Shopify Tops Views in 2Q, Sees Growth Accelerating in 3Q

By Adriano Marchese

Shopify expects sales to pick up after revenue growth outpaced the company's earlier forecast as more merchants joined the platform.

The Ottawa-based company, which provides technological infrastructure for online merchants, on Wednesday reported revenue of $2.05 billion, up from $1.69 billion, beating analyst expectations of $2.01 billion, according to FactSet

This was driven by growth at both of its main segments. Shopify's merchant solutions rose to $1.48 billion from $1.25 billion, thanks to more merchants signing on to its platform as well as pricing increases on its subscription plans.

Meanwhile, subscription solutions revenue rose to $563 million from $444 million a year earlier.

Adjusted earnings, were 26 cents a share, with analysts expecting 20 cents a share.

Net income was $170 million, or 13 cents a share, compared with a net loss of $1.3 billion, or $1.02 a share, in the comparable quarter a year ago.

Gross merchandise volume--a key metric that measures the total value of orders processed on Shopify's platform--rose 22% to $67.2 billion.

Gross payments volume climbed to $41.1 billion, representing 61% of GMV it processed in the quarter, compared with $31.7 billion.

Looking ahead, Shopify expects third-quarter revenue to grow at a low-to-mid-twenties percentage rate from the year prior when it reported revenue of $1.71 billion. Consensus expectations for the third quarter is for revenue of $2.07 billion.

Shopify is currently navigating through an environment of shaky consumer spending across the globe, as well as more intense competition in online shopping. In May it forecast the slowing sales growth for the coming months, results that included a drag from last year's sale of it's logistics business.

Recently, online retailers have noted caution among consumers. Executives at Amazon.com, which last week projected weaker-than-expected revenue growth for the current quarter, said that customers have been more likely to look for deals and lower-priced essentials when shopping online.

Amazon and other online players are also currently facing more competition from low-cost platforms such as Temu and Shein, posing a threat to Shopify's share of the e-commerce market.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

August 07, 2024 08:07 ET (12:07 GMT)

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