, a 30% increase year over year, with a penetration rate of 61% [3] - Shop Pay saw a 45% increase, processing$ 16 billion of GMV and accounting for 39% of Shopify's Gross Payments Volume (GPV) [3] Operating Performance - Non-GAAP gross profit rose 24.6% year over year to $1.05 billion, with a gross margin expansion of 160 basis points to 51.4% [4] - Adjusted operating income was$ 299 million, compared to $146 million in the previous year [5] Financial Position - As of June 30, 2024, Shopify had cash, cash equivalents, and marketable securities totaling$ 5.02 billion [6] - Free cash flow was $333 million in the second quarter, up from$ 232 million in the previous quarter, with a free cash flow margin exceeding 16% year over year [6] Future Guidance - For the third quarter of 2024, Shopify anticipates revenue growth in the low-to-mid-twenties percentage range year over year [7] - The company expects a sequential gross margin increase of 50 basis points and operating expenses as a percentage of revenues to be between 41% and 42% [7]