Shopify has released its financial results for Q2 2020, the period which ended June 30, 2020; recording a total revenue of $714.3 million, a 97 percent increase from the comparable quarter in 2019. All numbers are in USD.
The large increase in revenue came as the number of new stores created on Shopify grew by 71 percent between Q1 2020 to Q2. Shopify attributed this to “the shift of commerce to online,” as well as the extension of its free 90 day trial period enacted amid COVID-19.
During today’s conference call regarding the results, Shopify COO Harley Finkelstein noted that more merchants joined Shopify’s platform than ever before. He pointed to a number of major brands that became Shopify merchants including Farm Boy, Snickers, Molson-Coors, and more.
“The world is changing fast,” said Tobi Lütke, Shopify’s CEO. “With the rapid shift to online commerce, massive disruption to conventional employment, and growing conviction that opportunity needs to be more evenly distributed, entrepreneurship has never been more important.”
Shopify continued to see positive momentum with its subscription and merchant solutions, each with year-over-year revenue growth of 28 percent ($196.4 million in revenue) and 148 percent ($517.9 million in revenue), respectively. Shopify CFO Amy Shapero attributed this during the conference call to high gross merchandise volume (GMV), which grew 119 percent compared to Q2 2019, coming to a $16.3 billion.
Shapero noted that this was a growth rate that Shopify had note seen since before it went public in 2015.
The Ottawa-based company’s gross profit dollars grew 83 percent to $375 million in the second quarter of 2020, compared with $204.8 million for the second quarter of 2019. Operating income for Q2 was $0.3 million, or 0 percent of revenue, versus a loss of $39.6 million, or 11 percent of revenue, for the comparable period a year ago.
Shopify attributed much of this growth to what both Finkelstein and Shapero called an acceleration of the e-commerce landscape due to the COVID-19 pandemic.
GMV for the company’s point-of-sale (POS) channel declined by 29 percent compared to the first quarter of this year, as Shopify merchants suspended their in-store operations in April and May. Shopify did report, however, that POS GMV did begin to recover in June as COVID-19 restrictions eased and stores began to reopen. The company stated that it began approaching February levels by the end of the month and continued to grow into July.
“Whether this trend will continue is unknown given the reintroduction of lockdown measures in certain geographies as well as the uncertain macroeconomic environment,” Shopify said.
Retail merchants continued to adapt to socially distanced selling through Q2 2020, with 39 percent of brick-and-mortar merchants in English-speaking geographies using some form of local in-store/curbside pickup and delivery solutions.
The second quarter of 2020 was a very active one for the e-commerce giant, which launched a number of new products, features, and initiatives in the wake of the COVID-19 pandemic.
At Reunite, a virtual event held by Shopify in place of Unite, its annual developer conference that was cancelled due to the pandemic, the company announced a move into the financial services space, launching Shopify Balance, a banking product for small businesses, which includes a bank account, card, and rewards program for Shopify merchants. Another big announcement made at Reunite included the opening of merchant applications for Shopify’s fulfillment network.
In Q2, Shopify noted that shipping adoption increased from 42 percent of eligible merchants in the United States and Canada using the service in Q2 2019 to 49 percent in 2020. The company stated that it “continued to develop the product-market fit of Shopify Fulfillment Network,” with increased automation of merchant onboarding and order management, growing fulfillment volumes and the number of merchants enrolled in the program relative to the first quarter of 2020.
During Q2, Shopify also launched Shop, a consumer-facing mobile assistant shopping app that created to offer users the ability to discover local businesses, receive relevant product recommendations from brands, check out, and track all of their online orders. The company also began offering a new point-of-sale system designed to bring together both in-person and e-commerce sales.
Shopify also teamed up with two American tech giants during Q2, including Facebook, to launch Facebook Shops, aimed to help businesses easily set up an online store for customers to access on both Facebook and Instagram. The company partnered with retail behemoth Walmart to allow Shopify’s merchants in the United States to sell their products on Walmart’s website.
Over the quarter, Shopify also announced a big change to how the company will operate, including that it would be a “digital by default” company, meaning the vast majority of its employees will continue to work remotely, even after the COVID-19 pandemic ends.
The company also launched Shopify Capital, its small business loan fund, in Canada, and made its contactless payments hardware, Shopify Tap & Chip Card Reader, available to Canadian merchants.
Closer to the end of Q2, the federal government revealed plans to launch a national app for contact tracing that was developed in partnership with Shopify, as well as BlackBerry.
The second-quarter financial results follow more announcements from Shopify this week, pertaining to Shopify Studios, the company’s full-service media production subsidiary, as well as Shop Pay, the company’s accelerated checkout feature.
Shopify Studios is launching a new television series on Discovery Channel and announced that 100 percent of the delivery emissions produced by every order using Shop Pay will be automatically offset. The company claimed this new initiative would make Shop Pay one of the first carbon-neutral ways to pay.
