Shopify Beats On Q1 Earnings, Signals Growth To Come

Shopify (SHOP) saw shares hit all-time highs upon the release of the eCommerce platform’s earnings report for Q1 2017. SHOP shares were trading up 7.86 percent to $83.33 in the early afternoon on Tuesday.

For the quarter, Shopify reported revenue growth in the period ending March 31, 2017, of 75 percent year over year (YoY) to hit $127.4 million. Within this, subscription solutions revenue for Shopify was up 60 percent YoY to $62.1 million. Likewise, merchant solutions revenue saw growth of 92 percent YoY to $65.3 million for the quarter.

Net loss for the first quarter of 2017 hit $13.6 million, or $0.15 loss per share. On an adjusted basis, Shopify reported that net loss per share hit $0.04, well above the Street’s estimate of $0.10 adjusted for the quarter.

“With our excellent start to the year, it is clear we are becoming the de facto platform for sellers,” said Shopify CFO Russ Jones. “In addition to merchant growth and their adoption of both new channels and merchant solutions, we also continue to see expansion of merchants’ GMV.”

As Jones noted, gross merchandise volume for the first quarter was up 81 percent YoY to $4.8 billion. Shopify also saw growth in gross payments volume to $1.8 billion, accounting for 38 percent of the total versus 37 percent, or $1 billion, in the same period last year.

Additionally, Shopify reported it continues to see the influence of mobile growing on its merchants’ stores. Mobile made up 69 percent of traffic and 59 percent of orders at the end of March 2017, up from 62 percent and 51 percent, respectively, in the same period last year.

“Retail is shifting headlong toward the vision we laid out two years ago — of inspiring entrepreneurship with multichannel commerce,” Jones said, “and we fully expect to continue leading this industry transition for years to come.”

It will be interesting to see how recent and upcoming releases will work to influence Shopify’s future earnings. On the multichannel front, Shopify recently announced the introduction of its own EMV-compliant payments hardware, set to rollout June of this year.

In terms of outlook, Shopify expects Q2 revenues between $142 million to $144 million, with adjusted operating loss between $18 million and $20 million. For the full year of 2017, Shopify anticipates revenue between $615 million and $630 million, with adjusted operating loss in the range of $14 million to $18 million.