Shopify Q3 revenue up 96 per cent from last year amid mass shift to e-commerce

The flood of businesses scrambling to build or enhance their digital efforts during the COVID-19 pandemic nearly doubled Shopify Inc.'s third-quarter revenue compared with a year ago.

The Ottawa-based e-commerce company, which keeps its books in U.S. dollars, said Thursday that its revenue reached US$767.4 million in the quarter, up from US$390.5 million during the same period last year.

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Shopify also said it earned US$191.1 million or US$1.54 per diluted share in the quarter, compared with a loss of US$72.8 million or 64 cents per share in the prior year.

Harley Finkelstein, who was promoted to president at the end of September, said the quarter was boosted by more brands than ever before opening their first e-commerce stores or shifting existing ones from other platforms to Shopify as COVID-19 brought retail foot traffic to a halt and spurred temporary closures and more people staying at home.

"We believe these changes in the landscape will endure as consumers' new shopping behaviours stick and become the new normal," he told a conference call with financial analysts.

Those conditions helped Shopify add a record number of merchants for the second quarter in a row and a record number of them became paid subscribers.

Shopify lured many of them in with extended free trials lasting 90 days, up from the 14 days it previously offered, and some made their first sales faster than the platform has ever seen before.

The quarter, Finkelstein said, saw well-known brands like Dior, Beyond Meat, Clif Bar, Jenny Craig and Mat and Nat join the platform and the goal is to keep growing.

"We want to capture anyone thinking of starting a business. Whether or not they become the next Gymshark or the next Allbirds remains to be seen, but the idea is that we want to capture anyone who has any ambition to start a business on Shopify," he said.

Finkelstein's remarks came as the company's adjusted earnings hit US$140.8 million or US$1.13 per diluted share, up from last year when it lost US$33.6 million or 29 cents per share.

Analysts on average had expected a profit of 53 cents per share for the quarter and US$663.4 million in revenue, according to financial data firm Refinitiv.

Looking ahead, the company was optimistic about the upcoming Black Friday, Cyber Monday and holiday shopping seasons.

A recent survey of merchants Shopify conducted found companies are anticipating more online than in-store purchasing for Black and Cyber Monday, pushing more than half of those in the retail space to make improvements to their online stores ahead of the expected flurry.

Shopify executives said the company is doing its best to increase staff in its fulfilment centres and predict and mitigate supply chain issues ahead of the rush.

This report by The Canadian Press was first published Oct. 29, 2020.

Companies in this story: (TSX:SHOP)

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