Shopify surpasses revenue expectations in Q4 2019 financial results

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Shopify has released its Q4 and full-year 2019 financial results, the period which ended December 31, 2019. The Ottawa e-commerce company has surpassed predictions for its revenue, with $1.578 billion in total revenue for the year, a 47 percent increase over 2018. All numbers are in USD.

“Twenty nineteen was a milestone year for us.”
– Tobi Lütke, Shopify

The company’s fourth-quarter revenue also beat predictions, with a total revenue of $505.2 million, a 47 percent year-over-year increase from Q4 2018. These results were bolstered by a strong performance during Black Friday and Cyber Monday, with worldwide merchant sales reaching $2.9 billion up 63 percent from last year’s $1.8 billion.

“2019 was a milestone year for us,” said Tobi Lütke, Shopify’s co-founder and CEO. “We’ve earned the trust of more than one million merchants, and we are motivated more than ever to keep lowering the learning curve so anyone, anywhere can become an entrepreneur.”

The Q4 and full-year results come after an interesting third quarter, which gave Shopify its slowest growth rate in four years, despite a 45 percent year-over-year increase in revenue. Despite those results, the third quarter of 2019 also saw Shopify reach one million merchants on its platform.

Twenty nineteen did, in fact, mark a big year for Ottawa-based Shopify, which made its largest acquisition to date, purchasing Massachusetts-based 6 River Systems for $450 million USD. The 6 River Systems deal represents a core part of Shopify’s burgeoning fulfillment strategy. In June, the company announced $1 billion to build out a Shopify Fulfillment Network to give US-based merchants an offering of various fulfillment centres.

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In 2019, Shopify also launched a $6.6 million sustainability fund and launched a number of new features, including Shopify Email, pitting it against former partner Mailchimp.

This year is set to be another busy year for Shopify, with Amy Shapero, Shopify’s CFO, noting on a Wednesday morning investor call that 2020 is “clearly a year of heavy investment for us.” Shopify is predicting 2020 revenue to be in the range of $2.130 billion to $2.160 billion. It is also predicting expenditures of approximately $80 million, to be largely related to new office spaces.

The company started off 2020 announcing its intentions to open its first permanent Vancouver office. In the coming year, Shopify is looking to expand its team with more than 1,000 employees in the region. In its investor call on Wednesday morning, Shapero noted that the company is also set to open a new research and development (R&D) centre in Ottawa to help Shopify test and build out its fulfillment network. Shapero explained that a portion of Shopify’s $1 billion allocated for the network will go towards the R&D centre.

Shapero added that the fulfillment network is still in the early stages of a five-year plan, searching for the right product market fit. The initiative is set to be limited in scale for the coming year as Shopify looks to invest more in 6 River Systems as an independent fulfillment platform as well as investing to integrate its technology with Shopify.

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Wednesday’s report also comes on the heels of news that Shopify recently let go of its chief marketing officer Jeff Weiser. As BetaKit reported, Shopify made the move as it looks to restructure its marketing department and strategy.

Despite Lütke stating in an internal email to staff early this month that Shopify’s current marketing “constitutes a ‘successful discovery of something that didn’t work,’” Shopify’s financial report pointed to some notable changes in the company’s marketing strategy.

Early 2019 saw the launch of Shopify Studios, the company’s TV, film, and digital content development and production house. Shopify also launched its first brand campaigns in 2019, with the report stating that it nearly doubled “unaided awareness of Shopify among the target audience in cities where the campaign was run” with brand health showing “a marked increase in the number of small- and mid-sized businesses saying they “will definitely try” Shopify.”

It was noted, though, that Shopify plans to invest in “the Shopify Brand” in 2020 in order to expand awareness and attract new entrepreneurs to its platform.

On the investor call, Lütke stated that Shopify sees parts of its marketing working “really well,” calling the change in its CMO leadership “mostly internal motivated.”

“We’ve been really comfortable with the particular programs that have been running,” said the CEO. “Shopify Brand is something new for us that is going to be a large part of Shopify’s future and we are going to continue scaling it and building it out.”

Meagan Simpson

Meagan Simpson

Meagan is the Senior Editor for BetaKit. A tech writer that is super proud to showcase the Canadian tech scene. Background in almost every type of journalism from sports to politics. Podcast and Harry Potter nerd, photographer and crazy cat lady.

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