Shopify Q2 Results: Can the E-Commerce Giant Cope with a Challenging Landscape?

Shopify sign on their headquarters building in Ottawa, Ontario, Canada — JHVEPhoto/iStock Editorial via Getty Images

Online shopNYSE:SHOP) is scheduled to report its second-quarter results on Wednesday, August 7, and investors will certainly be interested in how the company fares in the face of macroeconomic challenges.

The consensus earnings per share estimate is $0.20 (+42.9% YoY), and the consensus revenue estimate is $2.01 billion (+18.9% YoY).

The Canadian e-commerce giant is expected to maintain its growth despite lowered expectations for consumer spending.

In early July, Bank of America upgraded Shopify (SHOP) stock from Neutral to Buy due to the potential for revenue growth and margin expansion.

The e-commerce platform also received an “Outperform” rating from “In Line” from Evercore, stating that the stock’s recent depreciation has created an attractive opportunity to own a best-in-class e-commerce platform.

“Investors are concerned about the company’s outlook for a revenue slowdown in the second quarter, but Shopify typically follows conservative guidance,” said South African analyst Gary Alexander.

Analysts also expect solid growth in the enterprise segment.

“The company’s enterprise segment is growing faster and is inherently more profitable due to subscription revenue and the fact that most customers are opting for three-year contracts,” said South Africa-based analyst Fountainhead.

“I am particularly bullish on Shopify’s strategy to gain market share in the enterprise segment, which will translate into Shopify Plus subscription revenue growth and free up operating leverage,” said South Africa-based analyst Amrita Roy.

The company’s results were overshadowed in the latest quarter by a GAAP loss and expectations for a 50 basis point decline in gross margin.

Over the last 2 years, SHOP has beaten EPS estimates 88% of the time and beaten revenue estimates 88% of the time.

Over the past 3 months, EPS estimates have been revised upwards 5 times and downwards 25 times. Revenue estimates have been revised upwards 10 times and downwards 20 times.

The company’s shares were down 31.3% since the beginning of the year.