SHOP Q2 2023 Earnings

Call Details

• Call Title: Shopify Q2 2023 Earnings Call
• Date: August 2, 2023 at 12:00 PM UTC
• Management Team:
  • Carrie Gillard (Director of Investor Relations)
  • Harley Finkelstein (President)
  • Jeff Hoffmeister (CFO)

Call Summary

Financial Performance

• GMV in Q2 was $55B, up 17% year over year.
• Revenue for Q2 was $1.7B, up 31% year over year.
• Merchant Solutions revenue for Q2 was $1.3B, increasing 35% year over year.
• Subscription Solutions revenue for Q2 was $444M, up 21% year over year.
• Q2 gross profit was $835M, up 27% year over year, and overall gross margin was 49.3% versus 50.7% in the prior year.
• Q2 free cash flow was $97M, representing 6% of revenue and marking the third consecutive quarter of positive free cash flow.
• Cash and marketable securities were $4.8B as of June 30, 2023, and net cash was $3.9B after convertible notes.
• Adjusted operating income for Q2 was $146M after excluding one-time items.

Guidance

• Q3 revenue is expected to grow at a low 20s percentage rate year over year, which management stated translates into mid-20s growth when adjusting for a 300 to 400 basis point headwind from the sale of the logistics businesses.
• Q3 gross margin percentage is expected to be approximately 2 to 3 percentage points higher than Q2 2023 gross margin of 49.3%.
• Q3 operating expense dollars are expected to be flat to up slightly versus Q2 operating expenses of $818M when excluding Q2 one-time items.
• Stock-based compensation is expected to be approximately $110M in Q3.
• Full-year 2023 capital expenditures are expected to be approximately $45M, which includes $33M already incurred in H1 related to logistics.
• Free cash flow for Q3 is expected to be higher than the entire first half of 2023.