Shopify posts positive revenues in Q2 2023 for third quarter running

A pair of hands holding a mobile phone which has the Shopify logo on it
Ottawa e-commerce giant posts higher losses, but GMV grows.

Shopify made gains for the third quarter running, defying the indifferent markets still rattling investors. Shopify posted a year-over-year increase in total revenues of 31 percent to $1.7 billion. It was the third quarter running the e-commerce retailer was able to report an increase in revenues. Shopify reports all its results in USD.

“We’re not just shipping products faster, but we are also expanding our global merchant base, all while improving our ability to generate greater free cash flow.”
– Harley Finkelstein

“Our business momentum has led to another quarter of strong financial results. We’re not just shipping products faster, but we are also expanding our global merchant base, all while improving our ability to generate greater free cash flow,” Harley Finkelstein, president of Shopify, said.

“As we lean into the new shape of Shopify, our focus remains on building the world’s best product to empower entrepreneurs and businesses everywhere,” he said.

Shopify posted an operating loss of $1.6 billion, which includes in one-time items from the impairment and acceleration of stock-based compensation related to the sales of logistics businesses, as well as severance, the company’s statement says.

The Ottawa-based e-commerce retailer said excluding those one-time charges, operating income was positive for the quarter.

Adjusted operating income was $146 million, or nine percent of revenue, compared with an adjusted operating loss of $42 million, or three percent of revenue, in the second quarter of 2022.

The difference primarily reflected higher revenue compared to the same period last year, as well as lower adjusted operating expenses.

Shopify also posted its highest gross merchandise volume (GMV) increase ever, up 17 percent to $55.0 billion, an increase of $8.2 billion over the second quarter of 2022. Gross payments volume grew to $31.7 billion, representing 58 percent of GMV processed in the quarter, versus $24.9 billion (53 percent) for the second quarter of 2022.

Shopify continues to fight an uphill battle with the markets, and shareholders reacted swiftly after its second-quarter earnings for 2023 were posted. The company’s shares dropped by $6.23 to $83.39 CAD as of press time, a seven percent decrease.

Shopify’s forecast for the third quarter continues to reflect the company’s realistic outlook, despite posting ongoing operating losses.

Shopify predicted operating expense dollars to be flat to up slightly compared to the second quarter of 2023. This is excluding one-time items from the impairment and accelerated stock-based compensation related to the sale of the logistics businesses and severance during Q2. Again, the company pegged stock-based compensation at approximately $110 million next quarter.

Some of the second quarter highlights included launching the Shopify Marketplace Connect app, a centralized hub for merchants to sell on all major marketplaces, including Amazon, eBay, and Walmart, while connecting, managing, and fulfilling their orders through Shopify.

RELATED: Shopify reveals AI suite, business credit card, and dropshipping-like feature in latest product showcase

The launch of Shopify Credit, a pay-in-full business credit card exclusively for Shopify merchants, rewarded them by offering amplified cash back on the categories where they spend the most.

The e-commerce retailer also completed the US rollout of Shop Cash, a rewards program that allows shoppers to earn rewards on eligible Shop Pay purchases and redeem them in the Shop app, and kicked off the launch of Shopify Magic, its suite of AI-enabled features.

“We’re taking a very, very practical approach when it comes to AI,” Finkelstein said during the earnings call. “Unlike other generative AI products, Shopify Magic is specifically designed for commerce and it’s not just embedded in one place, it’s embedded throughout the entire product.”

As employee fears grew over the use of artificial intelligence (AI) bots to replace support staff at Shopify, and amidst a market slump, the pressure was on the Canadian e-commerce giant to deliver on its second quarterly results.

Shopify executives recently laid out plans for an AI-first customer support experience at a recent town hall, according to Business Insider. At the meeting, some employees worried AI might replace their jobs. The Support org is responsible for troubleshooting issues for Shopify’s millions of merchants, Business Insider noted.

And three months after the Canadian e-commerce giant laid off 20 percent of its workforce—or more than 2,000 people—and sold its logistics business, rumours are more cuts are on the way, Business Insider also noted. This comes after a previous layoff of about 1,000 Shopify staff globally, 10 percent of its workforce, in 2022.

The publication said Shopify has quietly laid off a number of workers in recent weeks, with cuts coming to departments as varied as customer support, engineering, and marketing. Many workers in Ireland were also let go earlier in July.

The timing of any forthcoming potential layoffs is unclear.

Shopify reported earnings for the second quarter on Aug. 2, after the markets closed. For the second quarter of 2023, Shopify initially forecasted revenue to grow at a similar rate to the first quarter’s growth rate on a year-over-year basis.

The first quarter posted total revenue increasing 25 percent to $1.5 billion, compared to the prior year.

For the second quarter, the company also expected stock-based compensation to be approximately $110 million, excluding one-time charges related to the sale of its logistics businesses.

Ahead of the second earnings call, Shopify had let loose with a barrage of announcements, all timed to help bolster the impression that business is healthy and even thriving ahead of the second quarter report.

Leading up to the earnings call, the Ottawa-based, e-commerce retailer did its best to dazzle with its 2023 Summer Editions. Editions are Shopify’s twice-yearly showcases where it unveils new features.

This version of Editions landed just one day after the departure of long-time Shopify executive Satish Kanwar, who helped steer the company’s product strategy as its VP of corporate development and head of product acceleration.

Image courtesy of Burst.

Charles Mandel

Charles Mandel

Charles Mandel's reporting and writing on technology has appeared in, Canadian Business, Report on Business Magazine, Canada's National Observer, The Globe and Mail, and the National Post, among many others. He lives off-grid in Nova Scotia.

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