Q2 Earnings Outperformers: Shopify (NYSE:SHOP) And The Rest Of The E-commerce Software Stocks

Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at 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 decent Q2. As a group, revenues beat analysts’ consensus estimates by 0.9% while next quarter’s revenue guidance was in line.

Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. Thankfully, e-commerce software stocks have been resilient with share prices up 7.7% on average since the latest earnings results.

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 $2.05 billion, up 20.7% year on year. This print exceeded analysts’ expectations by 1.7%. Overall, it was a strong quarter for the company with a solid beat of analysts’ total payment volume estimates and a decent beat of analysts’ GMV (gross merchandise value) estimates.

"Our Q2 results make it clear: Shopify is rapidly strengthening its position as a leading enabler of global commerce and entrepreneurship," said Harley Finkelstein, President of Shopify.

Shopify scored the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 36.4% since reporting and currently trades at $74.00.

We think Shopify is a good business, but is it a buy today? Read our full report here, it’s free.

Best Q2: 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 $296.8 million, up 19.9% year on year, outperforming analysts’ expectations by 1.2%. It was a strong quarter for the company with an impressive beat of analysts’ billings estimates and a decent beat of analysts’ ARR (annual recurring revenue) estimates.

The market seems content with the results as the stock is up 3.2% since reporting. It currently trades at $45.48.

Is now the time to buy Squarespace? Access our full analysis of the earnings results here, it’s free.

Slowest Q2: 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 $387.1 million, up 4.1% year on year, in line with analysts’ expectations. It was a mixed quarter for the company with an improvement in its gross margin.

VeriSign posted the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 4.1% since the results and currently trades at $183.90.

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 $1.12 billion, up 7.3% year on year, in line with analysts’ expectations. Taking a step back, it was a good quarter for the company with a decent beat of analysts’ bookings estimates.

GoDaddy achieved the highest full-year guidance raise among its peers. The stock is up 18.5% since reporting and currently trades at $167.41.

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 $435.7 million, up 11.7% year on year, in line with analysts’ expectations. Zooming out, it was a decent quarter for the company with a solid beat of analysts’ billings estimates but full-year revenue guidance missing analysts’ expectations.

The stock is up 5.5% since reporting and currently trades at $165.74.

Read our full, actionable report on Wix here, it’s free.

Join Paid Stock Investor Research

Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.