Canadian ecommerce giant Shopify announced its first-ever $1 billion revenue quarter today driven primarily by soaring gross merchandise volume (GMV).
As part of its Q2 2021 financial results, ending June 30, Shopify claimed $1.12 billion in total revenue, up 57 percent year-over-year, on a GMV of $42.2 billion, up 40 percent or $12.1 billion year-over-year (all numbers USD).
Shopify attributed its GMV growth as the main driver of the company’s merchant solutions revenue, which reached $785.2 million, a 52 percent increase year-over-year. Subscriptions solutions revenue actually grew faster, up 70 percent year-over-year, totalling $334.2 million. Shopify president Harley Finkelstein noted on an investor call this morning that point-of-sale GMV was almost back to pre-COVID percentage levels of overall GMV despite the significant increase in GMV totals.
“When we talk about Shopify’s flywheel, this is exactly what we mean.”
– Harley Finkelstein
Shopify co-founder and CEO Tobi Lütke partially attributed the return of point-of-sale GMV to the fact that the company’s product “is now very, very good,” noting it had already received its fourth code re-write. “We really took that product seriously,” Lütke said.
Finkelstein also noted the expansion of Shop Pay, now available to even non-Shopify merchants on Facebook and Google, as well advances and loans through Shopify Capital, as key developments in supporting merchants. The company claimed that merchants in the US, Canada, and UK received $363 million through the program, a 137 percent increase.
“When we talk about Shopify’s flywheel, this is exactly what we mean,” Finkelstein said on the call.
Q2 2021 was also Shopify’s fifth-straight profitable quarter, with the company reporting a net profit of $879.1 million, a dramatic increase over the $36 million posted last year during the height of the pandemic. $778 million of that total comes from unrealized net gain on Shopify’s equity investments. Shopify’s net income last quarter included a $1.3 billion unrealized gain on its investment in partner company Affirm, which went public in January.
In a regulatory filing on Tuesday, Shopify revealed plans to raise up to a total of $10 billion through new issues or secondary offerings. The offering is an amendment to Shopify’s initial short form base shelf prospectus filed in August 2020.
The new, revised $10 billion total represents an increase of $2.5 billion. Offerings of this nature serve as a means for public companies to raise capital, and can be used to support a variety of activities, including acquisition efforts.
The offering comes as Shopify has made a series of recent investments in other North American tech companies. This month, Shopify-backed Ohio software startup Loop’s $65 million Series B round. In June, Shopify reportedly invested in Stripe, and earlier this year, invested in Vancouver-based FinTech startup Bench and Toronto same-day delivery firm Swyft.
Shopify also announced changes to its developer revenue share at the company’s Unite 2021 developer conference, dropping App Store commissions to zero percent on the first $1 million developers earn annually from merchants. When asked about the financial implications of not taking that revenue, Shopify CFO Amy Shapero said the impact would not be material to the company’s results on the back half of the year or 2021 in general.
“While it’s not material for us, it is material for our developers,” she said.
Shopify halted detailed financial guidance at the start of the COVID-19 pandemic, and did not provide such with its Q2 2021 results. However, the company did say it expected its full-year 2021 adjusted operating income “to be above the level we achieved in 2020,” or $491.3 million.
Feature image courtesy Shopify.