- Shopify shares soared 21% on Tuesday.
- The company, which builds software for businesses to run online storefronts, gave a rosy forecast for the holiday quarter.
- Shopify said it's attracting a growing number of large customers, which helped drive the third-quarter revenue beat.
Shopify shares jumped 21% on Tuesday after the Canadian e-commerce company posted better-than-expected results for the third quarter and gave an optimistic forecast for the holiday shopping season.
Here's how the company did:
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- Earnings: 35 cents per share vs. 27 cents per share expected by LSEG
- Revenue: $2.16 billion vs. $2.12 billion expected by LSEG
Shopify said it expects revenue in the current quarter to grow at at a percentage in the mid- to high-twenties. That surpassed Wall Street's expectations of 22.8% for revenue growth, according to FactSet.
Gross merchandise volume, or the total volume of merchandise sold on the platform, increased 24% year over year to $69.7 billion during the third quarter. Analysts surveyed by FactSet were looking for GMV of $68.1 billion.
Money Report
Shopify sells software for merchants who run online businesses as well as services such as advertising and payment processing tools. The company has been investing heavily in marketing in recent months, even at the risk of pinching near-term profits, as it looks to gain further market share. The company competes with e-commerce juggernauts Amazon and Walmart, as well as software providers like Salesforce and BigCommerce.
On a call with investors, Shopify president Harley Finkelstein said a growing number of major retailers and companies signed up for its services during the quarter, pointing to Lionsgate Entertainment, shoemaker Reebok and luxury fashion brand Off-White, along with handbag company Vera Bradley and Hanes.
"Shopify is increasingly the go-to platform of choice, not just for entrepreneurship, but for all of commerce," Finkelstein said. "We are well positioned for extensive growth across different merchant segments, size, geographies, channels and products."
Jeff Hoffmeister, Shopify's CFO, said on the call that the upbeat fourth-quarter forecast is "driven by the same factors that have supported our strong revenue growth results so far this year," including "assumptions around the continued strength of our merchants GMV."
Shopify shares are up about 41% year to date. The Nasdaq has gained roughly 36% over the same stretch.
