What happened
Shares of cloud-based e-commerce platform-provider Shopify (SHOP 4.90%) soared on Tuesday following a blowout second-quarter report. Shopify handily beat analyst estimates across the board, maintaining a blistering pace of growth. The stock closed about 12.5% higher.
So what
Shopify reported second-quarter revenue of $151.7 million, up 75% year over year and about $8 million higher than the average analyst estimate. Subscription-solutions revenue jumped 64%, to $71.6 million, driven by a record number of merchants joining the platform, while merchant-solutions revenue surged 86%, to $80.1 million, driven by a 74% increase in gross merchandise value. Gross merchandise value hit $5.8 billion during the quarter, with $2.2 billion of that being processed by Shopify Payments.
Image source: Shopify.
Non-GAAP earnings per share (EPS) came in at a loss of $0.01, up from a loss of $0.04 during the prior-year period and $0.06 better than analysts were expecting. GAAP net loss was $14.0 million, or $0.15 per share, down from a loss of $8.4 million, or $0.10 per share during the same period last year.
Shopify CFO Russ Jones sounded an optimistic tone:
The fundamental shift in retail toward multi-channel and mobile, the ongoing adoption of Shopify by larger brands, and our continued focus on building out the market-leading platform for sellers all contributed to the strength of our results this past quarter. As we have been able to predict and capitalize on these shifts, and continue to innovate so entrepreneurs of all sizes can take advantage of them, we feel we are exceptionally well-positioned for the next several years.
Now what
Shopify expects its momentum to continue into the third quarter. The company sees revenue coming in between $164 million and $166 million, up 64% to 66% year over year, although it expects to continue posting losses on both GAAP and non-GAAP bases. For the full year, Shopify expects to produce revenue between $642 million and $648 million, up from $389 million in 2016.
Along with its second-quarter results, Shopify announced that its customer base has reached 500,000 businesses in 175 countries. Shopify's platform has some major momentum behind it, and investors like what they see.
