Shopify doubles sales for third consecutive quarter

Shopify capped a blockbuster year for online retail by doubling sales for the third quarter in a row, though it warned it would be unable to maintain that breakneck growth in 2021.

Shares in Shopify, which have almost tripled in value over the past 12 months to value the Canada-based company at almost $180bn, fell 7 per cent in early trading on Wednesday.

Revenues for the final three months of 2020 grew 94 per cent to $977.7m, exceeding Wall Street’s forecasts for at least the fifth successive quarter.

Hundreds of thousands of new merchants last year adopted Shopify’s services, which allow brands and independent stores to sell directly to customers through their own websites or social platforms such as Instagram, as an alternative to trading through Amazon or other large marketplaces.

Total spending by consumers on the 1.7m merchants that use Shopify’s software and services grew 99 per cent to $41.1bn in the fourth quarter, as consumers were forced to shop online during the pandemic. Net income in the quarter was $123.9m, up from $771,000 in the same period the year before.

However, that performance is unlikely to be repeated this year, Shopify said, as it forecast the ecommerce industry would “likely resume a more normalised pace of growth”. It declined to provide precise financial guidance for the coming months.

“We expect that we will continue to grow revenue rapidly in 2021, albeit at a lower rate than in 2020,” Shopify said. “2020 catapulted commerce into a period of incredibly rapid change, presenting Shopify with unprecedented opportunities in 2021 to accelerate innovation.”

While it expected “rapid growth” in gross profits, Shopify said it planned to reinvest the proceeds “as aggressively as we can” in hiring engineers, in-store checkout systems and new ventures such as its logistics network and “Shop” app.

Shopify said earlier this month that its online checkout system, Shop Pay, would be integrated into Facebook and Instagram — the first time it has been used outside Shopify’s own platform — after last year striking a deal with TikTok to embed ecommerce in the popular video-sharing app.