Shopify keeps “Top Pick” status at National Bank following Q4 results

Following the company’s most recent quarterly results, National Bank Financial analyst Richard Tse has maintained his “Outperform” rating on Shopify (Shopify Stock Quote, Chart, News, Analysts, Financials NYSE:SHOP).

On February 11, Shopify released its Q4 and fiscal 2024 results. In the fourth quarter, the company posted Operating Income of $465-million on Revenue of $2.81-billion.

“2024 was a stand-out year for Shopify. We seized every opportunity to fuel our growth and it showed in the results quarter after quarter,” CEO Harley Finkelstein. “Heading into 2025, we are committed to making entrepreneurship more common and further establishing Shopify as the go-to commerce platform for businesses of all sizes. With our proven track record, the agility of our platform, and our relentless focus on merchant success, we like our odds in this evolving technology landscape, and are excited about the opportunities it brings for Shopify and our merchants.”

Tse broke down the numbers.

“Shopify reported solid in-line FQ4 results with revenue growth of +31% Y/Y (vs. our / Consensus forecasts of 27%) and Adj. EPS of $0.44 (in line with both our / Consensus forecasts),” he wrote. “Notably, the Company continues to demonstrate capital discipline where Adj. Operating Margin expanded +233 bps Y/Y to 20.8% (vs. 18.5% in FQ4’23); that operating leverage helped drive an ROIC of 16% (+626 bps Y/Y) and a FCF margin of 22% (+93 bps Y/Y).”

While the street seemed tepid about SHOP’s guidance, Tse was not disappointed and today reaffirmed that his “Top Pick” status for the company into 2025.

“With respect to the outlook for FQ1’25, Shopify guided to essentially in-line revenue growth in the mid-20s vs. expectations (NBF and Cons. at ~24%) with gross profit growth in the low-20s (NBF: 23.7%, Cons. 23.4%) while OpEx was slightly below our expectations between 41 – 42% of revenues (NBF: 40.6%, Cons. 41.1%). On OpEx, we’d note Shopify has outperformed its OpEx guide every quarter in FY24, and given the number of growth levers and increasing application of AI and other automation, we still see a lot of untapped operating leverage. Bottom line, we believe the results and outlook line up with our existing investment thesis,” the analyst concluded.