Shopify stock skyrockets ahead of the holiday season

The holiday season is fast approaching, and Shopify seems to have received its Christmas gift a bit early this year: Its stock skyrocketed to its highest level since 2022 after reporting quarterly earnings. 

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Shopify is a leading e-commerce platform that allows businesses of all sizes to sell their products online and in person. The company aims to make managing a retail business easier and more efficient by providing multiple tools and services. 

This e-commerce giant is available in over 175 countries and powers companies such as Mattel  (MAT) , Netflix  (NFLX) , Heinz, SKIMS, Kylie Cosmetics, and more.

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During its latest earnings call, Shopify explained why its business has boomed over the years and teased a few innovations it will implement on its platform to continue its growth. 

Tobias Lütke, CEO of Shopify, is riding growing demand for omnichannel retail.

David Fitzgerald/Getty Images

Shopify integrates AI into its platform

Shopify said part of its growth last quarter was attributable to its new Artificial Intelligence (AI) integrations, which attracted more people to join the e-commerce platform. These AI integrations help merchants run their businesses more efficiently, allowing them to sell more goods and generate more profits.

Some of Shopify’s AI integrations include Shopify Flow, which allows merchants to automate inventory tasks like reordering and restocking, and Shopify Inbox, which uses AI to respond to consumers via a chatbot.

The company is also working to merge its search engine with AI to make shop searches more relevant and personalized.

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During its earnings call, Shopify teased that it plans to integrate even more AI tools into its business to improve efficiency. However, it says it can’t disclose specific details as it works with clients individually, including YouTube, Roadblocks, TikTok, and Instagram  (META) .

Nonetheless, Shopify said it will continue forming partnerships and building commerce integrations so merchants can reach new audiences.

“The idea here is to make sure that every surface area where consumers may want to purchase, they’re able to do so through Shopify,” said Shopify President Harley Finkelstein.

Shopify reports strong quarterly earnings, and its stock surges

According to Shopify’s  (SHOP)  third-quarter earnings report for 2024, revenues increased by 26% to $2.16 billion compared to the same time last year, exceeding analyst’s expectations of $2.11 billion. 

This marks Shopify’s sixth consecutive quarter of greater than 25% revenue growth, excluding logistics.  

Gross profit for the quarter increased by 24% year over year to $1.12 billion, and the free cash flow margin grew by 19% to $421 million in the quarter.

“These results demonstrate the durability of our business, our multiple avenues for growth and continued discipline of balancing both future growth investment and operational leverage,” said Shopify CFO Jeff Hoffmeister.

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After releasing its latest earnings report, Shopify’s shares surged over 21% on November 12.

Given its outlook for the fourth quarter of 2024, the company is optimistic about its future.    

Shopify expects revenues to grow at a mid-to-high-twenties percentage rate year over year, with gross profit growth similar to this year’s Q3 and free cash flow margins similar to Q4 2023.

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