Shopify Inc. (TSX:SHOP)(NYSE: SHOP) posted its third-quarter financials last week, offering a glimpse into the workings of this renowned e-commerce platform during a period of rampant digital transformation. The press release showcased a mix of figures, shedding light on various financial facets of the company. The company showed improvement on both its top and bottom lines, but is it enough of a reason to buy its shares?
For the period ending Sept. 30, Shopify’s revenue totaled $1.7 billion and rose an impressive 25% year over year. Particularly important to investors is that the company also shed a lot of expenses. Shopify has been laying off staff this year in order to become leaner, and that is certainly paying off. Operating expenses totaling $779 million were down 23% from the same period last year. As a result of the sharp decline in costs, Shopify’s financials bounced back into the positive, with the company reporting a profit of $718 million versus a loss of $159 million a year ago.
Overall, it was a strong showing for the company, which seems to suggest that Shopify may be on the right path. It was also the fourth consecutive quarter where Shopify achieved positive free cash flow, which is important for investors who want to avoid potentially dilutive or risky stocks.
The e-commerce stock popped on the news and since the start of the year, shares of Shopify are up around 74%. The stock is still nowhere near the more than $100 per share it was trading at in early 2022, so there could still be more upside left for investors who buy the stock today.