Shopify posts surprise profit as lockdowns drive online traffic
By C Nivedita
(Reuters) - Shopify Inc (NYSE: SHOP) said more people were shopping online as the COVID-19 crisis kept them at home, helping the Canadian e-commerce company post a surprise adjusted profit for the first quarter and sending shares to a record high.
Online retailers such as Shopify and eBay Inc (NASDAQ: EBAY) have seen higher-than-usual demand during the coronavirus outbreak as governments around the world order people to stay indoors in an effort to contain the spread of the disease.
The Ottawa-based company's NYSE (NYSE: SHOP) and TSX-listed shares rose 5% in morning trade on Wednesday.
Shopify's gross merchandise volume (GMV), a metric used in the e-commerce sector to measure transaction volumes, surged 46% to $17.4 billion in the quarter, beating estimates of $16.58 billion, according to IBES data from Refinitiv.
New stores created on the company's online platform jumped 62% between March 13 and April 24 as many brick-and-mortar businesses migrated online, although it was unclear how many would generate sales in the long-term, Shopify said.
"We expect new norms and trends will benefit Shopify under different economic scenarios ... our diversity in merchant base is helping ... and we are not dependent on any one merchant," said Chief Financial Officer Amy Shapero on a call with analysts.
However, Shapero said it was uncertain how much the shift online would help offset the economic weakness caused by the pandemic.
Shopify, which suspended its 2020 financial forecast last month, did not provide any outlook on the coming quarters and said it was closely watching the impact of rising unemployment on consumer spending and the creation of new shops on its platform.
Shopify posted a net loss of $31.4 million, or 27 cents per share, for the quarter ended March 31, compared with $24.2 million, or 22 cents per share, a year earlier.
Excluding items, it earned 19 cents per share, while analysts had expected a loss of 18 cents.
Total revenue surged 46.6% to $470 million, ahead of analysts' estimates of $442.9 million.
(Reporting by C Nivedita in Bengaluru; Editing by Devika Syamnath)