Business
Shopify revenue surpasses $ 1 billion as pandemic drives record increase in online sales

Shopify revenue surpasses $ 1 billion as pandemic drives record increase in online sales

Shopify Inc.’s revenue crossed the billion dollar mark for the first time in a single quarter, and the volume of products sold through its offerings hit an all-time high, as businesses began to reopen amid the pandemic. of COVID-19.

The e-commerce company, which is based in Ottawa but prefers to list its headquarters as “Internet, everywhere,” attributed the milestones announced on Wednesday to the return of stores, restaurants and favorite places temporarily closed by the health crisis and growth of e-commerce. -Trade.

Shopify’s revenue for its second quarter, which ended June 30, reached US $ 1.1 billion, up 57% from US $ 714.3 million in the same period a year last.

Its Gross Merchandise Value (GMV) – a key metric measuring the total dollar value of orders facilitated through the Shopify platform – reached US $ 42.2 billion, an increase of $ 12.1 billion or 40% compared to the second quarter of 2020.

“In places that have started to reopen, such as the UK, GMV grew faster than our overall GMV in the year-over-year quarter, indicating that online and in-store commerce is no longer more mutually exclusive, ”said Shopify president Harley Finkelstein. a conference call.

“Although we started to see a return of some consumer spending towards services and recreation towards the end of the quarter, which we expected, all regions remain at GMV levels above pre-COVID levels.”

Shopify has put much of the pandemic in the spotlight as it offers digital solutions to help businesses sell goods and services online.

As health officials and politicians placed restrictions on purchases and on which businesses could stay open, Shopify has helped many businesses move online and offered plenty of free trials.

Analysts have been watching closely if the company can retain these customers after the trials and cases of COVID-19 are over.

The company said on Wednesday that it expects revenue to grow rapidly in 2021 but at a slower pace than in 2020 as the number of new traders joining the platform is below the year’s record. last, but more than any year before 2020.

The pandemic has also escalated its ongoing battle with Seattle e-commerce giant Amazon.com Inc.

In recent years, Shopify has launched a distribution network of competitors that it plans to expand and make more efficient.

In June, he announced that as of Sunday, he would not be taking any share of the first million dollars in revenue generated each year by developers from the range of booking features, subscription tools and other products. they design for the e-commerce company’s software.

Shopify previously took 20% of all revenue generated by each of the roughly 6,000 developers who create and sell tools that can be integrated and used with Shopify systems. It will only take 15% once the million dollar mark is reached.

Shopify was raising the stake after Amazon revealed it would require a 20% reduction in developers making up to $ 1 million in the previous calendar year, down from 30% previously. Those who earn less than $ 1 million in revenue from the Amazon App Store will also receive 10% of their earnings as credits for the company’s web service offerings.

Apple and Google have also dropped what they’ll take of a developer’s $ 1 million in revenue to 15 percent from 30 percent.

Shopify CEO Tobi Lutke weighed in on the impacts that merchants saw from Apple’s recent move to allow users not to be tracked by the apps they use and download on iPhones on Wednesday.

“In the short term, we think it will reduce the effectiveness of some ads, but I think it will make more marketers look for new and multiple ways to connect with shoppers in addition to the increasingly expensive ads. “, did he declare.

Lutke’s remarks came as Shopify earned US $ 879.1 million or $ 6.90 per diluted share, up from $ 36 million or 29 cents per share a year earlier.

Its net income included an unrealized net gain of $ 778 million on equity investments.

Shopify’s adjusted earnings were $ 284.6 million or $ 2.24 per diluted share, compared to $ 129.4 million or $ 1.05 per share in the second quarter of 2020.

The company is expected to earn 97 cents per share in adjusted earnings on $ 1.05 billion in revenue, according to financial data firm Refinitiv.

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