Shopify Earnings: Impressive Multiprong Margin Surge Drives Strong Results

Narrow-moat Shopify reported excellent third-quarter results, including better-than-expected revenue and meaningfully better profitability. Guidance was a little better than we anticipated on the profitability front but a little shy of our revenue assumption. That said, we were anticipating a dramatic increase in profitability in the near term as a result of headcount reductions, price increases on the standard version, and the disposition of the margin-dilutive logistics business. Therefore, our profitability estimates have increased only slightly. We are increasing our fair value estimate to $60/CAD 83 per share from $57/CAD 76. After the roughly 20% spike in Nov. 2 trading, we see the stock as once again fairly valued.