Advertisement
The e-commerce company’s diversity of merchants has helped it cope with lower consumer spending caused by high inflation and elevated borrowing rates.
Shopify Inc.’s president has heard retailers talking about softening consumer spending but feels his company is weathering the storm well because of the diversity of its merchants.
“Our merchants do seem to be outperforming and doing better than others,” Harley Finkelstein told analysts on a Wednesday earnings call.
“I think a big part of the reason that we are not seeing the same thing that others might is because we simply have merchants across a ton of verticals and across a ton of geographies.”
The Ottawa-based e-commerce software company caters to both small businesses and multi-national giants. It’s recently attracted the likes of burgeoning brands including jeweler Mejuri and apparel company Evereve, along with household names such as Toys “R” Us, Barnes & Noble and Casper.
The bevy of brands have helped Shopify cope with lower consumer spending caused by high inflation and elevated borrowing rates in many of its key markets.
Several brands have said they expect the softening to continue as the year progresses, but Shopify’s chief financial officer Jeff Hoffmeister said on the same call as Finkelstein that their company hasn’t seen “any significant deterioration or improvement” during its second quarter.
That quarter delivered a net income of $171 million or 13 cents per diluted share, Shopify said Wednesday. (All figures in U.S. Dollars.)
The result for the company, which keeps its books in U.S. dollars, compared with a net loss of $1.31 billion or $1.02 per diluted share a year earlier when the company recorded a $1.34-billion charge on the sale of its logistics business.
Revenue for the quarter ended June 30 totalled $2.05 billion, up from $1.69 billion in the same quarter last year.
The increase came as subscription solutions revenue reached $563 million, up from $444 million a year ago, while merchant solutions revenue amounted to $1.48 billion, up from $1.25 billion.
“We are at our strongest yet,” Finkelstein told analysts just after the results were released.
Shopify shares on the Toronto Stock Exchange jumped 17.9% Wednesday to close at $87.87.
Meanwhile, TD Securities analyst Daniel Chan saw the quarter as being a reflection of “Shopify’s e-commerce leadership and continued ability to gain market share,” especially because its results were strong “despite a mixed consumer spend environment,” he said in a note to clients.
He added that parts of the company’s guidance were “better than expected.”
In its outlook for its third quarter, Shopify said it expects revenue to grow at a low-to-mid-twenties percentage rate on a year-over-year basis.
During that quarter, Hoffmeister said the company plans to hire for some key roles in its sales and research and development divisions. He expects the year to end with “minimal” headcount growth. He said Shopify had 8,300 employees at the end of 2023.
Shopify laid off 20% of its staff in May 2023 in a move meant to help it more intensely focus on its main operations. In July 2022, it also cut about 1,000 workers.
Newsletter
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Parents, here are the CCB payment dates for 2024, along with how much you can expect to receive each...
Here’s how Canada’s Old Age Security pension program works, who’s eligible for OAS, when you can start receiving OAS,...
Here’s how Canada’s retirement pension plan works, who’s eligible for CPP, when you can start receiving CPP, and CPP...
Canadians have reporting requirements for foreign assets, income and tax paid. Here’s how to claim each of these on...
Whether you want the highest interest rate or no service fees, these savings accounts will meet your needs.
Find the best GIC rates in Canada. Plus, everything you need to know about how they work.
Which ETFs should you invest in? Which ones best suit your risk tolerance? What about personal ethics? Check out...
Investors in Canada and the U.S. look forward to post-election certainty, but concerns remain about interest rates and global...
Apple and Nvidia vie for global market cap crown; Google, Microsoft and Meta crush earnings; Amazon’s Bezos takes WaPo...
Economy stalled in August, Q3 growth looks to fall short of Bank of Canada estimates.