Shopify (SHOP 2.08%) extended its flawless streak of earnings beats when it reported a loss of just $0.15 per share for the first quarter. Analysts had been expecting a $0.22-per-share loss on revenue of $122 million. Shopify posted revenue of $127 million. This marks the eighth straight time Shopify's quarterly results have come in above expectations -- every time since it made its initial public offering in 2015.
Here's a breakdown of Shopify's latest quarter in seven graphs.
Data source: Shopify financial reports.
Shopify's years of triple-digit growth are starting to catch up to it. Total revenue increased just 75% in the first quarter. Revenue growth was driven by continued increases in subscription solutions, which has been steadily climbing quarter after quarter as Shopify adds new merchants. Merchant solutions fell sequentially due to seasonality, but increased 92% year over year, driven by Shopify Payments, Shipping, and Capital.
Data source: Shopify financial reports.
Gross merchandise volume -- the total sales moving through Shopify's platform -- increased 81% in the first quarter. That's a marked slowdown from last year's 102% growth, which remained relatively elevated throughout 2016. Management had nothing specific to say about the slowdown other than it was normal seasonality.
Data source: Shopify financial reports.
Shopify Payments -- the company's payment processing business -- merely kept pace with the growth of gross merchandise volume last quarter. More concerning is the fact that gross payment volume as a percentage of gross merchandise volume declined from the fourth quarter. Management says the decline is due to more growth coming from markets where Payments isn't yet available.
Data source: Shopify financial reports.
Monthly recurring revenue (MMR), derived from Shopify's subscriptions, continues to climb exponentially. The growth in MRR stems from Shopify's price increase as well as the growth of Shopify Plus. Management says Shopify Plus subscriptions, aimed at very large merchants, cost as much as $40,000 per month.
Data source: Shopify financial reports.
Gross margin climbed to a two-year high, up 4.4 percentage points from the fourth quarter. The increase was fueled by the margin expansion of merchant services, which has accounted for a larger portion of revenue over time. Merchant services margin expanded thanks to faster growth of high-margin products like Shopify's shipping service and Capital, its small-business cash advance service.
Data source: Shopify financial reports.
The company's operating margin continues to trend in the right direction, but remains well below breakeven. Shopify continues to invest in growing the business, and it expects to produce negative operating margins for the full year. It is showing some leverage in its marketing and research and development spending as the margin steadily improves.
Data source: Shopify financial reports.
Shopify remains unprofitable, but its net loss is improving. The loss shrank by nearly one-third year over year on a non-GAAP basis. That improvement should give investors confidence that management can reach its goal of being profitable on a non-GAAP basis in the fourth quarter this year.
Overall, Shopify posted another great quarter of growth and gave investors some promising signs that it will reach its financial goals going forward.
