Shopify's net third-quarter income was $1.1 billion thanks to an unrealized gain related largely to its investment in San Francisco-based Affirm.
Article content
Shopify is bound by the laws of physics after all. On Thursday, the e-commerce giant reported third-quarter revenues of $1.1 billion (all figures U.S.), up 46 per cent year over year.
Advertisement
Article content
That’s about the same pace it had established just before the pandemic slammed into offline retailers in March 2020. Shopify’s revenues soared as merchants rushed to establish or expand their online presence. This boosted both of Shopify’s main streams of revenue — the company charges for a monthly subscription and also pay fees related to a variety of apps ranging from payment processing to shipping.
During the first four quarters of the pandemic, Shopify’s sales roughly doubled year over year. During the quarter ended last June, they climbed a more leisurely 57 per cent from a much higher base.
Had it not been for the pandemic, Shopify’s third-quarter revenues would have been somewhere between $750 million and $800 million — at least $300 million shy of where they turned out.
Advertisement
Article content
Shopify is that rare company, one that has spent much of its existence accommodating relentless demand for its software and services. In sharp contrast, most software startups spent inordinate effort trying to convince customers to come on board. A few years ago, Shopify had the luxury of turning its attention to expanding its operations and product lines at scale in an effort to stay ahead of the curve.
The company has added thousands of employees — the head count is now more than 12,000 worldwide, about 10 per cent of them in Ottawa — expanded its presence overseas and built a network of app developers. It also raised billions of dollars along the way. Its cash balance at the end of September was $7.5 billion.
Shopify’s net third-quarter income was $1.1 billion thanks to an unrealized gain related largely to its investment in San Francisco-based Affirm, which sells software that permits customers to take out loans at most retailers. Affirm’s share price has escalated sharply in recent months, prompting the higher valuation on Shopify’s books.
Advertisement
Article content
Ignoring the impact of that one-time gain, Shopify recorded a $4.1-million operating loss compared to a $130.9-million loss from the third quarter of 2020. The loss included an additional $30-million cost connected to the termination of lease agreements. Shopify committed to a permanent work-from-home model for the vast majority of its employees last year, when it booked an initial charge of nearly $32 million to close offices.
The company is abiding by the revenue outlook it established early this year, one that assumes the economy will remain reasonably healthy and that people will gradually resume shopping in person while continuing to buy online at a pace greatly exceeding the one it established pre-pandemic. Shopify is expected to finish the year with roughly $4.6 billion in revenue, up more than 55 per cent compared to 2020.
Investors reacted Thursday like they often do with this company. They bid up its shares. The momentum may be slowing, but it’s still there.
Shopify reverts to pre-pandemic growth: merely fast - Ottawa Citizen
Read More
No comments:
Post a Comment