Shopify (SHOP) Delivers Another Blockbuster Quarter

Shopify Inc. (NYSE:SHOP) started 16 years ago when founder Tobias Lutke opened an online store called Snowdevil to sell snowboards. He soon realized the absence of an easy-to-use e-commerce platform and decided to create one and called it Shopify. Today, Shopify is one of the world’s biggest e-commerce platforms used by businesses of all sizes. Anyone can set up an online store on the platform to sell their products. Its software suite helps merchants to manage everything from building a digital store to shipping and payment processing.

The company has enjoyed tremendous growth in recent years, especially during the last year. Much of the growth in 2020 was driven by strong demand across e-commerce platforms, as millions of people turned to online options for shopping amid lockdown restrictions due to the Covid-19 pandemic. Shopify’s stock value soared nearly 180 percent during 2020.

Shopify on Wednesday announced better-than-expected financial results for the fourth quarter. It reported earnings of $133.4 million, or 99 cents per share for the three months ended Dec. 31, significantly higher than 1 cent per share in the comparable period of 2019. On an adjusted basis, profit rose to $1.58 per share, easily beating the consensus forecast of $1.26 per share. Revenue climbed 93.6 percent on a year-over-year basis to $977.7 million, beating the analysts’ average estimate of $913.1 million.

If we look at the performance of key segments, revenue from subscription solutions jumped 53 percent to $279.4 million, as an increasing number of merchants joined the platform during the quarter. Comparatively, merchant solutions revenue soared 117 percent to $698.3 million, mainly helped by record growth in gross merchandise volume.

Looking forward, Shopify warned that its revenue growth will slowdown in the coming quarters as people return to physical stores after the mass rollout of the coronavirus vaccine.