Shopify Inc. (NASDAQ: SHOP)

Sector: Technology Industry: Software - Application CIK: 0001594805
Market Cap 217.18 Bn
P/B 17.36
P/E 121.94
P/S 20.30
ROIC (Qtr) 8.30
Div Yield % 0.00
Rev 1y % (Qtr) 31.54
Total Debt (Qtr) 1.12 Bn
Debt/Equity (Qtr) 0.09

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 1.92B provides robust 1.72x coverage of total debt 1.11B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 2.41B provide 2.57x coverage of short-term debt 939M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 14.52B provides 13.02x coverage of total debt 1.11B, indicating robust asset backing and low credit risk.
  • Tangible assets of 14.52B provide exceptional 35.40x coverage of deferred revenue 410M, showing strong service capability backing.
  • Robust free cash flow of 1.90B exceeds capital expenditure of 20M by 95.15x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 1.92B barely covers its investment activities of (1.20B), with a coverage ratio of -1.61, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (1.20B) provide weak support for R&D spending of 1.50B, which is -0.80x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 2.41B provide limited coverage of acquisition spending of (56M), which is -43.11x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 1.92B shows concerning coverage of stock compensation expenses of 443M, with a 4.34 ratio indicating potential earnings quality issues.
  • Long-term investments of 5.61B represent a high 38.71x of fixed assets 145M, indicating potential overexposure to financial assets versus operational capabilities.

Concentration Risk Benchmark Breakdown of Revenue (2024)

Concentration Risk Benchmark Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 281.21 Bn 33.75 6.55 10.73 Bn
2 CRM Salesforce, Inc. 248.88 Bn 34.46 6.17 11.14 Bn
3 SHOP Shopify Inc. 217.18 Bn 121.94 20.30 1.12 Bn
4 UBER Uber Technologies, Inc 182.87 Bn 10.99 3.69 12.19 Bn
5 INTU Intuit Inc. 182.36 Bn 44.28 9.38 6.78 Bn
6 NOW ServiceNow, Inc. 151.53 Bn 87.54 11.96 2.40 Bn
7 ADBE Adobe Inc. 146.69 Bn 21.08 6.33 6.64 Bn
8 ADP Automatic Data Processing Inc 108.05 Bn 26.12 5.17 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 14.41 2.68
EV to Cash from Ops. EV/CFO 112.73 13.34
EV to Debt EV to Debt 194.42 57.60
EV to EBIT EV/EBIT 106.37 19.20
EV to EBITDA EV/EBITDA 162.50 15.11
EV to Free Cash Flow [EV/FCF] EV/FCF 113.91 14.78
EV to Market Cap EV to Market Cap 1.00 -93.16
EV to Revenue EV/Rev 20.27 4.63
Price to Book Value [P/B] P/B 17.36 4.29
Price to Earnings [P/E] P/E 121.94 -132.44
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.25
Dividend per Basic Share Div per Share (Qtr) 0.00 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.52
Interest Coverage Int. cover (Qtr) 0.00 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -17.65 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 60.19 9,763.58
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 28.78 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 42.37 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) 36.87 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) 36.87 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) 28.97 123.84
FCF Growth (1y) % FCF 1y % (Qtr) 32.89 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 24.68 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.71 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 1.09 3.75
Current Ratio Curr Ratio (Qtr) 3.93 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 0.09 0.17
Interest Cover Ratio Int Coverage (Qtr) 0.00 -52.32
Times Interest Earned Times Interest Earned (Qtr) 0.00 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 19.40 -100.06
EBIT Margin % EBIT Margin % (Qtr) 19.05 -164.24
EBT Margin % EBT Margin % (Qtr) 19.05 -116.94
Gross Margin % Gross Margin % (Qtr) 48.70 58.20
Net Profit Margin % Net Margin % (Qtr) 16.70 -121.65