Investors Upbeat On Shopify’s ‘Global Retail Operating System’

After a better-than-expected earnings report and an upbeat round of guidance for the rest of the year, shares of Shopify were trading up when markets opened on Wall Street today (Aug. 1).

COO Harley Finkelstein, in a post-earnings interview with MarketWatch, said that strong outcomes were seen across the board from the firm’s efforts to transform itself from a software platform for digital and physical retail into “the first global retail operating system.”

Adjusted earnings per share came in at 14 cents, up from 2 cents a year ago – well in excess of the 3 cents analysts were seeking. On an unadjusted basis, Shopify showed a net loss of  $28.7 million (26 cents a share), compared to a loss of $24 million (23 cents) in the year-earlier period.

Revenue, on the other hand, was up to $362 million from $245 million, well ahead of pre-earnings estimate of $350 million. Gross merchandise volume (GMV) increased by 51 percent to $13.8 billion, while gross payments volume jumped to $5.8 billion and accounted for 42 percent of Shopify’s GMV processed in the period.

Shopify, in its remarks to analysts, touted the early success of its Shopify Fulfillment Network, a new service that allows retailers to maintain their own branded packaging, while essentially outsourcing order management to Shopify’s network fulfillment centers. The feature was initially announced in early summer 2019, and interest has so far well exceeded pre-launch expectations.

Finkelstein further noted the footprint of Shopify’s growth – taken in aggregate, its collection of merchants would constitute the country’s third largest eCommerce retailer. That kind of macro-sizing, he told MarketWatch, allows Shopify to “distribute economies of scale to more than 800,000 small businesses.”

With the greater than expected interest in the offering, the company could possibly accelerate its spending on the program.

Based on the predictions offered up, Shopify is indicating that more growth is on the agenda for the immediate 2019 future. For the third quarter, the company expects revenue of $377 million to $382 million, ahead of analysts’ consensus estimates of $374 million. The company’s full-year outlook calls for $1.51 billion to $1.53 billion in revenue, where analysts expect $1.51 billion.

For the whole of 2019, Shopify forecasts $1.48 billion to $1.50 billion in revenue.