Shopify Inc.’s share price jumped in Tuesday trading after the company beat earnings expectations and boosted its full-year forecast.
Shares in the Ottawa-based online shopping platform closed up $22.71, or 8.9 per cent, at $325.75 on the Toronto Stock Exchange.
The boost came after the company, which reports in U.S. dollars, said it had adjusted earnings of $10.3 million US or nine cents per share for the first quarter, while analysts had expected a loss of five cents per share, according to Thomson Reuters Eikon.
Revenue of $320.5 million US was up 50 per cent from the $214.3 million a year ago, and above the $310 million expected by analysts.
“Shopify had a surprisingly strong earnings report,” said analyst Colin Cieszynski at SIA Wealth Management Inc. in a research note.
International expansion
The growth comes as Shopify expands internationally and continues to add merchants as it pushes to increase its offerings in the highly competitive online retail space.
The company launched a TV and film content development and production house that will initially showcase entrepreneurial success stories.
Shopify is also pushing to roll out more seamless international currency transactions and support for more languages.
The company faces increased competition from other online platforms that are adding direct sales options, including Instagram’s limited roll-out in the quarter.
Harley Finkelstein, chief operating officer of Shopify, said on an earnings call that growth in the sector will mean more options for its merchants.
“With every new channel that comes to market, whether it’s a social media platform or a new marketplace, what that does is it makes Shopify more valuable as a retail operating system.”
Retail hardware for online merchants
He said the company also makes sure to have deals in place with other online platforms to capture economic benefits from its merchants selling elsewhere.
“We have economics in place to allow us to grow when our merchants sell more.”
In its push for a single simplified solution the company also recently rolled out a new retail hardware collection including a card reader as well as a dock for the reader and a stand for a tablet.
The added products come as more online merchants look to open physical retail stores, said Shopify CEO Tobi Lutke on the call.
“Funnily enough, expanding offline, so to speak, expanding to brick and mortars, is starting to look really good from a cost-per-acquisition perspective, so there are lots and lots of reasons that are pushing retailers back to the retail stores.”
He said that as merchants look to sell offline, as well as on an expanding array of platforms, Shopify is well-placed to serve its clients.
“You need a unified system to run a business across multiple channels…this is something which is just enormously complicated unless the software really, really makes this easy.”
