E-commerce Software Stocks Q2 Teardown: Wix (NASDAQ:WIX) Vs The Rest
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s have a look at how the e-commerce software stocks have fared in Q2, starting with Wix (NASDAQ:WIX).
While e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.
The 6 e-commerce software stocks we track reported a mixed Q2; on average, revenues beat analyst consensus estimates by 1.64%, while on average next quarter revenue guidance was 0.06% above consensus. Increasing interest rates hurt growth companies as investors search for near-term cash flows and while some of the e-commerce software stocks have fared somewhat better than others, they have not been spared, with share prices declining 6.38% since the previous earnings results, on average.
Founded in 2006 in Tel Aviv, Wix.com (NASDAQ:WIX) offers a free and easy to operate website building platform.
Wix reported revenues of $390 million, up 13% year on year, beating analyst expectations by 1.92%. It was a decent quarter for the company, with an improvement in its gross margin. It was also good to see that its revenue growth outperformed Wall Street's expectations.
"It has been an incredible past six months at Wix on many fronts as we generated accelerating profitable growth through execution excellence and focused operational discipline. As a result, Q2 again performed above expectations and exceeded our revenue growth and FCF margin guides. In addition to this outperformance, we also made remarkable strides in our product evolution with the introduction of our new cornerstone Partner product, Wix Studio," said Avishai Abrahami, Wix Co-founder and CEO.
Wix achieved the highest full year guidance raise of the whole group. The stock is up 0.26% since the results and currently trades at $88.73.
Is now the time to buy Wix? Access our full analysis of the earnings results here, it's free.
Best Q2: Shopify (NYSE:SHOP)
Originally created as an internal tool for a snowboarding company, Shopify (NYSE:SHOP) provides a software platform for building and operating e-commerce businesses.
Shopify reported revenues of $1.69 billion, up 30.8% year on year, beating analyst expectations by 4.27%. It was a very strong quarter for the company, with a significant improvement in its gross margin and a decent beat of analysts' revenue estimates.
Shopify pulled off the strongest analyst estimates beat and fastest revenue growth among its peers. The stock is down 16.9% since the results and currently trades at $51.85.
Is now the time to buy Shopify? Access our full analysis of the earnings results here, it's free.
Weakest Q2: GoDaddy (NYSE:GDDY)
Founded by Bob Parsons after selling his first company to Intuit, GoDaddy (NYSE:GDDY) provides small and mid-sized businesses with the ability to buy a web domain and tools to create and manage a website.
GoDaddy reported revenues of $1.05 billion, up 3.21% year on year, missing analyst expectations by 0.61%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a miss of analysts' revenue estimates.
GoDaddy had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is down 5.76% since the results and currently trades at $71.36.
While the company is not a domain registrar and does not directly sell domain names to end users, Verisign (NASDAQ:VRSN) operates and maintains the infrastructure to support domain names such as .com and .net.
VeriSign reported revenues of $372 million, up 5.71% year on year, missing analyst expectations by 0.29%. It was a mixed quarter for the company, with a miss of analysts' revenue estimates. On the other hand, free cash flow was still strong and in line with last year.
The stock is down 4.34% since the results and currently trades at $200.29.
Founded in New York City in 2003, Squarespace (NYSE:SQSP) is a platform for small businesses and creators to build their digital presences online.
Squarespace reported revenues of $247.5 million, up 16.4% year on year, beating analyst expectations by 1.72%. It was a solid quarter for the company, with strong sales guidance for the next quarter.
The stock is down 12% since the results and currently trades at $28.2.
The author has no position in any of the stocks mentioned