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Canadian e-commerce giant Shopify Inc reported third quarter results that fell short of analysts’ expectations, as a pandemic-fuelled boom in online shopping shows signs of cooling down ahead of the critical holiday shopping season.
The widespread shift to e-commerce at the height of the pandemic brought a wave of new business to Shopify, which provides infrastructure for retailers to set up their stores online and generates revenue mainly through subscriptions and merchant services.
However, as people step out of their homes and bigger rivals like Amazon.com Inc bolster their offerings to retain customers, Shopify’s growth, driven primarily by mom-and-pop stores, is expected to taper, analysts have said.
The company said it expects revenue to grow rapidly through this year, but warned growth would be at a slower rate than in 2020.
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For the quarter ended Sept. 30, the company reported a smaller-than-expected rise of 46 percent in revenue. Adjusted profit of 81 cents per share also missed analysts’ estimate of $1.18, according to Refinitiv data.
US-listed shares of the company, which nearly tripled in 2020, fell about 4.5 percent in premarket trading on Thursday.
Gross merchandise volume (GMV), a widely watched figure for the e-commerce industry’s performance, stood at $41.8 billion in the quarter, up 35 percent.
Shopify entered into partnerships with companies like TikTok and payments providers like Affirm, AmazonPay and Paypal to better enable merchants to process sales.
More merchants joined the platform, boosting subscription solutions revenue by 37 percent to $336.2 million in the quarter.
By Richard Rohan Francis and Eva Mathews; Editors: Maju Samuel, Krishna Chandra Eluri and Saumyadeb Chakrabarty
Learn more:
The Canadian e-commerce platform is emerging as one of the pandemic’s big winners. How will the company that made it possible for any brand to set up an online store use its newfound clout?
