Shopify Grows Total Revenue 58 Percent to $270.1 Million in Q3

Multi-channel commerce platform Shopify (NYSE: SHOP)(TSX: SHOP) posted solid financials for the third quarter of 2018, including total revenue of $270.1 million, representing 58

Subscription News: Shopify Grows Total Revenue 58 Percent to $270.1 Million in Q3

Source: Shopify

Multi-channel commerce platform Shopify (NYSE: SHOP)(TSX: SHOP) posted solid financials for the third quarter of 2018, including total revenue of $270.1 million, representing 58 percent growth year-over-year. Subscription Solutions was a big driver of that growth with revenue of $120.5 million, a 46 percent increase over the third quarter of 2017.

Other financial highlights for the quarter include:

  • Merchant Solutions revenue was $149.5 million, a 68 percent increase year-over-year, primarily due to growth in Gross Merchandise Volume (GMV).
  • As of September 30, 2018, monthly recurring revenue (MRR) was $37.9 million, a 41 percent increase over last year’s figure of $26.8 million.
  • Shopify Plus represented 24 percent, or $9.2 million, of MRR.
  • GMV for Q3 was $10.0 billion, an increase of $3.6 billion, or a 55 percent increase over Q3 2017.
  • Gross Payments Volume was $4.1 billion, or 41 percent of GMV.
  • Gross profit grew 50 percent to $149.7 million, compared to $100 million for Q3 2017.
  • Operating loss was $31.4 million, or 12 percent of revenue, compared to $12.7 million, or 7.4 percent of revenue for the same period last year.
  • Net loss for the quarter was $23.2 million, or $0.22 per share, compared to a $9.4 million loss, or $0.09 per share, for the third quarter of 2017.
  • As of September 30, 2018, Shopify had $1.58 billion in cash, cash equivalents and marketable securities, compared to $938 million at year end in 2017.

“Solid execution and continued rapid growth drove our strong results in the third quarter,” said Shopify CFO Amy Shapero in an October 25 news release. “We relentlessly shipped new products and features to prepare our merchants for their biggest selling season of the year, merchants’ GMV expansion was well ahead of ecommerce growth overall, and our merchant base continues to expand at a healthy clip. We’re well positioned to close 2018 and enter 2019 with excellent momentum.”

Shopify also reported a number of operational highlights:

  • Shopify launched Locations to allow merchants to track inventory in multiple locations from their Shopify account.
  • Shopify introduced the new App Store, so it is easier for merchants to find apps that will help them growt their business.
  • Shopify launched Shopify AR for merchants who want to use augmented reality.
  • Shopify Payments expanded to Germany. It Is now available in 10 countries: United States, Canada, the United Kingdom, Australia, Ireland, New Zealand, Japan, Singapore, Hong Kong and now Germany.
  • Customer purchases on mobile devices grew, now accounting for 77 percent of traffic and 67 percent of orders for the quarter, compared to 74 percent and 62 percent respectively.
  • Shopify Capital issued $76.4 million in merchant cash advances, a 73 percent increase over the third quarter of 2017.

Shopify offered the following guidance for the fourth quarter of 2018:

  • Revenues between $315 million and $325 million
  • GAAP operating loss between $15 million and $17 million
  • Adjusted operating income between $16 million and $18 million

Shopify offered the following full year guidance for 2018:

  • Revenues between $1.045 billion to $1.055 billion
  • GAAP operating loss between $95 million and $97 million
  • Adjusted operating profit between $8 million to $10 million

Subscription News: Shopify Grows Total Revenue 58 Percent to $270.1 Million in Q3

Source: Shopify

Shortly after the end of the quarter, Shopify announced its first-ever physical location in Los Angeles, offering in-person support, training and customer service to merchants and entrepreneurs using the Shopify platform. Merchants who want to learn more can visit Shopify.com/LA.

“Our new space in downtown LA is a physical manifestation of our dedication and commitment to making commerce better for everyone. We’re thrilled to be able to take our proven educational, support, and community initiatives and put them to work in an always-on capacity,” said Satish Kanwar, VP of Product at Shopify, in a news release. “We know that making more resources available to entrepreneurs, especially early on, makes them far more likely to succeed, and we’re happy to now be offering that through a brick-and-mortar experience in LA.”

Shopify stock jumped from $122.27 per share on October 24 to $136.99 on October 25, the day financials were released. It has dipped a bit since then, closing at $129.14 as of 7:43 p.m. EDT yesterday. This still up quite a bit from October 31, 2017 when Shopify stock was valued at $99.49 per share on the New York Stock Exchange.

Subscription News: Shopify Grows Total Revenue 58 Percent to $270.1 Million in Q3

Source: Google

Insider Take:

Shopify is still in growth mode, so it is making investments and not yet turning a profit. However, with strong growth in the Subscription Solutions and Merchant Solutions categories, a new brick-and-mortar store, and a host of growing services – Shopify Payments, Shopify Capital, Shopify AR and more – Shopify is positioning itself to be the “go to” multi-channel commerce platform for merchants of all sizes.

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