Q2 Top Performers: Shopify (NYSE:SHOP) and Other E-Commerce Software Stocks

Earnings numbers are often indicative of where a company will head in the coming months. With Q2 behind us, let’s take a look at Shopify (NYSE:SHOP) and its competitors.

While e-commerce has been around for over two decades and is enjoying significant growth, its overall retail penetration remains low. Only about $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for the online revolution. It is these large areas of retail where e-commerce has yet to take hold that are driving demand for various e-commerce software solutions.

The 6 e-commerce software companies we track had a decent Q2. As a group, revenue beat analyst estimates by 0.9%, while revenue forecasts for the next quarter were in line.

Valuation multiples for many growth stocks haven’t yet returned to their early 2021 highs, but the market was bullish on late 2023 as inflation cooled. This year was different, as mixed inflation signals led to market volatility. Fortunately, e-commerce software stocks have been resilient, with shares up an average of 7.7% since their last earnings results.

Shopify (NYSE:SHOP)

Originally created as an internal tool for a snowboarding company, Shopify (NYSE:SHOP) is a software platform for building and running an e-commerce business.

Shopify reported revenue of $2.05 billion, up 20.7% year over year. That print beat analyst expectations by 1.7%. Overall, it was a strong quarter for the company, with a solid beat on analyst estimates for total payments volume and a decent beat on analyst estimates for GMV (gross merchandise value).

“Our second quarter results clearly demonstrate that Shopify is rapidly expanding its position as a leader in powering global commerce and entrepreneurship,” said Harley Finkelstein, CEO of Shopify.

Shopify delivered the biggest beat on analyst estimates and the fastest revenue growth of the bunch. Not surprisingly, shares are up 36.4% since the report and are currently trading at $74.00.

We think Shopify is a good business, but is it worth buying today? Read our full report here, it’s free.

Top Q2: Squarespace (NYSE:SQSP)

Founded in 2003 in New York City, Squarespace (NYSE:SQSP) is a platform that enables small businesses and creators to build their digital presence online.

Squarespace reported revenue of $296.8 million, up 19.9% ​​year over year and topping analyst expectations by 1.2%. It was a strong quarter for the company, impressively topping analyst estimates for billings, as well as significantly topping analyst estimates for annual recurring revenue (ARR).

The market seems pleased with the results, as the stock is up 3.2% since the report. It is currently trading at $45.48.

Is it time to buy Squarespace? Access our full earnings performance analysis here, it’s free.

Slowest Q2: VeriSign (NASDAQ:VRSN)

While the company is not a domain registrar and does not directly sell domain names to end users, Verisign (NASDAQ:VRSN) operates and maintains the infrastructure that supports domain names such as .com and .net.

VeriSign reported revenue of $387.1 million, up 4.1% year over year, in line with analyst expectations. It was a mixed quarter for the company with an improvement in gross margin.

VeriSign posted the weakest results vs. analyst estimates and the slowest revenue growth of the group. Interestingly, shares are up 4.1% since the results and are currently trading at $183.90.

Read our full analysis of VeriSign’s results here.

GoDaddy (NYSE:GDDY)

GoDaddy (NYSE:GDDY), founded by Bob Parsons after selling his first company to Intuit, offers small and medium-sized businesses the ability to purchase a domain name and the tools to build and manage a website.

GoDaddy reported revenue of $1.12 billion, up 7.3% year over year, in line with analyst expectations. Taking a step back, it was a strong quarter for the company, with bookings comfortably beating analyst estimates.

GoDaddy achieved the largest full-year guidance increase among its peers. Shares are up 18.5% since the report and are currently trading at $167.41.

Read our full, hands-on report on GoDaddy here. It’s free.

Wix (NASDAQ: WIX)

Founded in 2006 in Tel Aviv, Wix.com (NASDAQ:WIX) offers a free and easy-to-use website building platform.

Wix reported revenue of $435.7 million, up 11.7% year over year, in line with analyst expectations. Off the back of that, it was a decent quarter for the company, with a solid beat on analyst estimates for billings, but full-year revenue guidance fell short of analyst expectations.

Since the report was released, the company’s shares are up 5.5% and are currently trading at $165.74.

Read our full, hands-on report on Wix here. It’s free.

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