(Bloomberg) – Shopify Inc. nearly doubled its revenue in the second quarter, crushing analyst estimates when an avalanche of merchants moved their online businesses during the coronavirus pandemic.
Sales grew 97% to $ 714.3 million over the same quarter a year ago, Ottawa-based Shopify said in a statement Wednesday. Analysts had expected about $ 512 million, according to data compiled by Bloomberg.
Gross merchandise volume, a key metric representing the value of all products sold through the Shopify platform, increased 119% year-over-year to $ 30.1 billion. Analysts had expected a 49% increase to $ 20.6 billion. Food, beverage and tobacco sales doubled in the first quarter, the company said.
“The strength of Shopify’s value proposition was fully exhibited in our second quarter,” Chief Financial Officer Amy Shapero said in the quarterly statement. “We are committed to transferring the benefits of scale to our merchants, helping them to sell more and sell more efficiently, which is especially critical in this rapidly changing environment.”
E-commerce companies have been big winners in recent times, with the coronavirus closing many physical stores. Many analysts predict that this momentum will last. Shopify shares rose as much as 12.5% in early New York operations, hitting a new high, and up 169% this year.
New stores created on the Shopify platform grew 71% in the second quarter compared to the first quarter, driven in part by 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, resulting in a record quarter for new merchant additions to the platform.
“Strong transactional revenues, well above the highest expectations, point to Covid-19 tailwinds that are stronger at SHOP than most anticipated ones,” said Citigroup analyst Walter Pritchard. “The key from here on will be the sustainability of demand from newly acquired merchants,” he said in a report.
Read more: Shopify is enjoying a great time and hoping it will last
Still, the company decided not to provide forecasts for the third quarter, citing the uncertainty surrounding Covid-19. He said he is monitoring the impact of rising unemployment on new store creation, consumer spending habits, and the speed at which traditional merchants move online. The tech company suspended its full-year forecast in April.
This year, Shopify has formed partnerships with Walmart Inc. to expand its third-party marketplace, and with Affirm Inc. to allow consumers to split purchases into a series of smaller payments, moves aimed at increasing competition with Amazon.com. Inc.
Work from home
The company said in May that it will keep its offices largely closed for the rest of the year as it designs its space for a “digital by default” mindset, adjusting to a remote working environment.
“This also represents an opportunity for Shopify to open up, further diversify our talent pool, with no restrictions on physical location,” Shapero said in today’s earnings call.
The company assumed an impairment charge of $ 31.6 million by leaving some of its secondary offices in major cities, he said. Second quarter results include $ 37.1 million in incremental expenses related to changes to its facilities, she added.
‘Correct time’
After its shares quadrupled in 2019, Shopify outperformed 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 is clear that Shopify is in the right place at the right time with the leading platform for e-commerce software and services that enables ‘digital transformation’ for thousands of companies,” said Baird analyst Colin Sebastian.
(Updates with stock price movement, analyst comments and details of work from home)
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