Shopify (SHOP) continues to be a Canadian success story.
The Ottawa-based e-commerce platform reported third-quarter earnings results that crushed estimates. This can be largely attributed to the surge in e-commerce demand due to the COVID-19 pandemic.
Shopify posted a third-quarter net income of $191.1 million, or $1.54 a share, compared to a net loss of $72.8 billion, or 64 cents a share a year ago. On an adjusted basis, Shopify earned $1.13 a share- easily eclipsing analyst estimates of 52 cents a share. This adjusted figure also surged from last year’s adjusted figure of a 29-cent loss per share.
Shopify’s revenue this quarter also nearly doubled to $767.4 million from $390.6 million. Analysts were expecting revenue to grow to only $663.1 million. Much of the company’s revenue this quarter came from $245.3 million in subscription revenue from new customers joining the platform. Shopify also made $522.1 million in revenue largely driven by merchant-solutions and growth in gross merchandise volume. Shopify witnessed a $30.9 billion in gross merchandise volume for the quarter, up 109% from last year.
Shopify also attributed much of its third-quarter growth to its new payment option for select merchants. This new payment solution allows consumers to split their payments into installments. According to Shopify’s Q3 earnings release, this “buy-now-pay-later” option has helped merchants “boost sales through increased cart size and higher conversion.”
Just two days ago, Shopify also announced a partnership with hot social media video app TikTok to attract more merchants. Shopify said that the partnership will allow its 1 million+ merchants to sell products in the form of shoppable video ads, where TikTok users can click on an ad to buy the product.
Although Shopify declined to provide any forecasts or projections for the fourth quarter, they have seen shares gain 156% so far this year.
Through its proprietary services, Shopify has revolutionized e-commerce and direct-to-consumer sales. The company offers online retailers a package of services aimed at simplifying the process of running an online store. Shopify provides users with services ranging from payments, marketing, shipping, and customer engagement tools.