Shopify is one of the most renowned e-commerce platforms for small and medium-sized businesses. The company's stock has skyrocketed 167% in 2020. Shopify has experienced astronomical growth across the board, from sales to gross merchandise volume (GMV). The amount of money spent on the platform increased by 119% year-over-year.
In less than six months, Shopify stock rose from $322 in March to $1146 in September, which was the company’s all-time high.
◾Shopify’s Spectacular Q2 Earnings Report
On July 29th, 2020, Shopify announced strong Q2 financial results for the quarter ended June 30, 2020. The e-commerce giant reported revenue of $714.3 million for the quarter, a 97% increase from Q2 in 2019. According to Refinitiv data, Shopify’s Q2 revenue was $200 million more than analysts’ expectation of $513.83 million. It reported quarterly earnings of $1.05 per share, beating experts’ consensus estimate of $0.01 per share by $0.04. The company’s EPS has increased very quickly from $0.14 a year ago. In Q2 2020, Shopify’s gross profit dollars grew 83% to $375.0 million, compared to $204.8 million for Q2 2019. The number of new stores created on the platform rose by 71% in Q2 compared to Q1.
Revenue from Shopify’s Merchant Solutions grew by a whopping 148% to $517.9 million, while Subscription Solutions grew 28% to $196.4 million.
Shopify is expected to report Q3 earnings later today for the fiscal quarter ended Sep 2020. The consensus earnings-per-share forecast for the quarter is $-0.13. Its e-commerce retail market share has been increasing steadily in consecutive quarters and will be another key metric to watch.
◾Is Shopify still a good long-term investment?
The company is undertaking several plans that will catalyze tremendous growth in the coming years. In 2019, Shopify announced that it will invest more than $1 billion in the next five years to build out its Fulfillment Network. The integrated fulfillment solution has developed rapidly since it was launched and will expand its capabilities tremendously throughout the coming years. Experts believe that the network’s capabilities will level the playing field and enable Shopify to compete more effectively against Amazon. In the next five years, Shopify’s value, market cap, market share, revenue, and profitability could increase rapidly as its fulfillment capabilities expand.
Shopify still has much room for growth in the long-term. E-commerce has reached an inflection point this year. Most retailers currently operate online and physical stores. Shopify has positioned itself perfectly to exploit this transition to e-commerce, evidenced by its GMV for 'buy online, pick up in-store' that more than doubled in Q2 compared to Q1 of 2020. Additionally, Shopify has proven its ability to innovate unique solutions to attract businesses of all sizes. It unveiled Shopify Plus for bigger retailers with tons of features to handle large, high-volume brands. This enterprise-level has enticed major retailers and now contributes 29% of Shopify's monthly recurring revenue.
Shopify also offers a basic option with low-cost plans starting at $9 per month, which is enticing for many first-timers and SMBs. With all these offerings, Shopify won’t run out of customers any time soon. Its popularity will likely continue to grow.
Even though the challenges created by the crisis contributed to Shopify’s spectacular Q2 earnings, the e-commerce giant has the potential to grow long after the health crisis is over. It only revealed the benefits of having both online and physical stores. Most businesses are now keen on maintaining or even expanding their online stores on Shopify.
𝘋𝘪𝘴𝘤𝘭𝘰𝘴𝘶𝘳𝘦: 𝘐 𝘰𝘸𝘯 Shopify 𝘪𝘯 𝘮𝘺 𝘱𝘰𝘳𝘵𝘧𝘰𝘭𝘪𝘰 𝘢𝘯𝘥 𝘵𝘩𝘪𝘴 𝘪𝘴 𝘮𝘺 𝘱𝘦𝘳𝘴𝘰𝘯𝘢𝘭 𝘷𝘪𝘦𝘸 𝘢𝘯𝘥 𝘢𝘯𝘢𝘭𝘺𝘴𝘪𝘴 𝘰𝘧 𝘵𝘩𝘦 𝘤𝘰𝘮𝘱𝘢𝘯𝘺 𝘢𝘯𝘥 𝘴𝘩𝘰𝘶𝘭𝘥 𝘯𝘰𝘵 𝘣𝘦 𝘵𝘢𝘬𝘦𝘯 𝘢𝘴 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵 𝘢𝘥𝘷𝘪𝘤𝘦.