Shopify Eyeing Enterprise Business with Commerce Components

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Ontario-based Shopify (NYSE:SHOP) recently reported its fourth quarter results that continued to outpace market expectations. The company continues to expand its market reach and is now targeting enterprise retailers for its next round of growth.

Shopify’s Financials

Shopify’s fourth quarter revenues grew 28% to $1.7 billion, ahead of the market’s forecast of $1.64 billion. On an adjusted basis, earnings dropped to $0.07 per share, surpassing the market’s forecast of breakeven.

By segment, subscription revenues grew 14% to $400.3 million. Merchant solutions revenue rose 32% to $1.3 billion.

Among other metrics, gross merchandise volume (GMV) rose 17% to $61 billion in the quarter. Gross Payments Volume (GPV) grew 24% to $34.2 billion.

Revenue for the full year grew 23% to $5.6 billion. It ended the year with a net loss of $2.73 per share compared with earnings of $2.29 per share reported a year ago.

Like the previous quarter, Shopify did not provide a forecast for the quarter.

Shopify’s New Offerings

Recently, Shopify launched Shop Promise, its consumer-facing badge that provides accurate anticipated delivery dates across a merchant’s online store, checkout, and on the Shop app. It also announced Hydrogen and Oxygen, its React-based headless commerce stack and global hosting solution, respectively, helping merchants fast-track their customer storefront build with the tools needed to accelerate development. It also launched Shopify Tax, providing robust tax compliance tools for US-based merchants selling to customers domestically, with sales tax liability insights, product category suggestions, and precise calculation technology to collect tax based on specific addresses within United States tax jurisdiction.

Over the last year, Shopify has launched several new features including Shopify Audiences, Shopify Collabs, POS Go, Tap to Pay, integrated Twitter Shopping, and YouTube channels with the aim of building out the Shop App so merchants can connect more easily with buyers and build relationships with them. Recently, it launched Audiences for Google that allow merchants to reach high-intent audiences from their own store across YouTube, Google Search, Google Display Network, and Gmail. It has also expanded Audiences for Pinterest, which operates similar to the Meta integration and allows Plus merchants to use the tool to find high-intent buyers across Shopify and upload to Pinterest for better targeting. With these partnerships, it is continuing to invest in marketing platforms where merchants are actively looking for their buyers.

Shopify’s Enterprise Focus with Commerce Components

Shopify is expanding its presence in the enterprise segment, and recently announced the launch of Commerce Components by Shopify (CCS), its enterprise retail solution. Commerce Components is a composable stack where retailers can choose the Shopify components they want, integrate with their existing systems, and create improved customer experiences. Shopify has already begun testing the solution with Mattel, which will bring its portfolio of over 400 brands to the platform. To drive customer engagement for the solution, Shopify signed partnership agreements with Accenture, Deloitte, Ernst & Young, IBM Consulting and KPMG to drive greater adoption of Shopify.

Its stock is trading at $40.48 with a market capitalization of $51 billion. It hit a 52-week high of $78.00 in March last year and a 52-week low of $23.63 in October last year.

Disclosure:?All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

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