Shopify Second Quarter Revenue Grows 62 Percent to $245.0 Million
Driven by strong growth in Subscription Solutions revenue
Multi-channel eCommerce platform Shopify (NYSE: SHOP)(TXS: SHOP)reported strong revenue growth of 62 percent in the second quarter of 2018 with total revenue of $245.0 million, driven by Subscription Solutions revenue of $110.7 million, a 55 percent increase year-over-year, and Merchant Solutions revenue of $134.2 million, a 68 percent increase. Subscription Solutions revenue was driven by growth in Monthly Recurring Revenue and an increase in the number of merchants using the Shopify platform for their online businesses. Merchant Solutions revenue was driven by Gross Merchandise Volume and growth in Shopify Capital and Shopify Shipping, each more than doubling revenue over Q2 2017.
“The diversity of our revenue drivers and of our merchant base contributed to our strong revenue growth this past quarter,” said Amy Shapero, CFO, in a news release. “Our mission, our technology and our growth model position us, and our merchants, to thrive in the face of massive changes to retail. We built the Shopify platform to meet the many and varied needs of all types of merchants, whether they are makers or curators, entrepreneurs or household brands. This presents us with an expansive opportunity set that we will continue to invest in with a view to even greater success over the long term.”
Other financial highlights from Shopify’s second quarter include the following:
- As of June 30, 2018, Monthly Recurring Revenue was $35.3 million, a 49 percent increase year-over-year.
- Shopify Plus represented $8.1 million, or 23 percent, of MRR, compared to 18 percent for Q2 2017.
- Gross Merchandise Volume was $9.1 billion, an increase of $3.3 billion, or 56 percent year-over-year.
- Gross Payments Volume was $3.6 billion, representing 40 percent of GMV processed during the quarter.
- Gross profit grew 58 percent to $137.0 million, compared to $86.8 million in Q2 2017.
- Operating loss was $30.8 million, or 12.6 percent of revenue, compared to a loss of $15.9 million, or 10.5 percent of revenue for the same period last year.
- Net loss for Q2 2018 was $24.0 million, or $0.23 per share, compared to $14.0 million, $0.15 per share, for Q2 2017.
- Adjusted net income was $2.5 million, or $0.02 per share, compared to an adjusted net loss in Q2 2017 of $1.1 million, or $0.01 per share.
- As of June 30, 2018, Shopify had $1.57 billion in cash, cash equivalents and marketable securities, compared to $938 million as of December 31, 2017.
Operational highlights for the second quarter include:
- Shopify hosted partners from around the world at the company’s annual Unite conference in Toronto, where merchants learned about coming upgrades and enhances to the platform.
- Company launched new Tap & Chip Reader.
- Shopify launched Shopify Payments in Japan, bringing the total countries offering the service to eight.
- More than one-third of eligible merchants in the U.S. and Canada used Shopify Shipping.
- Mobile device sales grew during Q2, accounting for 76 percent of traffic and 66 percent of orders, versus 72 percent and 60 percent, respectively, for the same period last year.
- Shopify Capital issued $68.5 million in merchant cash advances, an 84 percent increase year-over-year.
- Shopify Capital has grown to nearly $300 million in cumulative merchant cash advances since its April 2016 launch.
- Shopify announced a partnership with Nest. Merchants can access Store Cam footage through Nest Cams.
Shopify offered the following guidance for Q3 2018:
- Revenues between $253 million and $257 million
- GAAP operating loss between $40 million and $42 million
- Adjusted operating loss between $9 million and $11 million
Shopify offered the following guidance for the full year 2018:
- Revenues between $1.015 billion to $1.025 billion
- GAAP operating loss between $105 million and $110 million
- Adjusted operating profit in the range of $0 million to $5 million
Originally launched in 2006, Shopify now has more than 3,000 employees, more than 600,000 merchants in 175 countries and total sales of $63 billion. The company has four offices in Canada and one in San Francisco.
In anticipation of second quarter financials, Shopify stock went from a high for the month of $173.78 per share on July 25 down to $138.21 per share on July 31, the day financials were released. Stock has rebounded slightly to $141.87 as of 6:31 EDT on August 3.
Shopify has seen tremendous growth this quarter, continuing its upward trend. With new features and services, the company has been able to attract big name brands like Nestle and eBay to the fold as well as smaller businesses and solo entrepreneurs. All the trends seem to be moving in the right direction, and if the company can post any kind of profit at year end, this will be a huge plus for this company.