Shopify Increases Revenue and Gross Profits, Post Operating Loss in Q3 2021


Shopify reported total revenue of $ 1.12 billion, up 46% year-over-year when it announced its third quarter results for 2021. The Canadian company announced that Gross cargo volume (GMV) for the third quarter was $ 41.8 billion, an increase of $ 10.8 billion. or 35% in the third quarter of 2020.

As impressive as the company’s numbers are, it posted an operating loss for the third quarter of 2021 of $ 4.1 million, or 0.4% of revenue, compared to revenue of $ 50.6 million. dollars, or 7% of sales, for the comparable period a year ago.

Overall, however, Shopify’s gross margin increased 50% to $ 608.9 million, from $ 405.1 million for the third quarter of 2020.

As impressive as the company’s numbers are, it posted an operating loss for the third quarter of 2021 of $ 4.1 million.

As of September 30, 2021, Shopify had $ 7.52 billion in cash, cash equivalents, and marketable securities, up from $ 6.39 billion as of December 31, 2020.

“The strength of Shopify’s flywheel was visible in the more normalized spending environment we experienced over the past quarter, as more merchants made greater use of our platform to start and grow their businesses. “said Amy Shapero, Chief Financial Officer of Shopify.

“Our results show that Shopify is performing well, giving our merchants the tools they need to differentiate themselves in a growing number of markets,” Shapero said. “We remain focused on making commerce easier for our merchants so they can take full advantage of what digital makes possible and reinvent retail. “

It may be, but a chart shared by the company showed that Amazon dominated online with 39% of the market, compared to 8.6% for Shopify. Still, the Canadian company had more market share than Walmart at 5.8% and eBay at 4.9%, for example.

During the earnings call, Shapero noted that the company saw a slight drop in mid-summer as vaccinations increased in the United States and people returned to shopping in physical stores; However, she said that was offset in August by an increase in online retailing with the reopening of workplaces and preparing students for classroom learning in schools.

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Highlights for the third quarter included the initial rollout of Shopify Balance, a money management product, to merchants in the United States. Shopify Balance offers merchants a no-cost money management account with quick access to their money, a card to spend online, on mobile, or in store, and rewards that include cash backs, perks, and discounts. on daily expenses.

Shopify also introduced TikTok Shopping to merchants, allowing merchants with a TikTok For Business account to add products that are directly related to their online store’s checkout.

The company has opened a physical space in New York City offering Shopify’s products, services and technologies, and serving as a hub where merchants can receive hands-on assistance, inspiration, and training to help them grow their business.

And merchants in the United States, Canada and the United Kingdom received a record $ 393.6 million in cash advances and loans to merchants from Shopify Capital in the third quarter of 2021, an increase of 56 % from $ 252.1 million funded in the third quarter of last year.

Shopify Capital has reached approximately $ 2.7 billion in cumulative capital since launching in April 2016, of which approximately $ 524 million was outstanding as of September 30, 2021.

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The company said its outlook for the remainder of 2021 is in line with our February assumptions. The economy remains resilient, consumer spending on services and offline retail is growing, and e-commerce, after declining from its peak share as a percentage of total retail sales, is growing at a faster pace. normalized to 2020.

Given these factors, Shopify continues to expect rapid revenue growth in 2021, but at a slower pace than in 2020.

The company expects that the fourth quarter will contribute the largest share of annual revenue and that the revenue distribution will be more evenly distributed over the four quarters than it has been in the past.

“While the commerce market, both online and offline, can be affected by supply chain delays or increased costs of materials, labor, shipping or of advertising in the fourth quarter, and that Black Friday Cyber ​​Monday spending can be pulled forward, we expect our GMV in the fourth quarter to continue to grow much faster than the trade, ”the company said.

Shopify predicts rapid dollar gross profit growth in 2021 and plans to continue to reinvest in its business as aggressively as possible, with year-over-year growth in operating expenses accelerating slightly in the fourth quarter.

RELATED: Former Slack Leader Allan Leinwand Joins Shopify as New CTO

In the second quarter of 2021, Shopify ranked second this year on the TSX30 2021, the Toronto Stock Exchange’s program featuring the 30 best-performing stocks over a three-year period.

Shopify showed 846% growth over the three-year period. The TSX30’s announcement came just after the news that the Canadian e-commerce giant had teamed up with another unicorn, Israeli digital marketing firm Yotpo, in a $ 30 million deal.

Shopify reportedly reached 1.16 billion average monthly unique visitors in the three months ending June, compared to Amazon’s 1.10 billion. Business Insider said the gap is expected to increase in the current quarter, with Shopify-powered sites expected to attract 1.22 billion visitors compared to Amazon’s 1.13 billion.

With the boom in e-commerce turning into 1.75 million customers, Shopify has increased its reach across many verticals, including working with a number of social media companies to launch new features for its merchants, thus becoming one of the most valuable companies.

In October, Shopify’s net worth was valued at $ 182.37 billion. The growth of the Canadian giant should not stop there either.

RELATED: Shopify Crosses Billion Dollar Quarterly Revenue Milestone in Second Quarter Results

Scott Galloway, a professor at the Stem School of Business at New York University, predicted that Shopify would make “pretty serious” deals within the next six to 12 months, predicting the company could buy Snap. The latter is the parent company of the Snapchat messaging app.

Admittedly, the prediction doesn’t seem like a stretch given that Shopify recently struck a deal with streaming service Spotify to mix music and entrepreneurship. Since the end of October, artists on Spotify can now connect their Shopify store to show their products and music directly on their Spotify profile.

Even though Shopify is expanding outward with new partnerships, it has also decided to strengthen its own ecosystem internally. It took steps to refine its platform and ecosystem in mid-September with the announcement of a cross-border solution called Shopify Markets.

“We are now global by default,” Shopify president Harley Finkelstein told CNN in an interview. The solution is intended to help merchants identify, configure, launch and optimize international markets, all from a single Shopify store.

As the business grows, the ranks of Shopify executives continue to change with the latest announcement in October that Allan Leinwand, a former senior executive at Slack, is joining Shopify as CTO.

Feature image courtesy of Shopify


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