Shopify Shares Soar As Sales Beat Expectations

Shopify, which powers around 25 per cent of online commerce in Australia with customers including JB Hi-Fi, LSKD, and July, has posted sales that beat analyst expectations for the third quarter.

Third-quarter sales rose 26 per cent, with gross merchandise volume up 24 per cent from a year ago.

Shares traded 23 per cent higher in midday trading and closed at $108.73 (A$166.42), which has meant its share price has risen around 80 per cent over the last 52 weeks.

The latest rise in sales come as the platform saw an increase in consumer spending along with the addition of more merchants to its e-commerce platform.

For the third quarter, Shopify reported net income of $828 million (A$1.26 billion), up from $718 million (A$1.09 billion) in the prior-year period.

Revenue came in at $2.16 billion (A$3.31 billion), beating analyst expectations of $2.12 billion (A$3.24 billion).

Shopify indicated that they continue to add a variety of new storefronts that use its tools to simplify managing online business.

President Harley Finkelstein said that tools that automate certain processes allow merchants to instead focus more on the product they are selling.

“Let’s be honest: Nobody starts a business with the goal of focusing their time on sales tax compliance or inventory management,” he said on an earnings call, according to the Wall Street Journal.

Shopify is also seeing a significant growth outside of North America where the number of its merchants grew by 36 per cent. New retailers include Watches of Switzerland, The Body Shop, Fashionphile, Off-White and footwear brand Reebok.

With retailers entering one of the busiest season of the year, Shopify expects growth to pick up in the fourth quarter. It has forecast revenue growth in the mid- to upper 20 per cent range, better than the 23 per cent expected by analysts, according to FactSet.

In Australia, Shopify recently partnered with the Australian Retailers Association (ARA). Shopify’s latest partnership with ARA is focused on delivering commerce trends and insights to Australian retailers.