Shopify Inc. $SHOP (-5,86 %) has reported revenue of $2.81 billion for the fourth quarter of fiscal 2024, up 31% year-over-year and exceeding analyst expectations of $2.73 billion.
This is the seventh consecutive quarter in which Shopify has recorded revenue growth of more than 25%, excluding the logistics division.
Following the announcement, Shopify shares showed volatility in pre-market trading as investors digested the results.
At the time of writing, Shopify's share price was up nearly 3%.
Shopify shares are up 37% in the last 12 months.
Sentiment on Wall Street remains positive, with at least two firms raising their 2025 price targets for the stock.
Shopify earnings for the 4th quarter
Net income was 1.29 billion US dollars, almost double the 657 million US dollars of the previous year.
Gross merchandise volume (GMV) increased by 25.7% year-on-year to 94.5 billion US dollars, while revenue from merchant solutions rose by 32.6% to 2.15 billion US dollars.
However, the gross margin for the quarter fell slightly to 48.1% compared to 49.5% in the previous year. Gross profit increased by 27% year-on-year to 1.35 billion US dollars.
Shopify generated operating cash flow of $615 million and free cash flow of $611 million. The free cash flow margin improved to 22% from 21% in the prior year.
The quarter's results reflect the impact of the holiday shopping season, a critical time for e-commerce businesses.
Online spending rose nearly 9% to $241.1 billion in November and December, according to Adobe Analytics, which monitors sales on retailers' websites.
This figure slightly exceeded analysts' forecast of $240.8 billion and underscores the robust consumer activity during the holiday season.
Shopify forecast for the 1st quarter of 2025
Shopify expects Q1 2025 revenue growth to be in the mid-20 percent range year-over-year, in line with a consensus estimate of $2.32 billion.
Shopify expects merchants' strong momentum to continue from the fourth quarter into the first quarter, although the first quarter is typically the company's lowest gross merchandise volume (GMV) quarter due to seasonal trends.
"We expect the strong merchant momentum from the fourth quarter to continue into the first quarter, knowing that the first quarter is always our lowest GMV quarter due to seasonality," the company said in a press release.
Shopify has issued the following forecast for the first quarter of 2025
- Gross profit: expected to increase in the low twentieths of a percent year-over-year.
- Operating costs: Expected to account for 41% to 42% of revenue.
- Share-based compensation: Estimated at USD 120 million.
- Free cash flow margin: Expected to be in the mid-teens.