Investment Thesis
Shopify demonstrates strong revenue growth (30.1% YoY) and robust free cash flow generation ($476M, 15% margin) with a fortress balance sheet (zero debt), but is severely hampered by net losses (-18.3% margin) that are deteriorating faster than revenue growth. The substantial $963M gap between positive operating income and negative net income indicates significant non-operating charges that require clarification before repositioning positively.
Strengths
- Strong revenue growth momentum at 30.1% YoY with healthy gross margins of 48.8%
- Excellent free cash flow generation of $476M demonstrating core business cash generation capability
- Fortress balance sheet with zero debt, $1.8B cash, and 6.2x current ratio providing financial flexibility
Risks
- Unprofitable on net income basis (-$581M, -18.3% margin) with deteriorating profitability trend (-39% YoY decline)
- Significant unexplained gap between positive operating income ($382M) and negative net income suggests material non-operating charges that may be structural
- Negative returns on equity (-4.6%) and assets (-4.1%) indicate shareholder value is being destroyed despite revenue growth
Key Metrics to Watch
- Net income path to profitability and closure of operating income to net income gap
- Source and sustainability of non-operating charges impacting bottom line
- Free cash flow maintenance relative to revenue growth to confirm business model quality
Financial Metrics
Revenue
3.2B
Net Income
-581.0M
EPS (Diluted)
$-0.45
Free Cash Flow
476.0M
Total Assets
14.1B
Cash
1.8B
Profitability Ratios
Gross Margin
48.8%
Operating Margin
12.1%
Net Margin
-18.3%
ROE
-4.6%
ROA
-4.1%
FCF Margin
15.0%
Balance Sheet & Liquidity
Current Ratio
6.20x
Quick Ratio
6.18x
Debt/Equity
0.00x
Debt/Assets
0.0%
Interest Coverage
N/A
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-07T10:34:47.944660 |
Data as of: 2026-03-31 |
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