Shopify is set to integrate platforms with AIMS360 ERM software.

Shares of Shopify shot up Thursday after a better-than-expected earnings report with an increased subscription rate, signaling further growth in e-commerce.

The Canadian company, which helps businesses set up shop online, beat analysts’ expectations for the quarter ending Sept. 30, with a 58 percent increase in revenue, to $270.1 million, compared with $171.5 million in the same period last year. Subscription solution revenue was also up 46 percent to $120.5 million, largely driven by an increased number of merchants signing up for the platform. Shares of Shopify shot up 12 percent to $137 in trading Thursday.

“Digital commerce, while it seems ubiquitous, it’s still kind of in, not the first or second inning, but the early innings in terms of adoption and GMV volumes that we can expect over time,” William Fitzsimmons, equity analyst at Morningstar, said. 

The company has more than one million active users and helps merchants sell everything from apparel to cannabis online. The total value of items sold on Shopify was up 55 percent in the quarter.

Amy Shapero, Shopify’s chief financial officer credited growth to the company’s new products and services.

“We relentlessly shipped new products and features to prepare our merchants for their biggest selling season of the year,” Shapero said in a press release. “We’re well positioned to close 2018 and enter 2019 with excellent momentum.”

Expenses for the quarter also increased to $181.1 million, compared with $112.7 million the same time last year. But the expansion might be paying off ahead of the upcoming shopping season. Some of Shopify’s latest offerings include the company’s first physical store, which opened in Los Angeles earlier this year, serving as a place for platform users to meet Shopify employees in real life and get help with products. Shopify AR taps into augmented reality and Shopify Payments, a local payment system, allows users in 10 countries to pay by way of bank transfers, in addition to credit cards.

Shopify, which works primarily with small businesses, has extended its offerings with Shopify Plus. The service offers support to larger companies for a higher monthly fee — $299 a month, compared with the basic service of $29 a month — and contributed $9.2 million, or 24 percent, to the company’s recurring revenue stream for the quarter, compared with 20 percent last year.

Market watchers have been bearish on Shopify’s stock in recent weeks after a pullback in retail and tech sectors, fueled by increased concern over possible trade wars, a decrease in Chinese consumer spending and President Trump’s announcement earlier this month that the U.S. would withdraw from the 144-year-old international postal agreement that enables Chinese businesses to mail small packages to the U.S. at a reduced rate. Investors also feared the rapid closure rate of brick-and-mortar stores would negatively impact Shopify, which works with many privately owned businesses. But a note to investors last week from Guggenheim pointed out that this is good news for a site that hopes to capitalized off of e-commerce.

“The results proved to be pretty robust,” Fitzsimmons told WWD. “They’re really showing that those headwinds are just noise and that they’re still able to execute on the business even with all that stuff going on.”

load comments
blog comments powered by Disqus