Shopify Soars as Holiday Surge Pushes Revenue Past Estimatesby
Company reported 243,000 customers at end of fourth quarter
Forecasts 2016 revenue of $320 million to $330 million
Shopify Inc., the Canadian e-commerce software maker, soared as much as 21 percent after a rush of new customers over the holiday season boosted its earnings past analyst estimates.
The Ottawa-based company reported a loss of 1 cent a share, excluding some items, compared with a projected 5-cent loss, the average of nine estimates compiled by Bloomberg. Revenue of $70.2 million beat estimates averaging $61.2 million as the company’s customer base grew to 243,000 compared to around 200,000 in the third quarter.
Shopify traded up 12 percent to $22.82 at 9:40 a.m. in New York, after rising as much as 21 percent. The company went public at an IPO price of $17 in May 2015. Shopify projected 2016 revenue would be between $320 million and $330 million, up from 2015 revenue of $205.2 million.
Shopify is still unprofitable as it seeks to grab market share around the world ahead of rivals such as Bigcommerce Inc. and Demandware Inc., and online marketplaces including Etsy Inc. and eBay Inc. It plans to build data centers in Europe and increase its international presence before turning a profit at the “tail end” of 2017, Chief Financial Officer Russ Jones said on a conference call.
The quarter also highlighted the seasonal nature of Shopify’s business, which helps small and medium merchants set up online stores, process payments and ship products. Existing merchants saw a boost in sales and new customers joined during the period, Jones said.
“We do get merchants that set up business for that holiday period," he said. "It’s not the lion’s share, most of the people that are doing this are in it for the long haul."