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Shopify's stock surged Wednesday after it reported higher-than-expected revenue in the first quarter of 2021, as the company continues to build on the momentum sparked by the shift to e-commerce amid the COVID-19 pandemic.
Shopify, (SHOP) (SHOP.TO) which reports earnings in U.S. dollars, booked total sales of $988 million in the three-month period ending March 31, a 110 per cent increase from $470 million during the same time last year. Analysts had expected revenue of $866 million, according to data from Refinitiv.
The results sent Shopify's stock up as much as nearly 13 per cent in early trading Wednesday. The company's stock was trading at $1,571.68 on the TSX at 10:49 a.m. ET, a rise of nearly 10 per cent.
Adjusted net income for the quarter hit $254 million, or $2.01 per diluted share, compared to an adjusted net income of $22 million, or 19 cents per diluted share, in the same period last year.
"Shopify's momentum continued into 2021 as digital commerce tailwinds remained strong and merchants took advantage of the range of capabilities offered by our platform," Amy Shapero, Shopify's chief financial officer, said in a statement released with first quarter results.
Shopify's first-quarter revenue surpassed what it earned in the fourth quarter, something Shapero called "a remarkable achievement, given we typically see a seasonal decline" following the period that features the holiday shopping season.
The company expects that it will continue to grow revenue through 2021, albeit at a slower rate than it saw in 2020, when the COVID-19 pandemic forced businesses and consumers to shift rapidly to e-commerce. With vaccination efforts ramping up and economies gradually reopening around the world, Shopify expects full-year adjusted operating income to be lower than 2020, when it hit $437 million.
So far, Shopify president Harley Finkelstein told analysts on a conference call Wednesday that the company has not seen a slowdown in growth as the North American economy, particularly in the United States, has started reopening in recent months.
"Consumer preferences have shifted permanently. The centre of gravity was offline, it is now online, and there is no going back to the pre-pandemic version of that," he said, pointing to Australia and New Zealand – which have formed a travel bubble with few cases of COVID-19 – as an example of what the future may look like in other regions. He noted that the company has not seen "any slowdown whatsoever" when it comes to consumers buying from Shopify merchants in those two countries.
"Consumers want to buy, and they're voting with their wallets, to buy from independent, direct-to-consumer brands of which Shopify has the majority," Finkelstein said.
"I think that you're going to continue to see this trend continue well beyond the pandemic. Again, e-commerce is still really quite small relative to total retail, and it will continue to grow really nicely."
The results come the day after Shopify released its 2020 Economic Impact Report. Conducted by Deloitte, the report found that Shopify merchants had a global economic impact – which includes profit, labour income and tax revenue – of $307 billion, creating 3.6 million jobs worldwide. In Canada, Shopify merchants created more than 123,000 jobs and $18 billion in economic activity.
Chief executive Tobi Lutke announced earlier this month that three of Shopify's top executives will leave the company. Chief technology officer Jean-Michel Lemieux, chief talent officer Brittany Forsyth and chief legal officer Joe Frasca are expected to leave their posts "over the coming months."
When asked by an analyst about his future at Shopify, Lutke reiterates that he's "in for the long term here."
"I'll never in my life come up with a better idea than the one of Shopify," he said. "I'm all in."
With files from Reuters.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.