Shopify, Disney, and Lyft: Earnings Recap for 7 August

On Wednesday, 7 August, the financial landscape was eventful, marked by significant earnings releases from some of the world’s leading companies. 

These reports may have offered traders, consumers, and analysts a comprehensive view of market conditions, consumer spending trends, and economic health. 

Let's delve into the highlights of Wednesday’s market movers and examine what each report disclosed about the companies and their respective sectors:

Shopify Soars on Higher Subscription

Despite the challenging global economic climate, in general, and weaker economic growth and spending in Canada, Shopify (SHOP), the Canadian multinational e-commerce company, managed to shine brightly in Q2 with a generally optimistic performance.

The company reported its Q2 earnings results on Wednesday, 7 August, following which it surged by about 17.8%. The report showed the following:

- Operating margin beat estimates.

- Q3 outlook on margins and growth exceeded expectations.

- Revenue rose by 21% (to land at $2 billion).

- Q2 adjusted earnings per share (EPS) was 26 cents.

- Q2 GMV from merchant transactions grew 22% to $67.2B, exceeding estimates of $65.34B.

- Merchant solutions revenue increased by 19% to $1.5 billion, surpassing estimated revenues of $1.47 billion.

- Subscription revenue grew by 27% to $563 million, exceeding estimated revenues of $529 million.

Interestingly, these positive results emerged despite an ailing economy and a 13.2% drop in Shopify’s shares since the beginning of 2024. Moreover, the report followed the recent earnings from Amazon (AMZN), whereby the e-commerce giant slid and revealed less-than-rosy results. (Source: Yahoo Finance)

Disney Slids on Mixed Earnings 

Entertainment behemoth Disney (DIS) reported its fiscal third-quarter earnings on Wednesday, 7 August. Following this, the company’s shares slid by 4.5%, adding to the 4.6% loss it experienced throughout 2024.

The report stated that adjusted earnings per share were $1.39, exceeding the expected $1.19. Additionally, revenue amounted to $23.16 billion, slightly surpassing the expected $23.07 billion. Moreover, the total segment operating income increased 19% to $4.225 billion compared to the previous year, fueled by robust performance in Disney's entertainment division, particularly in streaming services.

The report also showed that Disney’s combined streaming business (Hulu, ESPN+, and Disney+) was profitable above expectations. Bob Iger, Disney’s CEO, also commended the company's recent accomplishments in film and TV offerings for driving that segment's growth. 

Notably, these results arise amidst increased efforts by media companies to capture customers who are shifting towards streaming services. 

On the other hand, the report presented a mixed outlook. While highlighting some positive aspects, it also indicated that operating income projections for the fourth quarter in its experiences division are expected to decrease by a moderate single-digit percentage. This decline is attributed to a slowdown in domestic demand. Additionally, Disneyland Paris is experiencing reduced visitor numbers due to the Olympics, and there's a noticeable downturn in activity in China. Still, Disney emphasised its proactive approach to monitoring attendance, guest expenditures, and cost management.

Traders may also want to note that Disney recently announced price hikes for its streaming services. Iger explained that Disney is “seeing growth in consumption and the popularity of [its] offerings,” allowing the company to raise prices. Even though Iger stated that past price hikes haven’t led to “significant” customer losses, it will be worth seeing the actual repercussions of this move and how it will affect Disney’s stock price. Iger also revealed that the company aims to foster further technological advancements and integrate them into its services, moves that Iger feels “very bullish about.”

Lyft’s Shares Drop on Negative Estimates 

American ride-hailing company Lyft (LYFT) also reported Q2 earnings on Wednesday, 7 August.

Results showed quarterly sales of $1.44 billion, above the estimated $1.39 billion and 41% higher YoY. Additionally, the adjusted EPS was $0.24, beating the projected $0.19. Moreover, quarterly gross bookings were $4.0 billion, marking a 17% YoY increase, while active riders grew 10% YoY (landing at an all-time high of 23.7 million). Furthermore,$256.4 million in free cash flow for the quarter was generated, marking a YoY rise from the prior $112.2 million.

On the other hand, Lyft fell short of the expected gross bookings, reaching $4.02 billion for Q2, a 17% increase from the prior year instead of the anticipated $4.07 billion.

Following the report, Lyft’s shares slid by 17.2%, adding to the overall 34.3% drop experienced from the start of 2024.

Other Earnings Releases

In addition to Wednesday’s reports, traders may want to consider the results from Super Micro Computer (SMCI) and Airbnb (ABNB) on Tuesday, 6 August, for a broader picture of the markets.

Following their below-expected earnings reports, both Airbnb and SMCI saw declines in their stock prices. Airbnb reported weakened demand for its rentals, leading to lower-than-expected bookings. Meanwhile, SMCI experienced a decline in margins despite achieving higher sales growth.

Only time will tell how they will perform in the next quarter.

Conclusion

In summary, Wednesday, 7 August, brought mixed earnings reports from major companies. Despite the tough economic climate, Shopify is impressed with its strong growth and optimistic outlook. Disney's results were mixed, showing strengths in streaming but signalling potential challenges ahead. While reporting growth, Lyft missed booking expectations and saw its stock drop sharply. What should traders and investors expect going forward? Only time will tell.