Canadian e-commerce platform Shopify Inc. added a record number of new merchants in the second quarter.
Shopify said Tuesday that it hit 500,000 customers during the quarter ended June 30, with clients ranging from individuals selling handmade goods to web stores for major brands like Budweiser and Tesla. The number of merchants jumped about 67% from the same period last year, when Shopify had about 300,000 customers.
The vendor’s shares soared the most in almost a year and a half on Tuesday after beating analysts’ revenue estimates for a ninth quarter in a row and boosting its forecast for the current quarter.
Shopify is the e-commerce platform vendor for 22 retailers in the Internet Retailer 2017 Top 1000, according to Top500Guide.com. It earns money from subscriptions to its platform and fees for services like managing inventories and processing payments. The vendor said it is present in 175 countries.
The company booked $151.7 million in sales in Q2, beating the average analyst estimate of $144.3 million and its own forecast of $142 million to $144 million. The second-quarter earnings report Tuesday burnished the Ottawa-based company’s reputation as a stock market darling.
Shopify’s shares gained as much as 15% to $105.79 on Tuesday, the most since February 2016, pushing Shopify’s market cap to more than $10 billion. That’s more than major Canadian retailers Canadian Tire Corp. Ltd. and Metro Inc. Shopify is the best performing stock on Canada’s benchmark equity index, gaining 122% this year. Some analysts, from firms including Royal Bank of Canada and Goldman Sachs Group Inc, have lowered their ratings on the stock recently, after such gains have made it one of the most expensive software stocks.
Shopify, which provides tools for merchants to sell online through their own websites and multiple third-party marketplaces including Amazon.com Inc. (No. 1 in the Top 1000) and eBay Inc., doesn’t yet turn a profit. Still, its loss of 1 cent a share was smaller than the average analyst estimate of a loss of 7 cents on the same basis.
CEO Tobi Lutke ended a conference call with analysts expressing his own excitement about the milestone. “500,000 merchants is just such a crazy number,” Lutke said. “I have lots of stories about being laughed out of VC offices because they told me the entire addressable market for my company was 40,000 stores.”
Shopify’s growth comes as more retail spending shifts online from physical stores, prompting a new wave of bricks-and-mortar bankruptcies. The company is adding and growing new revenue streams, such as giving loans to its customers to help them grow and poaching bigger, more established customers from competitors like privately-held Magento.
Average annual growth since 2012 has been 74%, the company said. Keeping up such a rapid pace will become harder though, Lutke said in a separate interview.
“To make growth even static you have to grow exponentially. That is the funny thing when you talk to everyone about percentages,” he said. “I don’t know how much longer we can keep that going.”
Earlier this year, Shopify upped the price of its Shopify Plus platform, which is designed for larger merchants, to $2,000 per month for merchants with online revenue of up to $10 million. At the time, Shopify said it was doing that in response to “the evolving size, scope and complexity of Plus Merchants.”