Update: Shopify shares soar after Ottawa tech firm reports 50% jump in Q1 revenues


Shopify touted the “encouraging” growth of its e-commerce platform in international markets Tuesday, after announcing its first-quarter 2019 revenues rose 50 per cent year-over-year to $320.5 million (all financial figures in USD).

The firm’s shares closed up 7.9 per cent, or $17.74, to $243.53 on the New York Stock Exchange.

The boost came after the company, which reports in U.S. dollars, said it had adjusted earnings of $10.3 million or nine cents per share for the first quarter, while analysts had expected a loss of five cents per share, according to Thomson Reuters Eikon.

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“Shopify had a surprisingly strong earnings report,” said analyst Colin Cieszynski at SIA Wealth Management Inc. in a research note.

The Ottawa-based tech giant’s efforts to expand its global footprint dominated the question-and-answer period during a conference call with analysts to discuss its first-quarter earnings. Shopify recently launched its platform in Dutch and Simplified Chinese, bringing the total number of languages it now serves to nine.

Noting that 100,000 of the more than 800,000 merchants who use Shopify’s platform are working on it in a language other than English, chief financial officer Amy Shapero said the firm is seeing “very encouraging” growth in foreign markets.

“It is early days in international,” she told analysts. “We’re still learning.”

Shapero said the Shopify Plus platform aimed at higher-volume merchants remains focused on English-speaking markets, meaning most of the company’s growth in other countries is being driven by smaller customers.

Chief operating officer Harley Finkelstein said Shopify is still figuring out each market when it comes to various aspects of e-commerce such as how merchants like their landing pages to be configured.

“Doing things in Germany is very different from doing things in Japan,” he said. “There are nuances to it.”

Shopify executives said the software firm is seeing plenty of positive signs in other areas as well.

The Shopify Plus platform continued to grow rapidly in the first quarter, adding big-name retailers such as Levi’s and Hasbro to its stable of merchants. Shapero credited Shopify’s “maturing sales team” for much of the uptick.

CEO Tobi Lütke noted the company recently launched a new multi-currency feature that allows Shopify Plus merchants who use the Shopify Payments application to sell in multiple currencies and get paid in their local currency, a move he hopes will help make cross-border online shopping easier.

Shopify also continued to step up its offerings to brick-and-mortar retailers, adding a new card reader that enables both tap and chip payments to its hardware product mix earlier this month.

Despite huge year-over-year revenue growth, however, Shopify officials said they still see plenty of opportunities to tap into new markets, both at home and abroad.

Noting the e-commerce firm recently unveiled a $30-million multimedia ad campaign in 12 North American cities, Shapero conceded Shopify’s brand awareness “is not as high as we’d like it to be,” adding she hopes the new campaign will “move the needle” and lure more merchants into the top of its product funnel.

“We’re confident that over the long term, this sort of investment will pay off,” she said.

Shopify also faces increased competition from other online platforms that are adding direct sales options, including Instagram’s limited rollout in the quarter.

Finkelstein said growth in the sector will mean more options for its merchants.

“With every new channel that comes to market, whether it’s a social media platform or a new marketplace, what that does is it makes Shopify more valuable as a retail operating system,” he said.

He said the company also makes sure to have deals in place with other online platforms to capture economic benefits from its merchants selling elsewhere.

“We have economics in place to allow us to grow when our merchants sell more.”

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