Q3 E-commerce Software Earnings Review: First Prize Goes to Shopify (NYSE:SHOP)
As e-commerce software stocks’ Q3 earnings season wraps, let's dig into this quarter's best and worst performers, including Shopify (NYSE:SHOP) and its peers.
While e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.
The 6 e-commerce software stocks we track reported a mixed Q3; on average, revenues beat analyst consensus estimates by 0.9% while next quarter's revenue guidance was 0.8% above consensus. Investors abandoned cash-burning companies to buy stocks with higher margins of safety, but e-commerce software stocks held their ground better than others, with the share prices up 19.3% on average since the previous earnings results.
Best Q3: Shopify (NYSE:SHOP)
Originally created as an internal tool for a snowboarding company, Shopify (NYSE:SHOP) provides a software platform for building and operating e-commerce businesses.
Shopify reported revenues of $1.71 billion, up 25.5% year on year, topping analyst expectations by 2.6%. It was a very strong quarter for the company, with a significant improvement in its gross margin and a decent beat of analysts' revenue estimates.
"Our third-quarter results demonstrate the progress we are making to further solidify Shopify's position as the global leader in commerce," said Harley Finkelstein, President of Shopify.
Shopify pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. The stock is up 55.3% since the results and currently trades at $75.82.
Is now the time to buy Shopify? Access our full analysis of the earnings results here, it's free.
Squarespace (NYSE:SQSP)
Founded in New York City in 2003, Squarespace (NYSE:SQSP) is a platform for small businesses and creators to build their digital presences online.
Squarespace reported revenues of $257.1 million, up 18.1% year on year, outperforming analyst expectations by 2%. It was a decent quarter for the company, with strong sales guidance for the next quarter but a decline in its gross margin.
Squarespace pulled off the highest full-year guidance raise among its peers. The stock is up 3.5% since the results and currently trades at $31.12.
Is now the time to buy Squarespace? Access our full analysis of the earnings results here, it's free.
Weakest Q3: VeriSign (NASDAQ:VRSN)
While the company is not a domain registrar and does not directly sell domain names to end users, Verisign (NASDAQ:VRSN) operates and maintains the infrastructure to support domain names such as .com and .net.
VeriSign reported revenues of $376.3 million, up 5.4% year on year, falling short of analyst expectations by 0.8%. It was a weak quarter for the company, with a miss of analysts' revenue estimates.
VeriSign had the weakest performance against analyst estimates in the group. The stock is down 3.6% since the results and currently trades at $197.59.
Read our full analysis of VeriSign's results here.
GoDaddy (NYSE:GDDY)
Founded by Bob Parsons after selling his first company to Intuit, GoDaddy (NYSE:GDDY) provides small and mid-sized businesses with the ability to buy a web domain and tools to create and manage a website.
GoDaddy reported revenues of $1.07 billion, up 3.5% year on year, in line with analyst expectations. It was a mixed quarter for the company, with underwhelming revenue guidance for the next quarter. Growth is slow these days, but at least GoDaddy delivered strong free cash flow.
GoDaddy had the slowest revenue growth among its peers. The stock is up 34.5% since the results and currently trades at $101.12.
Read our full, actionable report on GoDaddy here, it's free.
Wix (NASDAQ:WIX)
Founded in 2006 in Tel Aviv, Wix.com (NASDAQ:WIX) offers a free and easy to operate website building platform.
Wix reported revenues of $393.8 million, up 13.9% year on year, surpassing analyst expectations by 1.1%. It an impressive "beat and raise" quarter. It was encouraging to see Wix slightly beat analysts' revenue guidance expectations.
The stock is up 33% since the results and currently trades at $119.56.
Read our full, actionable report on Wix here, it's free.
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The author has no position in any of the stocks mentioned
