Business News: Shopify soars after e-commerce boom, generating big profits.
Shares in Shopify rose 11.4% on Wednesday after the Canadian company, which makes tools for companies to promote merchandise online, reported first-quarter results that crushed analysts’ expectations.
For the main quarter, Shopify posted revenue of $ 988.6 million, which is up a whopping 110% from 12 months earlier and surpassed consensus estimates of $ 862.7 million. Adjusted earnings per share were $ 2.01, more than three times the 75 cents per share forecast by Wall Street.
Shopify’s web revenue was boosted by an unrealized $ 1.3 billion payout on its investment in online fund company Affirm, which went public in January. As part of a partnership created last July, Shopify owns more than 20 million shares of Affirm.
Shopify has become one of the biggest winners of the pandemic-fueled shift to ecommerce, as many brick-and-mortar stores have been temporarily closed and people have chosen to stay indoors to slow the spread of the coronavirus. Shopify’s stock price rose in 2020 in the wake of that time.
Investors are now hoping that Shopify will continue to attract more businesses that are looking to build a digital presence, even after the economy continues to reopen and consumers return to brick-and-mortar stores.
“Our forecasts for the full year 2021 are driven by assumptions that remain unchanged from February: As nations proceed to roll out vaccines in 2021 and populations are able to move more freely, the overall financial atmosphere is likely to improve; some of the shoppers’ spending will likely turn back to offline retailers and suppliers; and the continued shift to ecommerce, which accelerated in 2020, will likely pick up an extra normalized pace of development, “Shopify said in its earnings launch.
On Wednesday’s earnings name with shoppers, Shopify executives said that even in areas where economies have reopened, retailers are still seeing strong demand.
The company reported that gross merchandise quantity more than doubled to $ 37.3 billion in the quarter, indicating that momentum remains strong. GMV is a metric usually used in the e-commerce industry to measure the full value of products purchased over a given period of time.