Shopify reported better-than-expected fourth quarter results and said it expects growth rates to slow as countries roll out COVID-19 vaccines and consumer spending shifts more offline.
The company added that it would invest in its fulfillment network, app and point-of-sale technology and international expansion in 2021.
Shopify's outlook highlights how some of technology's big winners during the COVID-19 pandemic are going to see slowing growth as consumers get vaccinated and retail's new normal emerges. This more normalized growth comes amid big revenue surges in 2020. In its earnings statement, Shopify said:
Our outlook coming into 2021 assumes that as countries roll out vaccines in 2021 and populations are able to move about more freely, the overall economic environment will likely improve, some consumer spending will likely rotate back to offline retail and services, and the ongoing shift to ecommerce, which accelerated in 2020, will likely resume a more normalized pace of growth.
As a result, we expect that we will continue to grow revenue rapidly in 2021, albeit at a lower rate than in 2020. While we expect that the first quarter will likely still contribute the smallest share of full-year revenue and the fourth quarter the largest, the revenue spread may be more evenly distributed across the four quarters than it has been historically if the rollout of a vaccine shifts more spending to services and offline shopping towards the back half of the year.
Specifically, Shopify said it will invest in R&D and hiring in 2021 and spend to market services beyond its core e-commerce services. Subscription solutions revenue growth will be lower than 2020, but higher than any previous year.
Shopify's outlook is rationale but may be a comedown considering the company's sales in 2020 were up 86% from 2019.
In the fourth quarter, Shopify reported revenue of $977.7 million, up 94% from a year ago. Subscription solutions revenue was $279.4 million, up 53% from a year ago, with merchant solutions up 117% to $698.3 million.
Shopify reported net income of $123.9 million, or 99 cents a share, in the fourth quarter. Non-GAAP earnings were $1.58 a share. Wall Street was looking for Shopify to report fourth quarter revenue of $910.2 million with non-GAAP earnings of $1.26 a share.
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For 2020, Shopify reported revenue of $2.93 billion, up 86% from a year ago. The company reported $319.5 million, or $2.59 a share. Non-GAAP earnings were $491.3 million, or $3.98 a share.