Business

Shopify tempers 2021 expectations after record year for online demand

Revenue rose to $977.7 million in the fourth quarter ended Dec. 31, from $505.2 million a year earlier

Photo: REUTERS/Chris Wattie
  • The Ottawa-based company raked $5.1 billion in sales during the Thanksgiving weekend last year;
  • The, company, however, expects slower revenue growth this year from 2020 on vaccine rollouts.

Shopify hinted revenue growth would slow this year, as vaccine rollouts encourage people to return to stores, after the Canadian e-commerce firm trounced profit and revenue expectations for the holiday quarter on soaring online demand.

The company said it does not expect the near doubling of gross merchandise volume (GMV), an industry metric to measure transaction volumes, in 2020 to repeat this year.

READ ALSO: Shopify’s revenue rise 97% in the second quarter, to $714.3 million, crushing the market’s expectations

The roll-out of COVID-19 vaccines will likely rotate some consumer spending back to brick-and-mortar stores and the shift to e-commerce, which accelerated in 2020, will likely resume a more normalized pace of growth, the company said.

“We expect that we will continue to grow revenue rapidly in 2021, albeit at a lower rate than in 2020.”

The company’s U.S. shares fell 2.4% to $1,438 in pre-market trading, after nearly tripling in value in 2020.

Shopify’s platform helps sellers to set up stores online and the company also offers payments and shipment tracking services, attracting thousands of businesses as curbs imposed during the health crisis worldwide accelerated a shift to e-commerce.

READ ALSO: Google to invest $8 million in coronavirus-hit small businesses in Latin America

The Ottawa-based company, which generates revenue through subscriptions and merchant services, said monthly recurring revenue rose 53% to $82.6 million as more sellers on free trials converted into paying subscribers.

Gross merchandise volume rose 99% to $41.1 billion during the all-important holiday shopping season, the third straight quarter of record growth, also beating analysts’ estimates of $36.67 billion, according to IBES data from Refinitiv.

Shopify, which partners with Walmart and Facebook, said on Wednesday it plans to boost investment in products like Shop App, international expansion and Shopify Fulfillment Network.

Revenue nearly doubled to $977.7 million, beating estimates of $910.2 million. Adjusted earnings of $1.58 per share also topped estimates of $1.26.