Shopify (SHOP 6.43%) reported second-quarter results on July 31. The e-commerce platform's sales continue to increase at a rapid clip, though at a meaningfully slower pace than previous quarters.
Shopify results: The raw numbers
|
Q2 2018 |
Q2 2017 |
Year-Over-Year Change | |
|---|---|---|---|
|
Revenue |
$245 million |
$152 million |
62% |
|
Net loss |
($24 million) |
($14 million) |
N/A |
|
Net loss per share |
($0.23) |
($0.15) |
N/A |
Data source: Shopify Q2 2018 earnings press release.
What happened with Shopify this quarter?
Gross merchandise volume (GMV) -- which represents the total dollar value of sales made by all the merchants on Shopify's platform -- jumped 56%, to $9.1 billion.
Gains like that would be the envy of most other companies, but Shopify's second-quarter GMV growth represented a deceleration from 64% in Q1 and 74% in the year-ago quarter. Bears would likely point to this as evidence that Shopify's growth is peaking.
Bulls, however, would argue that Shopify has long runways for growth still ahead. The company's merchant-solutions revenue surged 68%, to $134.2 million, as Shopify Capital and Shopify Shipping both saw revenue double year over year. Moreover, Shopify's subscription sales leapt 55%, to $110.7 million, as monthly recurring revenue -- the number of merchants times the average subscription fee -- rose 49%, to $35.3 million.
Though Shopify's rate of growth may be slowing, few companies can match its revenue gains. Image Source: Getty Images.
Shopify CFO Amy Shapero, for one, remains optimistic as to the company's long-term growth potential. "We built the Shopify platform to meet the many and varied needs of all types of merchants, whether they are makers or curators, entrepreneurs or household brands," Shapero said in a press release. "This presents us with an expansive opportunity set that we will continue to invest in with a view to even greater success over the long term."
These growth investments, however, continue to weigh on Shopify's profitability. Shopify's GAAP net loss widened to $24 million, or $0.23 per share, from a net loss of $14 million, or $0.15 per share, in the prior-year period.
Looking forward
Shopify raised its full-year revenue forecast slightly to a range of $1.015 billion to $1.025 billion, up from a prior estimate of $1 billion to $1.01 billion. This new revenue target would represent year-over-year growth of approximately 51%.
The company reiterated its guidance for a GAAP operating loss of $105 million to $110 million and adjusted operating income -- which excludes stock-based compensation expenses -- of $0 to $5 million.
For the third quarter, Shopify expects to deliver revenue of $253 million to $257 million, with a GAAP operating loss of $40 million to $42 million and an adjusted operating loss of $9 million to $11 million.
"In closing, we are on a long-term journey to build a holistic system that solves key challenges entrepreneurs face while starting and running a successful business," said COO Harley Finkelstein during a conference call with analysts. "While we still have a lot of work ahead of us, this quarter's progress demonstrates that we are moving in the right direction and that we continue to be well positioned to lead, to inspire entrepreneurship, and to build a company that thrives over the years ahead."
