Shares of Shopify (SHOP 1.01%) soared on Wednesday after the e-commerce platform delivered blockbuster first-quarter financial results. As of 3:35 p.m. EDT, Shopify's stock price was up more than 10%.
Shopify's growth is breathtaking. Its revenue rocketed 110% year over year to $988.6 million. That boost was fueled by a 71% jump in subscription revenue to $320.7 million, and a 137% surge in merchant solutions revenue to $668 million.
"More entrepreneurs around the world are choosing Shopify to launch and grow their businesses, and for good reason," Shopify president Harley Finkelstein said in a press release. "Our singular focus is on making entrepreneurship easier, and making it easier for entrepreneurs to succeed."
Shopify's merchant customers are benefiting from booming e-commerce growth during the coronavirus pandemic. Its gross merchandise volume (GMV) -- essentially, the total amount of sales facilitated by its platform -- increased a staggering 114%, to $37.3 billion.
And as its merchants prosper, so does Shopify. The software star's adjusted net income and earnings per share rose more than tenfold to $254.1 million and $2.01 per share, respectively.
"Merchant sales growth on our platform accelerated in the first quarter as merchants leveraged our modern commerce technology, which helps them compete in any retail environment and engage directly with their customers wherever they are," Finkelstein said.
Management cautioned that e-commerce growth is likely to slow as vaccinations ramp up and consumers begin shopping at stores more often. Still, Shopify expects to "grow revenue rapidly in 2021," albeit at "a lower rate than in 2020."
Shopify also intends to spend heavily on growth initiatives in the year ahead, which will weigh on its profits. "We expect full-year 2021 adjusted operating income to be below the level we achieved in 2020," the company said.
Shopify can easily afford these investments. It ended the first quarter with nearly $7.9 billion in cash reserves on its fortress-like balance sheet.
"We are focused on building a commerce operating system that will help shape the future of retail," chief financial officer Amy Shapero said. "Our merchant-first business model positions us to capture the massive opportunity presented by the growth of digital commerce, benefiting both our merchants and Shopify."