Gross merchandise volume, a key metric that represents the value of all merchandise sold through the Shopify platform, jumped 119% from a year ago or to $ 30.1 billion. Analysts had expected a 49% increase to $ 20.6 billion. Sales of food, drink and tobacco products doubled in the first quarter, the company said.
“The strength of Shopify’s value proposition was fully on display during our second quarter,” CFO Amy Shapero said in the quarterly release. “We are committed to transferring the benefits of scale to our merchants, helping them sell more and sell more efficiently, which is especially critical in this rapidly changing environment.”
E-commerce businesses have been big winners in recent times, with the coronavirus having closed many physical retail stores. Many analysts predict that this boost will be lasting. Shopify shares jumped 12.5% at the start of trading in New York, hitting a new high, and are up 169% this year.
New stores created on the Shopify platform grew 71% in the second quarter compared to the first quarter, in part due to the company’s decision to extend the free trial period on standard plans from 14 days to 90 days.
Large sellers continued to migrate to Shopify Plus, which resulted in a record quarter for new merchant additions to the platform.
“Strong transactional revenues, well above even the highest expectations, indicate favorable winds for COVID-19 which are stronger at SHOP than most expected,” said Walter Pritchard, analyst at Citigroup. “The key here will be the sustainability of demand from newly acquired merchants,” he said in a report.
Nonetheless, the company chose not to provide a forecast for the third quarter, citing the uncertainty surrounding COVID-19. He said he was monitoring the impact of rising unemployment on the creation of new stores, consumer spending habits and the pace at which physical merchants are moving online. The tech company suspended its forecast for the full year in April.
This year, Shopify partnered with Walmart Inc. to expand its third-party marketplace site and with Affirm Inc. to allow consumers to split purchases into a series of smaller payments – moves to increase competition with Amazon. com Inc.
Work at home
The company said in May it would keep its offices largely closed for the remainder of the year as it designs its space for a “digital by default” mindset, accommodating a remote working environment. .
“It also represents an opportunity for Shopify to open up, to further diversify our talent pool, without any geographic constraints,” Shapero said during the earnings call today.
The company took on a $ 31.6 million depreciation charge as it moved out of some of its sub-offices in major cities, she said. The second quarter results include $ 37.1 million in additional spending related to changes to its facilities, she added.
After its shares more than quadrupled in 2019, Shopify overtook the Royal Bank of Canada this year to become the most valuable company in Canada’s S & P / TSX Composite Index. It is the best performing company in the index this year.
“It remains clear that Shopify is in the right place at the right time with the leading ecommerce software and services platform enabling ‘digital transformation’ for thousands of businesses,” said Colin Sebastian, analyst at Baird .
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