Shopify stock surge 20% as earnings beat

Shopify, a Canadian e-commerce company, reported strong Q3 results that beat expectations and provided upbeat guidance for the remainder of the year. The company’s earnings per share were 24 cents adjusted compared to 14 cents expected, and revenue was $1.71 billion compared to $1.67 billion expected.

Shopify expects 2023 revenue to grow at a mid-twenties percentage rate, driven by fourth-quarter revenue growth in the high teens. Gross merchandise volume rose 22% to $56.2 billion during the quarter, compared to analysts’ forecasts of $54.2 billion.

Shopify Chief Financial Officer Jeff Hoffmeister said the company’s results showcased the durability of its business model, with revenue growing 25% year over year and free cash flow margin reaching 16%.

Net income for the quarter was $718 million, or 55 cents a share, compared to a loss of $158.4 million or 12 cents per share in the year-ago quarter. The solid earnings beat comes after Shopify, which makes tools for companies to sell products online, has sharpened its focus on costs.

The company laid off 20% of its workforce in May and divested its logistics unit to supply chain software startup Flexport, including Deliverr, the last-mile delivery company acquired for $2.1 billion last May.

As part of an agreement that will make Faire the preferred wholesale platform for Shopify merchants, Shopify also revealed a partnership with Amazon that will enable quick and free Prime delivery on storefronts located on Amazon.