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Shopify Hits US$1 Billion in Sales Spurred by Online Shopping

By Andrea Villar | Thu, 07/29/2021 - 11:22

As businesses' e-commerce revenues grow exponentially and the economic recovery across the globe drives spending, Shopify topped US$1 billion in sales for the first time in 2Q2021. The e-commerce platform posted revenue of US$1.12 billion in the quarter, up from US$714 million a year earlier and surpassed analysts’ estimations, who expected US$1.05 billion. “As consumer spending remained strong, our merchants thrived and extracted more value from our platform, contributing to our rapid growth,” CFO Amy Shapero said in a statement. 

In 2Q2021, the Canadian-based company reported gross merchandise volume (GMV) of US$42.2 billion, up 40 percent from the same period last year, exceeding analysts' expectations by more than US$1 billion. Meanwhile, the company's monthly recurring revenue (MRR) grew 67 percent to US$95.1 million in the quarter. Shopify, which serves over 1 million merchants worldwide, mentioned it expects slower revenue growth than last year, citing the return of consumers to retail shopping, the slowdown in the growth of e-commerce and the decline of COVID-19 cases around the world. Despite the abovementioned, the company also said that growth would be higher than in any year prior to 2020.

The addition of the Shop Pay payment platform in 2020 to merchants on Google and Facebook paid off in 2Q2021 as it processed 25 percent more cumulative gross payment volume compared to the previous quarter. According to Samad Samana from global investment banking firm Jefferies, Shop Pay will offer ample scope for monetization in the future as Shopify moves to be “an increasingly important merchant-buyer touch point,” he told Yahoo Finance.

Shopify has been seeking partnerships of various kinds to boost sales for its merchants in the past few years. In 2020, the platform initiated the Shop Pay pilot program with buy now, pay later provider Affirm in an attempt to join the micro-lending revolution that is sweeping the industry. The e-commerce giant claims that this tool could increase sales volume by up to 50 percent. The customer is not charged interest or commissions, while the merchant pays a 5.9 percent commission based on order volume. Shop Pay is set to reach all Shopify users this quarter including those in Mexico.

In a call with analysts on the quarter's results, Shapero said that social channels and marketplaces represent a small but fast-growing part of the company's revenue mix and that “it will be some time before it becomes a significant part.”

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Andrea Villar Andrea Villar Journalist and Industry Analyst