Key insights
- Shopify reported strong Q1 earnings, beating revenue and EPS estimates. However, Q2 revenue guidance in the "high-twenties" percent signaled deceleration, causing shares to fall. Increased reliance on Merchant Solutions, while driving growth, is impacting margins due to higher transaction and loan losses. The market is reacting negatively to the decelerating growth outlook and relatively high valuation.
📌 Top story -- scroll down for more updates
9:45 am -- SHOP -5.84%
By Matt Frankel, CFP®Team Hidden Gems
Shopify (SHOP 8.66%) delivered the kind of quarter that should have cleared the bar, but its outlook gave investors pause. Revenue jumped 34% from the year-ago period to $3.17 billion, topping Wall Street's estimate of $3.09 billion, while GAAP earnings of $0.45 per share blew past the $0.24 consensus by 90%. Operating income nearly doubled to $382 million as the platform's higher-margin product mix kicked in.
Most of that momentum came from Merchant Solutions, which covers payment processing and merchant lending. Its 39% revenue growth far outpaced the 21% rise in Subscription Solutions (the recurring software fees merchants pay to use the platform), and that mix shift is doing more work than the headline. Heavier reliance on payments and loans is pulling overall margins down, and the cost is showing up in transaction and loan losses, which climbed 55% to $116 million. Those losses now eat 3.7% of revenue, up from 3.2% a year ago, a trend management will need to monitor as the lending book grows. Looking ahead, the company guided to high-twenties percent revenue growth next quarter, signaling deceleration from this quarter's pace.
8:15 am -- SHOP -6.72% in pre-market trading
By Yasser El-ShimyTeam Rule Breakers
Foolish investors would be well-advised not to miss the forest for the trees in Shopify's (SHOP 8.66%) Q1 report. The Canadian e-commerce juggernaut delivered a stellar Q1, with revenue jumping 34% to $3.17 billion and Gross Merchandise Volume topping $100 billion. Operating income nearly doubled to $382 million: showing tremendous operating leverage for Shopify.
Why did shares tumble pre-market? Guidance and valuation are the likely culprits. Shopify forecast Q2 revenue growth in the "high-twenties". While robust, this is a deceleration, and the Street may have been hoping for above estimates guidance. With the stock trading at a relatively high forward P/E near 85X, the market priced in perfection. Any hint of slowing growth triggers profit taking.
For long-term shareholders, this is noise. The underlying business is compounding beautifully, and their AI pivot is just beginning. If I have been waiting to start or add to a position, this post-earnings haircut offers an opportunity into a generational e-commerce winner.
7:30 am -- PINS +15.97% in pre-market trading
Pinterest (PINS +10.81%) soared over 15% ahead of the market open after results showed the fastest sales growth since Q2 2024, driven by higher monthly active users (MAU), with revenue guidance for the coming quarter ahead of expectations.
7:00 am -- AAPL -0.15%, INTC +3.55% in pre-market trading
Bloomberg reports Apple (AAPL +1.47%) has held internal talks about using new processor manufacturers, including Intel (INTC +14.01%), as a way to limit supply chain disruptions and diversify away from using Taiwan Semiconductor (TSM 1.47%).
6:00 am
By Buck Hartzell
Axos (AX +0.32%) reported an 18.7% YoY jump in diluted EPS to $2.15. Book value per share grew 17.7% YoY to $53.89 too. But the biggest jump was in non interest income which jumped from $33.3 million to $85.9 million this year. But $22 million of that was a one time legal settlement. Verdant leasing generated $23.7 million on non interest income too.
Axos purchased $2.3 billion in deposits from Jenius Bank and $3.2 billion of IRA savings and CDs from Capital One. The M&A environment is looking attractive to Axos. Their own stock is attractive relative to the overall market too.