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Shopify revenues accelerate but growth rate to start slowing

Even as consumers return to stores, company expects revenue gains to continue

The e-commerce boom of 2020 is continuing into 2021 and one of the first major e-tailers to announce Q1 earnings is confirming that. Shopify (NYSE: SHOP) reported total revenue in Q1 of $988.6 million, 110% growth year-over-year, powered by a 137% growth in Merchant Solutions revenue of $668 million.

Subscription Solutions revenue climbed 71% to $320.7 million, the Canadian-based company said Wednesday morning.

“Shopify’s momentum continued into 2021 as digital commerce tailwinds remained strong and merchants took advantage of the range of capabilities offered by our platform,” said Amy Shapero, Shopify’s CFO, in a statement. “We are focused on building a commerce operating system that will help shape the future of retail. Our merchant-first business model positions us to capture the massive opportunity presented by the growth of digital commerce, benefiting both our merchants and Shopify.”

The company cautioned, though, that its numbers may come down as more economies open up and consumers return to a more normal shopping experience, including in-store purchases.

“Our full-year 2021 outlook is guided by assumptions that remain unchanged from February: that as countries continue to roll out vaccines in 2021 and populations are able to move about more freely, the overall economic environment will likely improve; some consumer spending will likely rotate back to offline retail and services; and the ongoing shift to e-commerce, which accelerated in 2020, will likely resume a more normalized pace of growth,” Shapero said.

Gross merchandise value (GMV) nearly doubled to $37.3 billion year-over-year, up from $19.9 billion, while gross payments volume (GPV) grew to $17.3 billion, up from $7.3 billion a year ago. GPV now represents 46% of GMV. However, Shopify said it doesn’t expect the GMV surge that occurred in 2020 to repeat itself in 2021.

Shopify also said monthly recurring revenue (MRR) increased 62% to $89.9 million, up from $55.4 million, on the strength of more merchants joining the platform and its new Retail POS Pro subscription offering. Shopify Plus contributed $23.1 million to MRR.

Gross profit dollar growth increased 117% to $558.7 million compared to $263.8 million in Q1 2020. Operating income was 12% of revenue at $118.9 million, compared to a loss of $73.2 million and 16% of revenue in Q1 2020. Adjusted operating income for Q1 2021 was $210.8 million versus an adjusted operating loss of $7.3 million a year ago.

Net income was $1.2 billion, or $9.94 per diluted share, compared with a net loss of $31.4 million, or 27 cents per diluted share, a year ago. The company said net income was boosted by a $1.3 billion unrealized gain as a result of its equity investment in Affirm, which went public in January 2020.

“While we expect that the first quarter will likely still contribute the smallest share of full-year revenue and the fourth quarter the largest, the revenue spread may be more evenly distributed across the four quarters than it has been historically if the rollout of a vaccine shifts more consumer spending to services and offline shopping towards the back half of the year,” Shapero said.

As of March 31, Shopify had $7.87 billion in cash, cash equivalents and marketable securities, compared with $6.39 billion on Dec. 31, 2020. The increase reflects $1.5 billion of net proceeds from Shopify’s offering of Class A subordinate voting shares in the first quarter of 2021.

“We continue to expect rapid growth in gross profit dollars in 2021 and plan to reinvest back into our business as aggressively as we can, with the year-over-year growth in operating expenses accelerating each quarter throughout the rest of the year. As such, we expect full-year 2021 adjusted operating income to be below the level we achieved in 2020,” Shapero added.

Shopify said it has continued efforts to build out its Shopify Fulfillment Network, including optimizing software and building technology features for merchants to gain more insights into their inventory and overall control of that inventory. Harley Finkelstein, Shopify president, said the network filled as many orders in Q1 as it did in Q4 2020. In addition, Shopify Shipping, which allows merchants to ship directly, saw more than 50% of merchants using the service.

Work has also continued on evolving Shop, the company’s all-in-one mobile shopping assistant. New features included an in-app buy button and more search capabilities, including the ability to find businesses promoting sustainable commerce. More than 107 million users are registered on Shop.

Shopify has increased its investment in the Direct Air Capture carbon removal program, buying an additional 10,000 tons of removal from Carbon Engineering. It had previously purchased 5,000 tons from Climeworks. The Shopify Sustainability Fund is targeting more than $1 million per year for carbon sequestration.

Click for more Modern Shipper articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at