Shopify Q2 Revenue Crushes Estimates as Online Sales Grow Amid COVID-19
August 11, 2020
The popular e-commerce platform announced record sales figures amid the COVID-19 pandemic.
Shopify, the Canadian all-in-one e-Commerce solution, announced record-high Q2 revenues with figures that reflect the changing trend for commerce during the COVID-19 pandemic.
Although analysts had estimated a rise in the e-Commerce platform’s revenue, calling for $510.8 million and non-GAAP earnings per share (EPS) of $0.01, Shopify announced a sizzling $714.3 million in revenue, a growth of 97% from its previous year, and an Earning Per Share of $1.05.
Shopify’s impressive results include a 71% increase in the number of new stores using the platform and a 28% increase in its subscription solutions. The value of merchandise sold on the platform grew 119%.
Starting as an online seller for snowboarding gear, Shopify shifted towards an e-Commerce platform once its founders realized the potential for a fully hosted platform to build, sell, and grow your brand.
It now serves more than 1 million merchants in 175 countries, and offers some of the best tools in the market for both small and large businesses. In return for its subscription fees, you get customized themes, apps and features with shipping discounts, digital payments, and fulfillment services.
The remarkable jump is particularly pronounced since the start of the COVID-19 pandemic in March 2020. Between mid-March and late April, the number of new stores using Shopify grew 62% compared to the prior six weeks. With many brick-and-mortar stores shutting down, merchants hurried to increase their digital presence by opening online stores and boosting their digital sales numbers. Compared to its previous quarter in 2020, Shopify’s online gross merchandise volume (GMV) grew 73%.
After announcing the spike in revenue, Shopify’s stock shares rose 7%, increasing its lead over the largest company in the Canadian market, Royal Bank of Canada.
The company was already doing well before the pandemic, but the ongoing effects of lockdowns has leaped the change in consumer buying habits, with more and more people buying online.
Shopify has noticed a positive impact from COVID-19, overall. CEO Toby Lutke admitted there has been a “rapid shift to online commerce,” and said Shopify is embracing the increase in online entrepreneurship.
According to Shopify’s Chief Financial Officer Amy Shapero, the credit for Shopify’s strong performance in the second quarter goes to the valuable services it offers. “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.” She said in a press release after announcing the rise on Wednesday.
With the current certainty, however, Shopify is also watching whether the pace for investing in the platform is slowing down. The number of people downgrading to lower-paid plans spiked in April, but returned to pre-pandemic levels by the end of the quarter. From mid-June to mid-July, free-trial subscribers switched to paid plans at a lower rate than before the pandemic.
For now, the e-Commerce powerhouse is enjoying a great boost due to lockdowns, and it hopes the positive impacts will last beyond the pandemic.
In fact, the trend towards online commerce seems to behere to stay. Along with other digital solutions like Facebook or Paypal, Shopify is expected to continue its strong performance in the next decade.