Ottawa’s Shopify posts 89% jump in Q3 revenue

Shopify’s core strategy of focusing on helping its merchants sell more products is paying off, the CEO of the Ottawa-based commerce technology firm said Wednesday morning after reporting significant growth in several key metrics.

Investors appeared to agree with those sentiments, pushing the company’s stock up nearly 10 per cent to $44.88 on the New York Stock Exchange after Shopify (TSX:SHOP) (NYSE:SHOP) said its third-quarter revenue jumped 89 per cent to US$99.6 million (all figures are in U.S. dollars).

Monthly recurring revenue – a key metric for SaaS companies – stood at $16.3 million at the end of the three-month period ending Sept. 30, an increase of 67 per cent from the $9.8 million a year earlier.

The company attributed this increase to a growth in its customer base as the number of merchants using the Shopify platform grew to more than 325,000 in the quarter.

Gross merchandise volume, which is the total value of products sold by merchants on its platforms, rose to $3.8 billion, an increase of 100 per cent year-over-year.

The company’s net loss widened to $9.1 million compared with $4.7 million during the same period a year ago. Adjusted net loss, an internal number used by the company, was reduced to $1.8 million for the period, compared to $2.4 million a year ago.

The Ottawa-based firm was highly positive in its third quarter conference call to investors on Wednesday morning, and touted a number of platform successes including the launch of Apple Pay for web and the Shopify mobile app, as well as the integration of Canada Post to its Shopify Shipping program.

After the close of the quarter, the company also announced the acquisition of Waterloo-based Boltmade to help accelerate its Shopify Plus program and expanded its offerings to allow merchants to sell on Facebook Messenger.

CEO Tobi Lutke told Wednesday’s call that this focus on mobile commerce has already yielded results, as Shopify merchants are seeing up to twice as many conversions on mobile as before Apple Pay.

“Our accomplishments over the last few months support the strategy we have made clear from the beginning, which is to do the things that help merchants succeed,” Mr. Lutke said in a statement.

In August, the company offered 8,625,000 Class A subordinate voting shares which brought in net proceeds of $224 million.

The company was also in high spirits heading into the holiday retail season. Shopify chief financial officer Russ Jones told the investors call that the company is expecting its first quarter with revenues above $100 million in the coming period. Mr. Lutke closed the call by painting a picture of the company’s Black Friday traditions, traditionally the busiest shopping day of the year in the United States.

“It’s fun. We all get together in big rooms and look at a map of screens with all of this telemetry data. It looks like a company getting together for a nerdy version of the Super Bowl,” he told the call.

If you can’t find the Shopify ticker symbol on the TSX, you may want to try SHOP instead of SH.

The company's stock was up 5.3 per cent to $42.94 on the NYSE at noon.