Shopify's second quarter results benefited from a surge in small businesses going digital in a hurry and leveraging e-commerce amid the COVID-19 pandemic.
The company reported revenue of $714.3 million, up 97% from a year ago, with net income of $36 million, or 29 cents a share. Non-GAAP earnings were $1.05 a share.
Shopify was expected to report second quarter sales of $513.8 million with non-GAAP earnings of a penny a share. Estimates have had wide ranges due to economic uncertainty.
Tobi Lütke, Shopify's CEO, said there has been a "rapid shift to online commerce" and a growing conviction in "distributed entrepreneurship" over conventional employment.
On a conference call with analysts, Harley Finkelstein, chief operating officer, said:
Over the past few months, we've seen the COVID-19 pandemic fundamentally shift the way businesses and consumers interact. It has catalyzed e-commerce, introducing major changes in buyer behavior and pulling forward what retail would look like in 2020. Many merchants were caught off guard, and we knew that Shopify needed to act fast to help them survive. So from late March through the second quarter, we dialed up our urgency to enable independent businesses to adapt and compete in this new reality. This urgency helped more merchants not just survive, but thrive in a period of major upheaval. I cannot recall a time in our history when we have shipped so many features in such a short period of time.
Lütke was also asked about analytics on the Shopify platform as its market expands. Lütke said:
The way we are thinking about data is that what we really want to do is help the merchants surface their own data, like given the insights from their own sales patterns, help them with their own decision-making on business expansion. On a macro aggregated level, we are learning how businesses are best growing, what might be the next step might be for the merchants that are looking for and the next steps to expand their business against the backdrop of different economic environments and states and industries and so on. So all of this is beneficial.
- New stories on Shopify grew 71% in the second quarter compared to the first quarter.
- Customers are converting from a 90-day free trial to paid customers, but at a "slightly slower rate" than merchants that joined before the pandemic.
- Point-of-sale volume began to recover in June as businesses reopened.
- Monthly recurring revenue as of June 30 was $57 million, up 21% from a year ago.
- Walmart to integrate Shopify to boost its Walmart Marketplace assortment
- Shopify intros Balance financial service for SMBs, expands access to AI fulfillment network
Shopify didn't provide an outlook for the third quarter or 2020. The company said:
The COVID-19 pandemic has accelerated the growth of ecommerce, shifting a larger share of retail spending to online commerce, a trend we believe will persist. While COVID-19 has significantly influenced online store creation and consumer spending behavior, the magnitude and duration of its future impact remain uncertain in view of the greater likelihood of an extended global recession. As a result, Shopify is not providing a financial outlook for Q3 2020 or for full year 2020.