Shopify sees record sales in 2021 as more sellers use its platform

Shopify  is on track for sales growth of more than 50% in 2021, even as countries slowly emerge from Covid-19 lockdowns, helped by a strategy that encourages merchant customers to sell goods across multiple channels.

The Canadian e-commerce company on Wednesday reported revenue of $1.1bn for the second quarter, putting it on pace to top $4.4bn for the full year, 52% higher than 2020, according to analysts’ estimates. That’s despite an expected moderation in the pace of e-commerce growth as consumers return to shopping at brick-and-mortar stores.

Ottawa-based Shopify said gross merchandise volume (GMV) grew to $42.2bn in the second quarter, up 40% from the same period last year. The number represents the sales made by online merchants through Shopify’s platform, for which the company charges fees.

“In places that have begun to reopen, like the UK, GMV grew faster than our overall GMV in the quarter year-over-year, indicating that online and in-store commerce are no longer mutually exclusive,” Shopify president Harley Finkelstein said during Wednesday’s call with analysts.

Shopify shares were up 0.1% in New York. The shares had climbed 36% in 2021, compared with a 16% gain for the S&P/TSX Composite Index.

“Historically, most businesses were created offline and moved online. That’s no longer the case,” Finkelstein said, noting that every 28 seconds, a new entrepreneur makes their first sale on Shopify. Companies that use Shopify’s online selling software, then decide to open physical shops, are likely to use the company’s point-of-sale product when they do, he said.

Social media companies including Facebook are also offering tools to help companies sell online. Shopify will benefit by offering products to help them manage the complexity of selling across multiple platforms, Finkelstein said.

Shopify posted an adjusted profit more than twice analysts’ estimates, at $2.24 a share, as revenue growth outpaced spending.

“They beat on our gross margin estimates for both line items, the subscription revenue side and the merchant solutions side,” Jefferies analyst Samad Samana said after the results. “A big driver was that their operating expenses were just a lot lower than we were estimating.”

Costs were lower across the board, but the biggest dip was likely on research & development, he said.

“My educated guess is that they have pretty lofty ambitions for the number of developers they want to hire this year, and between a pandemic going on and a tighter labour market, it’s probably just taking them time to ramp headcount,” Samana said.

The “take rate” — which reflects how well the company is monetising each dollar that runs through the Shopify platform — expanded 1.86% over the quarter, Samana wrote in a research note after the release.

Bloomberg News. More stories like this are available on bloomberg.com