Shopify beats estimates as more merchants sign up for online boom

[OTTAWA] Shopify beat analysts' estimates for quarterly revenue and profit on Wednesday, as more brick-and-mortar businesses listed on the Canadian e-commerce firm's platform to cash in on the increase in number of people shopping online.

US-listed shares of Shopify, which in May briefly became Canada's most valuable company, rose about 7per cent before the bell.

Online retailers have emerged as winners from coronavirus lockdowns and retain their appeal as people prefer to shop from their homes instead of making a trip to brick-and-mortar stores due to a resurgence in infections.

In June, Walmart, the world's biggest brick-and-mortar retailer, partnered with Shopify to ramp up its efforts to capture a bigger slice of that surge.

Shopify generates revenue by selling subscription to merchants looking to join its e-commerce platform and by charging them payment processing and transaction fees, as well as for logistics services.

New stores created on the platform jumped 71 per cent in the second quarter from the first quarter.

Shopify's gross merchandise volume (GMV), a metric used to measure transaction volumes, more than doubled to US$30.1 billion in the quarter, largely helped by food, beverages, and tobacco categories. Analysts on average had estimated US$18.45 billion.

Revenue nearly doubled to US$714.3 million from a year earlier, beating the average analyst estimate of US$513.83 million, according to Refinitiv IBES data.

Shopify posted a net income of US$36.0 million, or 29 cents per share, compared with a net loss of US$28.7 million, or 26 cents per share.

Excluding items, it reported earnings of US$1.05 per share, while analysts had expected a profit of 1 cent. 

REUTERS