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Shopify (NYSE:SHOP) ROA %

: 24.15% (As of Dec. 2023)
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ROA % is calculated as Net Income divided by its average Total Assets over a certain period of time. Shopify's annualized Net Income for the quarter that ended in Dec. 2023 was $2,628 Mil. Shopify's average Total Assets over the quarter that ended in Dec. 2023 was $10,882 Mil. Therefore, Shopify's annualized ROA % for the quarter that ended in Dec. 2023 was 24.15%.

The historical rank and industry rank for Shopify's ROA % or its related term are showing as below:

SHOP' s ROA % Range Over the Past 10 Years
Min: -28.72   Med: -4.67   Max: 27.62
Current: 1.24

During the past 12 years, Shopify's highest ROA % was 27.62%. The lowest was -28.72%. And the median was -4.67%.

SHOP's ROA % is ranked better than
51.31% of 2826 companies
in the Software industry
Industry Median: 0.945 vs SHOP: 1.24

Shopify ROA % Historical Data

The historical data trend for Shopify's ROA % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Shopify Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
ROA %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -4.35 5.68 27.62 -28.72 1.20

Shopify Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
ROA % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -22.70 2.50 -50.75 28.48 24.15

Competitive Comparison

For the Software - Application subindustry, Shopify's ROA %, along with its competitors' market caps and ROA % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Shopify ROA % Distribution

For the Software industry and Technology sector, Shopify's ROA % distribution charts can be found below:

* The bar in red indicates where Shopify's ROA % falls into.



Shopify ROA % Calculation

Shopify's annualized ROA % for the fiscal year that ended in Dec. 2023 is calculated as:

ROA %=Net Income (A: Dec. 2023 )/( (Total Assets (A: Dec. 2022 )+Total Assets (A: Dec. 2023 ))/ count )
=132/( (10757+11299)/ 2 )
=132/11028
=1.20 %

Shopify's annualized ROA % for the quarter that ended in Dec. 2023 is calculated as:

ROA %=Net Income (Q: Dec. 2023 )/( (Total Assets (Q: Sep. 2023 )+Total Assets (Q: Dec. 2023 ))/ count )
=2628/( (10464+11299)/ 2 )
=2628/10881.5
=24.15 %

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

In the calculation of annual ROA %, the net income of the last fiscal year and the average total assets over the fiscal year are used. In calculating the quarterly data, the Net Income data used here is four times the quarterly (Dec. 2023) net income data. ROA % is displayed in the 30-year financial page.


Shopify  (NYSE:SHOP) ROA % Explanation

ROA % measures the rate of return on the total assets (shareholder equity plus liabilities). It measures a firm's efficiency at generating profits from shareholders' equity plus its liabilities. ROA % shows how well a company uses what it has to generate earnings. ROA %s can vary drastically across industries. Therefore, ROA % should not be used to compare companies in different industries. For retailers, a ROA % of higher than 5% is expected. For example, Wal-Mart (WMT) has a ROA % of about 8% as of 2012. For banks, ROA % is close to their interest spread. A bank’s ROA % is typically well under 2%.

Similar to ROE, ROA % is affected by profit margins and asset turnover. This can be seen from the Du Pont Formula:

ROA %(Q: Dec. 2023 )
=Net Income/Total Assets
=2628/10881.5
=(Net Income / Revenue)*(Revenue / Total Assets)
=(2628 / 8576)*(8576 / 10881.5)
=Net Margin %*Asset Turnover
=30.64 %*0.7881
=24.15 %

Note: The Net Income data used here is four times the quarterly (Dec. 2023) net income data. The Revenue data used here is four times the quarterly (Dec. 2023) revenue data.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Be Aware

Like ROE, ROA % is calculated with only 12 months data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective. ROA % can be affected by events such as stock buyback or issuance, and by goodwill, a company's tax rate and its interest payment. ROA % may not reflect the true earning power of the assets. A more accurate measurement is ROC % (ROC).

Many analysts argue the higher return the better. Buffett states that really high ROA % may indicate vulnerability in the durability of the competitive advantage.

E.g. Raising $43b to take on KO is impossible, but $1.7b to take on Moody's is. Although Moody's ROA % and underlying economics is far superior to Coca Cola, the durability is far weaker because of lower entry cost.


Shopify ROA % Related Terms

Thank you for viewing the detailed overview of Shopify's ROA % provided by GuruFocus.com. Please click on the following links to see related term pages.


Shopify (NYSE:SHOP) Business Description

Address
151 O'Connor Street, Ground Floor, Ottawa, ON, CAN, K2P2L8
Shopify offers an e-commerce platform primarily to small and medium-size businesses. The firm has two segments. The subscription solutions segment allows Shopify merchants to conduct e-commerce on a variety of platforms, including the company's website, physical stores, pop-up stores, kiosks, social networks (Facebook), and Amazon. The merchant solutions segment offers add-on products for the platform that facilitate e-commerce and include Shopify Payments, Shopify Shipping, and Shopify Capital.

Shopify (NYSE:SHOP) Headlines

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