Reflecting On E-commerce Software Stocks’ Q2 Earnings: VeriSign (NASDAQ:VRSN)

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at e-commerce software stocks, starting with VeriSign (NASDAQ:VRSN).

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 satisfactory 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. However, e-commerce software stocks have held steady amidst all this with share prices up 2% on average since the latest earnings results.

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. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with an improvement in its gross margin.

“We delivered another solid quarter, both operationally and financially, by focusing on our mission. Last week we marked 27 years of providing 100% availability in the .com/.net domain name resolution system,” said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.

VeriSign delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $175.

Is now the time to buy VeriSign? Access our full analysis of the earnings results 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%. The business had a strong quarter 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 5% since reporting. It currently trades at $46.27.

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

BigCommerce (NASDAQ:BIGC)

Founded in Sydney, Australia in 2009 by Mitchell Harper and Eddie Machaalani, BigCommerce (NASDAQ:BIGC) provides software for businesses to easily create online stores.

BigCommerce reported revenues of $81.83 million, up 8.5% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted an impressive beat of analysts’ billings estimates but a miss of analysts’ ARR (annual recurring revenue) estimates.

BigCommerce delivered the weakest full-year guidance update in the group. As expected, the stock is down 28.7% since the results and currently trades at $5.78.

Read our full analysis of BigCommerce’s results here.

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 number topped analysts’ expectations by 1.7%. It was a strong quarter as it also recorded a solid beat of analysts’ total payment volume estimates and a decent beat of analysts’ GMV (gross merchandise value) estimates.

Shopify delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 32.5% since reporting and currently trades at $71.87.

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

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. This result met analysts’ expectations. Overall, it was a satisfactory quarter as it also logged a decent beat of analysts’ bookings estimates.

GoDaddy scored the highest full-year guidance raise among its peers. The stock is up 6.9% since reporting and currently trades at $151.02.

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

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