Canadian e-commerce giant Shopify Inc. reported first-quarter revenue that exceeded Wall Street estimates, sending its shares higher in early trading on Tuesday. The Ottawa-based company posted revenue of $1.89 billion, up 23% from a year earlier and above the average analyst estimate of $1.84 billion, according to IBES data from Refinitiv.
Strong Merchant Growth Drives Results
Shopify's gross merchandise volume, the total value of orders processed on its platform, rose 18% to $60.9 billion. The company added more than 10,000 new merchants during the quarter, bringing its total subscriber base to over 2.1 million. Subscription solutions revenue increased 21% to $525 million, while merchant solutions revenue grew 24% to $1.37 billion.
“Our results reflect the continued strength of the global e-commerce market and the value we provide to merchants of all sizes,” said Harley Finkelstein, Shopify's president. “We are investing heavily in AI-powered tools to help our merchants sell more effectively.”
Profitability Improves
Shopify reported net income of $287 million, or $0.22 per share, compared with a loss of $193 million a year ago. Adjusted earnings per share came in at $0.31, beating the consensus estimate of $0.26 per share. The company's operating margin improved to 12.5% from 8.3% a year earlier, driven by cost controls and higher gross margins.
“Shopify continues to execute well, balancing growth with profitability,” said analyst Richard Tse of National Bank Financial. “The company is well-positioned to capture further market share in the growing e-commerce space.”
Outlook and Investments
For the second quarter, Shopify expects revenue in the range of $1.92 billion to $1.96 billion, with full-year revenue growth of approximately 20%. The company also announced a new partnership with AI startup Cohere to integrate advanced language models into its platform, aiming to improve merchant tools such as product descriptions and customer service chatbots.
Shopify's shares rose 4.5% in early trading on the Toronto Stock Exchange to C$112.50, giving the company a market capitalization of approximately C$145 billion.
