Shopify (NYSE:SHOP) is slated to report its second quarter results before markets open on Wednesday, July 29. The coronavirus pandemic is causing many brick-and-mortar businesses to make dramatic changes if they want to survive. State mandates to close physical stores, along with stay-at-home orders, made it necessary to connect with customers online. Enter Shopify, which helps merchants use the company's software to run their businesses and mobile storefronts.

The shift from brick-and-mortar to e-commerce is a long-running trend -- the pandemic just accelerated the transition. Given these factors, the overall outlook for Shopify's earnings release is positive. Here's what investors should be looking out for when the company reports. 

A digital globe highlighting Shopify's ability to reach customers worldwide.

Shopify is growing revenue double-digits. Images source: Getty images.

Will Shopify beat the already high expectations?  

First and foremost, investors will want to look at revenue growth. In its fiscal first quarter, revenue grew 47% year over year. Moreover, the bulk of that period came before coronavirus containment measures took effect. Needless to say, expectations are high, and it would not be surprising to see revenue growth accelerate from the prior quarter.

It will also be interesting to observe the monthly recurring revenue (MRR) metric. This is the value of monthly subscriptions held by merchants at Shopify. In its most recent quarter, it reported MRR of $55.4 million. Importantly, Shopify is growing MRR at a compounded annual rate of 50% since its first quarter in 2015.

In June 2019, the company announced a five-year $1 billion investment to build and operate the Shopify Fulfillment Network. Given the surge in businesses moving to digital, investors should track if the company speeds up this investment or announces an increase in the capital allocation to it. With investment in this initiative, Shopify has the opportunity to gain market share in U.S. retail e-commerce, where it currently has a 6% share. Leader Amazon dominates with 37% of the market.

Lastly, sales and marketing expenses rose a whopping 48% in the first quarter. The increase was mostly tied to marketing expenses as the company tried to reach more customers and attain better economies of scale. The shift to digital for businesses is becoming necessary for survival during the pandemic -- they likely don't need much persuasion from Shopify. It's possible the company was able to increase revenue while slowing the growth of advertising expenses -- a one-two punch that's usually a recipe for increasing investor returns.

A computer with a miniature shopping cart on it. Representing the ability to sell your items through Shopify's e-commerce platform.

Shopify had $55.4 million in monthly recurring revenue in the first quarter. Image source: Getty images.

What this means for investors 

The COVID-19 pandemic is causing havoc around the world. Fortunately for Shopify shareholders, the company is in a position to serve the many businesses that are being forced online in these circumstances. Even better for company investors is that many of the businesses that migrate online are likely to maintain that presence even after the pandemic has run its course.

Still, the challenges are plentiful in these unprecedented times, and shareholders should prepare for higher than usual volatility in the price of Shopify stock following the earnings announcement on Wednesday.