Shopify, which provides cloud-based e-commerce technology to manufacturers, distributors and retailers, nearly doubled revenue in the second quarter compared with the prior year. The company attributes growth to an expanded client base and their embrace of new shipping, social media marketing and financing programs.
“Our mission is to add value for merchants, and it is clear the additions to the platform we have made over the past year are doing this,” says Tobi Lütke, founder and CEO. Lütke cites client adoption of key programs, such as Facebook Messenger, Shopify Shipping and Shopify Capital, as contributors to Q2 growth.
Facebook Messenger gives Shopify clients a connection to their customers that provides order confirmations, shipping updates and customer service—in addition to providing merchants a social connection with their customers. Shopify Shipping enables customers to buy and print shipping labels and offers discounted rates on packages shipped via the U.S. Postal Service. Shopify Capital offers clients cash advances to grow their business, the vendor says.
A spike in the number of client merchants to more than 300,000 from 175,000 in Q2 2015 helped drive revenue from companies subscribing to its e-commerce platform to $43.67 million, up 71.6% from $25.45 million.
For the second quarter ended June 30, Shopify reported:
- Gross merchandise volume, or sales transacted by clients on Shopify’s e-commerce software, was $3.40 billion, an increase of 106.1% from $1.65 billion in the second quarter of 2015.
- Total revenue was $86.6 million, up 92.9% from $44.9 million in Q2 2015.
- Net loss grew to $8.4 million compared with $3.3 million in the same quarter last year.
Shopify’s Q2 results “beat consensus expectations,” says Colin Sebastian, an analyst at investment firm Robert W. Baird & Co. Sebastian cites the vendor’s expansion of services to client companies—including the April Facebook Messenger rollout, planned integration with Amazon.com’s Marketplace, and new shipping and capital services—among the reasons Baird is “increasingly confident in Shopify’s mid-market competitive position.”
For the first six months of fiscal 2016, Shopify reported:
- Total revenue was $159.4 million, up 94.0% from $82.3 million.
- Net loss of $17.2 million, compared with a net loss of $7.8 million in the prior-year quarter.
Shopify clients include Spikeball, a manufacturer, marketer and distributor of a trendy beach ball game; Herschel Supply, a manufacturer and wholesaler of backpacks, wallets and other types of carrying cases; and Tallamond, a supplier of parts and services to the airline industry. Herschel Supply is No. 281 in Internet Retailer’s 2016 B2B E-Commerce 300 and Tallamond is No. 290.
Shopify also provides e-commerce software to many smaller and midsized online retailers, including eight of the Top 1000 retailers in North America by web sales, according to Top500Guide.com.
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