(Bloomberg) — Shopify Inc. reported first-quarter revenue that topped analysts’ estimates as businesses moved swiftly online during the coronavirus pandemic.
Sales grew by 47% to $470 million from the same quarter a year ago, Ottawa-based Shopify said in a statement Wednesday. Analysts had expected about $443 million, according to data compiled by Bloomberg.
“We are working as fast as we can to support our merchants by re-tooling our products to help them adapt to this new reality,” Chief Executive Officer Tobi Lutke said in the quarterly release.
The key metric of gross merchandise volume, which represents the value of all goods sold on the platform, increased 46% or $5.5 billion to $17.4 billion from a year earlier. Analysts were expecting a 40% increase on a year-over-year basis to $16.9 billion.
Adjusted net income rose to $22.3 million, or 19 cents a share in the quarter from 6 cents a year earlier.
The New York-listed shares climbed 0.2% in early trading Wednesday.
Investors have continued to pile into the tech stock this year, pushing its market value to C$113.4 billion ($80.7 billion). It’s now the second-most valuable company on the Canadian stock market, just C$7.5 billion from Royal Bank of Canada which sits at C$120.9 billion as of Tuesday’s close.
Shopify suspended its 2020 financial guidance in April. Today, it said it is closely monitoring the impact rising unemployment has on new shop creation on its platform and consumer spending, the rate at which consumer spending habits transition to online shopping and the ability of brick-and mortar retail merchants to shift sales online.
Moving Online
Shopify’s data show the switch to online sales was fairly painless for many.
Most of the company’s retail merchants suspended their instore operations, sending point-of-sale volumes tumbling between March 31 and April 24 but they still managed to replace 94% of gross merchandise value with online sales, according to the company statement.
“Retail merchants are adapting quickly to social-distance selling, as 26% of our brick-and-mortar merchants in our English-speaking geographies are now using some form of local in-store/curbside pickup and delivery solution, compared to 2% at the end of February,” Shopify said.
In April, its Chief Technology Officer Jean-Michel Lemieux said the Ottawa-based e-commerce company was seeing U.S. Black Friday-type of traffic as it adds “thousands” of businesses to its platform amid the coronavirus outbreak. Many brick-and-mortar businesses have used Shopify to keep their companies afloat as nationwide lockdowns force retail store closures across the world.
Shopify offers tools to allow businesses to open their own digital stores across multiple channels, including social media. The company launched a redesigned point-of-sale service earlier this month that brings online and offline sales together, offers curbside pickup and local delivery options and greater flexibility to move inventory between various locations. Its rivals include tech giant Amazon.com Inc. and Square Inc.
Still, there has been a growing sense that Shopify’s stock rally may be overdone. Last week, Canaccord Genuity downgraded the stock, warning “we’re not entirely convinced” that gross merchandise volume “is as bulletproof as perceived.
Read more: Shopify Too Hot to Handle for Some Analysts After Latest Surge
The company said new stores created on it platform grew 62% between March 13 and April 24 versus the prior six weeks, driven by both first time and established sellers. But it added, “it is unclear how many in this cohort will sustainably generate sales, which is the primary determinant of merchant longevity on our platform.”
(Updates with more details from quarterly results.)
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