Why Shopify's Q2 Is So Impressive

Shopify Inc. (NYSE: SHOP) reported its most recent quarterly results before the opening bell on Wednesday. The up-and-coming e-commerce company posted $1.05 in earnings per share (EPS) and $714.3 million in revenue, while consensus estimates had called for $0.01 in EPS and revenue of $513.83 million. The second quarter of last year reportedly had EPS of $0.10 on $361.98 million in revenue.

During the latest quarter, Subscription Solutions revenue grew 28% to $196.4 million. This increase was driven primarily by growth in monthly recurring revenue (MRR), largely as a result of an increase in the number of merchants joining the Shopify platform.

Merchant Solutions revenue grew 148%, to $517.9 million, driven primarily by the growth of gross merchandise volume (GMV).

As of June 30, MRR increased 21% year over year to $57.0 million, up from $47.1 million at the end of June 2019. Shopify Plus contributed $16.6 million, or 29%, of MRR.

GMV for the second quarter was $30.1 billion, an increase of $16.3 billion, or 119%, over the second quarter of 2019. Gross payments volume grew to $13.4 billion, which accounted for 45% of GMV processed in the quarter, versus $5.8 billion, or 42%, for the second quarter of 2019.

Cash and cash equivalents totaled $1.88 billion at the end of the quarter, versus $649.9 million at the end of the previous fiscal year.

Shopify did not provide any guidance for the third quarter. However, the company did note that the COVID-19 pandemic has accelerated the growth of e-commerce, shifting a larger share of retail spending to online commerce.

Management also said that while the pandemic has significantly influenced online store creation and consumer spending behavior, the magnitude and duration of its future impact remain uncertain in view of the greater likelihood of an extended global recession.

Analysts are calling for $0.01 in EPS and $535.74 million in revenue for the third quarter.

Shopify stock traded up about 10% Wednesday to $1,080.00, in a 52-week range of $282.08 to $1,107.38. The consensus price target is $887.70.

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