Shopify revenues climb as more businesses go online amid pandemic


Shopify shares cracked the $1,000 mark for the first time Wednesday after the e-commerce giant reported a 47 per cent jump in first-quarter revenues and a surge of new interest from merchants in sectors such as the food and beverage industry in the wake of COVID-19.

The Ottawa-based company, which keeps its books in U.S. dollars, recorded revenues of US$470 million for the three-month period ending March 31, up from US$320.5 million in the same quarter last year. Shopify’s net loss was US$31.4 million, or 27 cents per share, compared with a loss of US$24.2 million, or 22 cents per share, a year earlier.

Markets appeared to react favourably to the latest earnings report. Shopify shares were up more than six per cent to $1,027.59 in mid-afternoon trading on the Toronto Stock Exchange.

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On an adjusted basis, Shopify (TSX:SHOP) says it earned US$22.3 million or 19 cents per share in the first quarter of 2020 compared with an adjusted profit of US$7.1 million or six cents per share a year earlier. Analysts on average had expected an adjusted loss of 18 cents per share for the quarter and US$449 million in revenue, according to financial markets data firm Refinitiv.

During a conference call with analysts on Wednesday morning, company officials said the company is working quickly to retool its products to help merchants adapt to new challenges as measures designed to control the COVID-19 pandemic have battered the economy.

Chief operating officer Harley Finkelstein said there has been a “notable increase” in new merchants signing on to the company’s Shopify Plus platform since the novel coronavirus hit. He noted that two companies that traditionally have not sold directly to consumers – food giant Heinz and chocolate-maker Lindt – opened Shopify Plus accounts in April.
“This pandemic is forcing all kinds of merchants to rethink how they sell things,” he said.

Chief financial officer Amy Shapero said new stores created on the Shopify platform grew 62 per cent between March 30 and April 24 compared with the previous six-week period as more brick-and-mortar merchants looked to expand their online presence and the company extended its free trial period on standard plans from 14 to 90 days. 

“The shift from offline to online commerce is accelerating,” she said, adding the company’s gross merchandise volume also picked up its pace of growth during the same period, thanks to growth in sectors such as food, beverage, tobacco, leisure and fitness.

While in-store sales of merchants using Shopify’s point-of-sale software plummeted more than 70 per cent between March 30 and April 24 compared with the six-week period before March 13 as brick-and-mortar merchants across the world closed their doors due to the pandemic, the company said those retailers managed to replace 94 per cent of their gross merchandise volume through online sales.

In addition, Shopify said its customers are adapting to new consumer buying habits in other ways. The company said more than a quarter of merchants in its English-speaking regions are now offering in-store or curbside pickup and delivery options, up from two per cent in February.

CEO Tobi Lütke told analysts the massive shift toward online commerce during the pandemic has prompted many merchants to turn to Shopify as they dramatically rethink their approach to e-commerce. 

He pointed to the company’s recent introduction of a new mobile shopping app and a revamped point-of-sale system as ways that Shopify is trying to stay ahead of the curve.

“We’ve just jumped a lot of years in the future,” he said.

​– With files from the Canadian Press


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