Shopify has pledged to redirect investments to assist merchants during the COVID-19 pandemic while also reporting strong Q1 results.
Ottawa, Canada-based Shopify released its first quarter earnings for 2020 (statement, .PDF) on Wednesday.
The e-commerce giant reported total revenue for Q1 2020 of $470 million, a 47% percent increase year-over-year. Net loss was $431.4 million or $0.27 per share. Adjusted, non-GAAP net income was $22.3 million, or $0.19 per share, in comparison to $7.1 million -- or $0.06 per share -- in Q1 2019.
As of March 31, Shopify had $2.36 billion in securities and cash on hand.
Subscription revenue grew by 34% to $187.6 million. The company says that this growth rate is largely due to an increase in merchants joining the platform, strong mobile application adoption, and an increase in Shopify Plus subscriptions.
Merchant Solutions revenue growth increased by 57% over the quarter to $282.4 million.
Gross Payments Volume (GMV) for Q1 2020 was $17.4 billion, an increase of 46% over Q1 2019. Non-GAPP profit was reported as $263.8 million.
Operating loss for the first quarter was $73.2 million -- or 16% of total revenue -- an increase from an operating loss of $35.8 million a year ago. Non-GAAP operating loss is $7.3 million or 2% of revenue.
Shopify says the losses were due to the acquisition of 6 River Systems, an increase in the allowances of losses in relation to Shopify Payments, and business disruption caused by the coronavirus pandemic.
"The vast majority of people are employed by small businesses, and they struggle the most during a crisis," said Tobi Lütke, Shopify CEO. 'The spread of COVID-19 is going to be a tough time for all entrepreneurs. 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. Our goal is that, because Shopify exists, more entrepreneurs and small businesses will get through this."
In Q4 2019, Shopify reported earnings that surpassed analyst expectations, reaching revenues of $505.2 million, an increase of 47% year-on-year. The company also reported a net income of $800,000 and non-GAAP earnings of $0.43 cents per share.
In April, Shopify released business guidance for investors outlining changes due to the coronavirus epidemic. The company said that new resources had been published for merchants and a $200 million fund was made available for the business funding arm Shopify Capital.
Shopify suspended its full-year outlook as the company expects financial results to be "contingent on the duration and scope of the COVID-19 pandemic."
Shopify will be redirecting spending from areas including brand marketing to bolster merchants during this time and to improve multi-channel selling and direct-to-consumer fulfillment operations.
Previous and related coverage
- Shopify reports strong Q4, plans to ramp up investments in automation, fulfillment for 2020
- Shopify launches new email marketing tool for SMBs
- Shopify reports Q3 earnings miss due to tax provision
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