On Tuesday, Shopify reported its Q1, 2017 results. The company lost (U.S.) $13.59-million on revenue of $127.4-million, a topline that was up 75 per cent over the same period last year.
“With our excellent start to the year, it is clear we are becoming the de facto platform for sellers,” said CFO Russ Jones. “In addition to merchant growth and their adoption of both new channels and merchant solutions, we also continue to see expansion of merchants’ GMV. Retail is shifting headlong toward the vision we laid out two years ago — of inspiring entrepreneurship with multichannel commerce — and we fully expect to continue leading this industry transition for years to come.”
Thadani notes that Shopify is up more than 95 per cent since he launched coverage on November 29. 2016. But he says the company is simply keeping its foot on the gas pedal operationally, and deserves a high premium.
“We view SHOP as a long term secular organic growth story,” says the analyst. “While there could be volatility (as with any stock), we believe investors should focus on the long term and add over time. Shopify has repeatedly and consistently translated positive core values into execution. Last month, we attended an industry event, where SHOP and a VC investor highlighted the company’s approach to the IPO process, which only accentuated our high regard for the company’s culture and philosophy.”
In a research update to clients today, Thadani maintained his “Buy” rating on Shopify, but raised his one-year price target from (U.S.) $95.00 to $101.00, implying a return of 22 per cent at the time of publication.
Thadani thinks Shopify will post EBITDA of $7.2-million on revenue of $619-million in fiscal 2017. He expects these numbers will improve to EBITDA of $62.1-million on a topline of $841-million the following year.