Shopify has reported a 45 per cent rise in third quarter revenue to $390.6 million, ahead of guidance for revenue between $377 million and $382 million.
The Canadian e-commerce giant said those results were achieved thanks to earning $225.0 million of merchant solutions revenue and $165.6 million of subscription solutions revenue. These segments grew by 50 per cent and 37 per cent year-on-year, respectively.
Subscription solutions revenue that is monthly recurring revenue (MRR) increased 34 per cent year over year to $37.9 million. This increase was driven by growth in the number of merchants joining Shopify’s platform.
Shopify Plus, the subscription plan for high-volume merchants, accounted for 27 per cent of MRR, up from 24 per cent in the third quarter of 2018.
Although the company saw robust revenue growth, rapidly rising operating expenses weighed on profitability.
Operating expenses rose 39 per cent year-on-year, from $181 million in the year-ago period to $252 million.
The operating loss widened from $31.4 million in the third quarter of 2018 to $35.7 million in the third quarter or 2019.
Shopify’s non-GAAP (adjusted) loss per share for the period was $0.29. This compares with adjusted net income of $0.05 per share in the year-ago quarter.
“More than a million merchants are now building their businesses on Shopify, as more entrepreneurs around the world reach for independence,” said Shopify chief executive Tobi Lütke.
“These merchants chose Shopify because we’re making entrepreneurship easier, and we will continue to level the playing field to help merchants everywhere succeed,” Lütke added.
“Our strong results in the quarter were driven in part by the success of our international expansion, which is just one of the many ways we are investing in the platform,” said Shopify chief financial officer Amy Shapero.
“By carefully balancing these multiple opportunities that have different investment time horizons, we can keep investing in the innovations that will power merchants in the future while helping them grow rapidly today.”
As part of its third quarter results, Shopify noted it surpassed one million merchants worldwide on its platform, “hitting a major milestone and reflecting the continued expansion of Shopify’s global community of entrepreneurs”.
Shopify also recently launched its own fulfilment business, selling its warehouse logistics technology to third party retailers, packaging and shipping products for an additional fee.
Its sights are now set on overtaking Ebay in terms of sales volumes this year, becoming the second largest US commerce platform, behind Amazon.