Shopify Reports Record Revenue Growth in Q2 Due to Pandemic

Second quarter revenue grew 97% to $714.3 million.

Global ecommerce platform Shopify saw record revenue growth during the second quarter of 2020 due to the coronavirus pandemic. The company reported total revenue of $714.3 million for the period ended June 30, 2020, a 97% increase year-over-year. Gross merchandise value (GMV) was $30.1 billion, representing 119% growth year-over-year. Growth was particularly strong in April and May and slowing down in June and July.

CEO and CFO remarks

“The world is changing fast,” said Tobi Lütke, Shopify’s CEO, in the company’s July 29 financial report. “With the rapid shift to online commerce, massive disruption to conventional employment, and growing conviction that opportunity needs to be more evenly distributed, entrepreneurship has never been more important. With all of these changes, our core principles remain the same: everything we ship is designed to lower barriers to entrepreneurship and reduce friction wherever we can.”

CFO Amy Shapero also commented on the company’s strong quarter.

“The strength of Shopify’s value proposition was on full display in our second quarter. We are committed to transferring the benefits of scale to our merchants, helping them sell more and sell more efficiently, which is especially critical in this rapidly changing environment. With our strong balance sheet and through prudent capital allocation, we remain well positioned to continue solving critical pain points for our merchants and contribute to their success for years to come,” Shapero said.

Impact of COVID-19

Shopify reported numerous impacts to the company because of the pandemic. Consumer shopping habits have shifted toward ecommerce due to shelter-in-place orders and the closure of many schools and businesses. New stores on the Shopify platform grew 71% in the second quarter, compared to the first. Part of this was due to Shopify’s extension of the free trial period from 14 days to 90 days. The 90-day free trial period ended May 31. Shopify’s hope is that merchants who started stores in April and May will convert to paying subscribers at the end of their free trials later this summer.

You May Be Interested In:

Check out our Upcoming Webinars!

We have a three webinars coming up this month that you will not want to miss.
Check out the details and sign up today.

Learn How to Leverage Lifetime Value
How to Track, Apply, and Optimize Acquisition for LTV

April 28, 2021
Noon Eastern


Learn a Product Development Framework For Maximum Revenue
How To Achieve Sustained Subscriber Growth

May 6, 2021
1 PM Eastern


Learn Monetization Strategies For Each Stage Of Your Business
The Journey to Subscription Excellence

May 13, 2021
1 PM Eastern


GMV through Shopify’s point-of-sale (POS) channel dropped by 29% in the second quarter, because many brick-and-mortar stores closed during the first months of the pandemic. Shopify is starting to see recovery to the GMV as retail merchants are being allowed to reopen their stores, following their jurisdiction’s guidelines for reopening. Popular categories where GMV increased faster included food, beverage and tobacco which doubled compared to the first quarter of the year.

Shopify's subscription model and its tools and guides help online and brick-and-mortar merchants start a business, starting at $29 a month for the Basic Shopify package to $299 a month for Advanced Shopify.

Financial highlights

Second quarter financial highlights include the following:

  • Subscription Solutions revenue was $196.4 million, a 28% increase year-over-year. Shopify attributes this to more merchants opening ecommerce businesses on their platform.
  • Merchant Solutions revenue grew for the third straight quarter to $517.9 million, an increase of 148% increase year-over-year.
  • Monthly Recurring Revenue was $57.0 million, a 21% increase, including $16.6 million from Shopify Plus.
  • GMV for Q2 was $30.1 billion, a 119% increase year-over-year
  • Gross Payments Volume was $13.4 billion, compared to $5.8 billion for the same period last year.
  • Gross profit was $375.0 million, an increase of 83% year-over-year.
  • Net income for the second quarter was $36.0 million, or $0.29 per diluted share, compared to a net loss of $28.7 million, or $0.26 per diluted share, for Q2 2019.

Operational highlights during the quarter include the following:

  • Shopify hosted their first virtual event, Shopify Reunite, to share information about new products and features with merchants.
  • Shopify launched a Facebook Shops channel, so Shopify merchants can customize their storefronts and merchants for Facebook and Instagram.
  • Shopify also launched the Walmart channel.
  • Merchants in the U.S., Canada and the U.K. received $153 million in merchant cash advances and loans from Shopify Capital.
  • In the last 12 months, 30,300 partners referred a merchant to Shopify.

Financial outlook

Because COVID-19 remains pervasive around the world, and consumer shopping habits have shifted, Shopify said that they would not provide an outlook for the third quarter of the full year 2020. Some of the challenges that are potential factors are continued and rising unemployment, changes in discretionary and non-discretionary spending, and the impact changes in brick-and-mortar stores will have as they move to multi-channel strategies.

“The COVID-19 pandemic has accelerated the growth of ecommerce, shifting a larger share of retail spending to online commerce, a trend we believe will persist. While COVID-19 has significantly influenced online store creation and consumer spending behavior, the magnitude and duration of its future impact remain uncertain in view of the greater likelihood of an extended global recession,” Shopify said.

Insider Take

This is a HUGE turnaround for Shopify. While unfortunate that it took a pandemic to make it happen, Shopify has been able to go from being solidly in the red to being solidly in the black, as evidenced by their net income/net loss figures year-over-year. On August 27, 2019, Shopify stock was valued at $406.99 per share. As of 1:23 p.m. EDT yesterday, Shopify was valued at $1,052.45, more than double last year’s value. This is incredible. While such a spike may not continue, merchants are finding Shopify and learning that they have the tools and expertise to help them be successful. This is a win for Shopify, their merchants and consumers who are turning to online shopping.