Over the next few weeks, subscribers will get 40+ earnings reviews, ongoing fundamental news coverage and real-time updates of my own portfolio/performance.
Other reviews sent so far include, Datadog, Mercado Libre, Axon, Uber, SoFi, Reddit, Amazon, Lemonade, Meta, Alphabet, ServiceNow, Taiwan Semi, Netflix and more!
Access to my current portfolio & performance vs. the S&P 500 can be found here.
Table of Contents
a. Demand
- Beat gross merchandise value (GMV) estimate by 3%.
- Strength enjoyed across all merchant sizes, cohorts, sectors and geographies.
- Beat gross payment volume (GPV) estimate by 3.3%.
- Beat monthly recurring revenue (MRR) estimate by 1%.
- Beat revenue estimate by 3.8% & beat growth guidance.
- Beat subscription solutions revenue estimate by 4.5%.
- Beat merchant solutions revenue estimate by 1.5%.
b. Profits & Margins
- Met GPM estimate.
- Beat 37.8% merchant solutions GPM by 60 basis points (bps; 1 basis point = 0.01%). Merchant solutions GPM was again pressured by Shopify Payments growing as a % of overall revenue. As a reminder, this product has lower OpEx intensity than its other products. The headwind from an EBIT margin perspective is much smaller and it’s great for overall profit dollar growth.
- Beat 79.7% subscription solutions GPM by 120 bps. Sidekick (AI assistant) and its rapid scaling are pressuring this GPM a bit right now. They’re happy to accept that headwind based on how excited they are by this product’s early results and long-term potential.
- Beat $0.31 GAAP EPS estimate by $0.04 ex-equity investment help.
- OpEx as a % of revenue fell 2 points Y/Y mainly due to headcount discipline. They’re also starting to see better AI cost efficiency as they more frequently swap frontier model usage out with cheaper options. So many companies have talked about that during this earnings season.
- Beat FCF estimate by 21%.
- Y/Y FCF margin expansion was 150 bps excluding a merchant cash advance accounting benefit outlined last quarter.
c. Balance Sheet
- $4.9B cash & equivalents.
- $525M investments.
- -0.8% Y/Y dilution.