Shopify Buys Sweden-based TicTail To Expand Global Presence

Shopify (NYSE:SHOP) recently announced acquisition of TicTail, a Swedish e-commerce company, per a report by Financial Post. However, the financial terms have been kept under wraps.

Per data from Crunchbase, TicTail has raised a funding of $32.6 million. Crunchbase profile of TicTail also reads that the acquisition is yet to be concluded. Since there have been no official announcements from either of the companies, it is difficult to assess when the buyout will be concluded.

Tictail merchants were reportedly informed in a message when they logged in about the development. Per a report from Breakit, online retailers on Tictail’s platform can shift their respective stores to Shopify’s platform within Apr 1, 2019. Post the deadline, the Swedish company’s platform will be rendered of no official use.

This move is a clear indication of Shopify’s strategy of increasing initiatives to penetrate international markets, which is a positive. The company is benefiting from a diversified expanding merchant base.

TicTail, based out of Stockholm, Sweden was founded in 2012. The startup is engaged in providing an online marketplace enabling shoppers to discover products from around 80,000-125,000 brands.

Acquisitions: A Key Growth Strategy

Shopify is fortifying its stake in the e-commerce market on the back of strategic acquisitions like Return Magic (pending), Oberlo, Tiny Hearts, Boltmade, Kit, among others. These buyouts are aimed at expanding Shopify’s merchant base and help it expand operations in international markets.

The company continues to pursue acquisitions that are strategically in sync with overall business mix and easy to integrate in the long term.

Analyzing Cash & DebtPosition

Shopify ended third-quarter 2018 with cash, cash equivalents and marketable securities balance of $1.58 billion compared with $1.57 billion recorded at the end of the second quarter.

The company provided cash from operations of 67k for the nine months period ended Sep 30, 2018, compared with $11.1 million utilized in the year-ago period. The negative cash flow can primarily be attributed to robust growth in merchant cash advances.

Nonetheless, Shopify has no long-term debt, which is a major positive.We believe that this strong cash position will help the company to continue with shareholder-friendly activities, and pursue strategic acquisitions and investments on product development in the long run.

Major Takeaways

Shopify is leaving no stone unturned to expand business by making its platform as merchant friendly as possible. In this regard, acquiring local players is anticipated to bolster growth prospects and improve competitive position against the likes of Wix (NASDAQ:WIX) , and other peers.

Further, with a view to make the platform more merchant friendly, Shopify is working on extending language capabilities beyond English. The focus on local languages is aiding in bolstering international presence. We believe this inclusive move will boost engagement and in turn increase adoption going forward.

In the recent past, the company introduced Shopify Payments in Germany. The company has introduced Shopify Payments across 11 countries to date (including the United States).

Moreover, global sales channels like Google (NASDAQ:GOOGL) Pay, Facebook (NASDAQ:FB) Messenger, Instagram, Pinterest, eBay (NASDAQ:EBAY) and Amazon (NASDAQ:AMZN) continue to attract new merchants. The availability of Apple (NASDAQ:AAPL) Pay, Google Pay and the addition of Canada Post as sales channels are other tailwinds.

Zacks Rank

Shopify carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Expected long-term earnings growth rate for Intel (NASDAQ:INTC) is currently pegged at 8.4%.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>