Shopify Earnings: Price Increases, Headcount Reductions, and Merchant Growth Drive Strength

Narrow-moat Shopify reported good second-quarter results, including meaningful upside to our estimates for both revenue and profitability. The firm has had a busy year so far, with the sale of its logistics business to Flexport, a price increase, significant headcount reductions, and recent introductions of artificial intelligence features Sidekick and Magic. Management also provided guidance that was better than we were expecting, although given the logistics sale, we were expecting some disconnect from our model. We see generally positive indicators throughout this earnings report. Given results and guidance, along with some adjustment related to the disposition of the logistics business, we maintain our fair value estimate at $57 per share, (CAD 76, from CAD 78). Shares have appreciated significantly this year, leaving shares fairly valued.