By Divya Balji
INTERNATIONAL - Shopify nearly doubled its revenue in the second quarter, crushing analysts’ estimates as a flood of merchants moved their businesses online during the coronavirus pandemic.
Sales grew 97 percent to $714.3 million from the same quarter a year ago, Ottawa-based Shopify said in a statement Wednesday. Analysts had expected about $512 million, according to data compiled by Bloomberg.
Gross merchandise volume, a key metric that represents the value of all goods sold through Shopify’s platform, surged 119 percent from a year earlier or to $30.1 billion. Analysts were expecting a 49 percent increase to $20.6 billion. Sales of food, beverages and tobacco doubled over the first quarter, the company said.
“The strength of Shopify’s value proposition was on full display in our second quarter,” Chief Financial Officer Amy Shapero said in the quarterly release. “We are committed to transferring the benefits of scale to our merchants, helping them sell more and sell more efficiently, which is especially critical in this rapidly changing environment.”
E-commerce companies have been big winners of late, with the coronavirus closing many physical retail stores. Many analysts predict this boost will be lasting. Shopify shares, which were up 148 percent this year as of Tuesday’s close, jumped as much as 9.4 percent in pre-market trading in New York.
Shopify rallies in pre-market US trading after reporting strong earnings
New stores created on the Shopify platform grew 71 percent in the second quarter compared with the first quarter, driven in part by the company’s decision to extend the free-trial period on standard plans from 14 days to 90 days.
Large sellers continued to migrate to Shopify Plus, resulting in a record quarter for new merchant additions to the platform.
Still, the company chose not to provide forecasts for the third quarter, citing uncertainty surrounding Covid-19. It said it’s monitoring the impact of rising unemployment on new store creation, consumer spending habits and the rate at which brick-and-mortar merchants move online. The tech company suspended its forecast full-year forecast in April.
This year, Shopify has formed partnerships with Walmart to expand its third-party marketplace site and with Affirm to allow consumers to break purchases into a series of smaller payments -- both moves aimed at stepping up competition with Amazon.com.
After its shares more than quadrupled in 2019, Shopify blew past Royal Bank of Canada this year to become the most valuable company in Canada’s S&P/TSX Composite Index. It’s the best-performing company in the index this year.
BLOOMBERG