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Shopify Doubles Revenue But Remains Unprofitable
E-commerce platform Shopify posted impressive fourth-quarter results, nearly doubling its revenue. However, it has not yet proved it can turn a profit.
Canada-based E-commerce solution provider, Shopify, has almost doubled its fourth-quarter revenue according to its recent results release. Strong adoption and retention rates and a good holiday shopping season drove accelerated growth in revenue and gross merchandise volume. However, despite the strong results, the company is yet to prove that it can turn a profit.
Subscription revenue jumped 70 percent year-on-year (yoy) to US$34.6 million, with the number of merchants using the platform increasing from 175,000 in the second quarter to 243,000 in the fourth quarter.
Sales for Shopify’s merchant solutions segment grew by 140 percent, driven by the strong performance of Shopify Payments, which streamlines the acceptance of credit cards and other forms of payment for new merchants.
All this has driven the company’s total fourth-quarter revenue to almost double yoy to US$70.2 million. Full-year revenue for 2015 was US$205.2 million, a 95 percent increase in 2014.
Gross merchandise volume for the fourth quarter was US$2.8 billion, representing a 109 percent increase over the 2014 fourth quarter.
“We are coming off not only a tremendous quarter for Shopify, but also for the hundreds of thousands of merchants that trust the Shopify platform to power their businesses,” said Tobi Lütke, founder and CEO of Shopify. “Over the holiday season our merchants collectively sold almost three billion dollars worth of products, a huge increase from the year before.
“We are also seeing our merchants use Shopify to sell on multiple new sales channels like mobile and social. We believe that multichannel, cloud commerce is an industry-wide shift that is still in its infancy.”
“Our strong fourth-quarter performance highlights the strength of our business model, one where we win when our merchants win,” said Russ Jones, Shopify CFO.
“Many of our efforts in 2015 — such as adding multiple new sales channels to a single integrated back office — were driven by our simple goal of helping merchants become more successful.”
Over the past year, Shopify has been actively involved in the rollout of major social commerce initiatives, including buy buttons on Twitter and the Facebook shopping pages. Shopify has also recently partnered with Uber to make deliveries in some US cities.
Despite the impressive results, Shopify still remains unprofitable, posting an operating loss of US$6.3 million, compared with a loss of US$4.8 million for the 2014 fourth quarter. The company posted a net loss of US$18.8 million for the full-year 2015.
Looking forward to 2016, the company is forecasting revenues in the range of US$320 million to US$330 million, with operating losses between US$36 million and US$42 million.
Despite the forecast losses, Shopify Russ Jones has predicted that the company will break even by the end of 2017.