Shopify ‘hitting stride’ as public company
Shopify shares surged in early morning trading as investors absorbed news of the Ottawa firm’s stellar first quarter, which ended March 31.
The stock hit a record $115.64 out of the gate on the TSX, up nine per cent from the previous day’s close, giving Shopify a market value in excess of $10 billion for the first time. After that initial burst of enthusiasm, the share price later settled into a more modest but still impressive gain of 7.4 per cent at the close.
“We’ve hit our stride as a public company,” chief executive and founder Tobias Lutke said during a Tuesday morning conference call.
“We’re starting to be more comfortable leading this space rather than just being a market participant.”
The space he was referring to is the burgeoning market of providing online merchants with a technology platform for selling their wares and services.
More than 400,000 merchants now use Shopify’s e-commerce products compared with 175,000 two years ago, when the company first sold shares to the public.
Even that understates the importance of an underlying shift in Shopify’s base of revenues.
While the Ottawa firm started out targeting small and mediumsized businesses, some of the latter have become quite successful. This means larger customers are making up a bigger share of Shopify’s revenues.
Rapid growth in the number of Shopify’s customers, combined with improvement in their heft, helped to fuel the company’s first quarter.
Shopify easily outpaced forecasts for the first quarter as revenues jumped 75 per cent yearover-year to $127.4 million (all figures U.S.). The electronic commerce specialist also reported a lower than expected operating loss of $4.3 million.
The consensus prediction for the quarter had been $121.6 million, while Shopify had earlier told independent analysts to expect an operating loss in the range of $9 million to $11 million.
The firm, which recently announced plans to substantially expand its downtown facilities, also upped its sales forecast for the coming year. Shopify said it now anticipates revenues in the range of $615 million to $630 million for 2017 compared with its earlier forecast of $580 million to $600 million.
Shopify ended the quarter with nearly $400 million cash on hand, a small increase from Dec. 31 despite the company’s first-quarter operating loss.
“With our excellent start to the year,” said Shopify’s chief financial officer Russ Jones, “it is clear we are becoming the de facto platform for (online) sellers.”
Certainly, the company is becoming a significant force in online retailing. After eight straight quarters of solid performance as a public firm, it is also building a reputation for doing what it said it would do — and more.