E-commerce firm Shopify Inc, beat Wall Street estimates for third-quarter revenue on Thursday, as more brick-and-mortar businesses listed on its platform to tap the pandemic-driven surge in online shopping.
The boom in online orders from consumers sheltering at home during the outbreak boosted sales across e-commerce firms, encouraging small- to medium-sized businesses to create an online presence.
Shopify generates revenue by selling subscription to merchants looking to join its e-commerce platform and by charging them payment processing and transaction fees along with other paid logistics services.
The Ottawa-based company’s gross merchandise volume (GMV), a metric used in the e-commerce sector to measure transaction volumes, surged 109 per cent to $30.9 billion US in the quarter, the highest since its IPO in 2015.
The company said its monthly recurring revenue rose 47 per cent to $74.4 million US as more merchants on free trials converted into paying subscribers.
“With consumers and retail moving online, new business formation is likely to focus more on digital than physical, that can support strong growth for Shopify even post the peak of the pandemic,” Wedbush analysts Ygal Arounian said.
Revenue nearly doubled to $767.4 million US for the quarter, beating analysts’ estimate of $663.4 million US, according to IBES data from Refinitiv.
In its move to attract more customers, the company recently joined hands with TikTok to help its one million-plus merchants advertise their products more easily on the video-sharing app.
Excluding items, Shopify reported earnings of $1.13 per share, beating estimates of 53 cents.