TORONTO – Canadian e-commerce darling Shopify Inc. appears to be settling into a pattern of slowing growth.
The Ottawa-based company revealed Tuesday that its year-over-year revenue grew by 62 per cent in the company’s second quarter, down from 68 per cent the quarter before and 75 per cent, which it posted in the first quarter of 2017.
Shopify has seen its year-over-year revenue growth drop consistently over the last six quarters, even as it unveiled a slew of new features and services for merchants, including a tap and chip payment reader, tipping, in-store pickup and multi-channel return and exchange options, and prominent merchants like Red Bull, Nestle, Kylie Cosmetics and Rebecca Minkoff flocked to the platform. The latest hit came days after it announced its first bricks-and-mortar location will open in Los Angeles in 2019.
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The company’s Tuesday earnings report also showed slowing growth in gross merchandising volume (GMV), a key number that measures the total value of merchandise sold through the company. GMV offers a window into the company’s ability to retain merchants and customers, which came under attack from short seller Andrew Left when he targeted the company late last year, saying that it relies too heavily on small merchants whose future business is uncertain and calling on it to release more data around customer “churn.”
Shopify, which reports its numbers in U.S. dollars, said in the latest quarter GMV grew by 56 per cent to $9.1 billion, down from the 74 per cent increase the measure saw the year before.
Shopify executives didn’t appear alarmed about the GMV slowdown and monthly recurring revenue, which rose by 49 per cent from the year before to hit $35.3 million,
Amy Shapiro, Shopify’s chief financial officer said she thinks the quarter’s growth was “still solid.”
“We don’t expect to accelerate either added MRR or MRR growth every quarter,” she told analysts on a call.
“There are puts and takes in our model and various drivers of growth that we will hit at various times and we are confident in the overall business model to continue to produce strong growth into the future.”
Shopify executives, including chief operating officer Harley Finkelstein and founder Tobias Lutke, were also upbeat because the company beat analyst estimates for revenue and adjusted earnings during the second quarter.
Revenue for the three months ended June 30 was nearly $245 million, up from $151.7 million in last year’s second quarter and well above analysts estimates of $234.6 million, according to Thomson Reuters Eikon.
Shopify, which re-released its earnings report on Tuesday to correct numbers it disseminated earlier in the morning, also reported $2.5 million or two cents per share of adjusted net income, compared with a year-earlier loss of $1.1 million or one cent per share. Analysts had estimated an adjusted loss of three cents per share in this year’s second quarter.
In terms of generally accepted accounting principles, Shopify had an increased net loss of $24 million or 23 cents per share during the quarter _ compared with a year-earlier loss of $14 million or 15 cents per share.
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