Strong Q1 sees Ottawa-based Shopify add record merchants, increase 2017 guidance

Shopify
Shopify rings the bell during its IPO on the NYSE two years ago.

Shopify (NYSE:SHOP)(TSX:SHOP) continued its growth trends in the first quarter of 2017 as the e-commerce firm signed up a record contingent of merchants who, in turn, are also selling more on the platform.

The Ottawa-based firm recorded revenues of $127.4 million for the quarter ending March 31, 2017, a 75 per cent increase from the same period a year ago. (All figures in U.S. dollars.)

Almost half of this revenue came from the firm’s subscription solutions, driven by a 62 per cent increase in monthly recurring revenue, a key metric for software-as-a-service companies. At the end of its first quarter, Shopify’s MRR stood at $20.7 million, which the firm ties to a record number of merchants added to the platform in this quarter.

"We’ve hit our stride as a public company"

Gross merchandise volume, or the total product being sold across Shopify’s platforms, was $4.8 billion, an increase of 81 per cent year-over-year.

Despite its strong revenue growth, Shopify went deeper into the red, reporting a net loss of $13.6 million this past quarter, compared with $8.9 million a year earlier.

Nonetheless, Shopify was encouraged enough by its results to increase its guidance. The company says it is now expecting revenues as high as $630 million for fiscal 2017, while it previously capped expectations at $600 million.

Harley Finkelstein, Shopify’s chief operating officer, told an investors’ conference call this morning that the company stayed quiet with a series of back-end improvements to its system for most of the quarter, with the notable exception of its Unite Conference held just a few weeks ago.

At its annual San Francisco gathering for partners and developers, the firm announced a number of new products and channels, including its first foray into hardware with a Shopify point-of-sale card reader. Mr. Finkelstein said these new offerings spread Shopify to new areas and should allow merchants to sell more.

“There’s never been more opportunity for our partners to build on top of Shopify’s platforms,” he told the call. These offerings align with the firm’s goal, which he says is to “flatten the learning curve” for merchants.

CEO Tobi Lütke closed the call, saying that he believes the promise of Shopify is being realized today. The firm is a leader in the retail space, he says, no longer just a participant in this market.

“We’ve hit our stride as a public company,” he told the call.