Shopify Inc. shares were surging about 8% in Thursday’s premarket action after the company easily topped profit expectations for its third quarter.
The company notched net income of $718 million, or 55 cents a share, whereas it recorded a net loss of $188 million, or 12 cents a share, in the year-earlier period. On an adjusted basis, Shopify
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+3.39%
earned 24 cents cents a share, while analysts were modeling 15 cents a share.
Revenue rose to $1.71 billion from $1.37 billion and edged the FactSet consensus, which was for $1.67 billion. The company saw 29% growth in its subscriptions-solutions revenue, which reached $486 million, along with 24% growth in the merchant-solutions category, which raked in $1.23 billion in revenue.
“Our results showcased the durability of our business model as we delivered a compelling combination of both top line growth and profitability,” Chief Financial Officer Jeff Hoffmeister said in a release.
Gross merchandise volume increased 22% to $56.2 billion, while analysts had been expecting $54.3 billion. The company generated $32.8 billion in gross-payments volume.
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For the fourth quarter, Shopify expects a “high-teens” rate of revenue growth. The FactSet consensus called for $2.08 billion in revenue, up about 20% from a year prior.
Management also expects to see free cash flow come in at a “high-teens” percentage of revenue. “Free cash flow margin and free cash flow dollars have both improved every quarter this year, and Q4 will continue to deliver on this upward trend — a clear manifestation of the steps that we have taken this year to drive towards greater profitability, as we build for the long term,” the company said in its release.
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