Canadian tech giant Shopify hits $1B in quarterly revenue as personal retail returns hit higher

Canadian tech darling Shopify posted $1 billion in revenue for the first time in the e-commerce company's history as a return to in-person shopping built on the company's momentum from the COVID-19 pandemic.

Ottawa-born Shopify, which keeps its books in US dollars, reported total sales of $1.12 billion in the second quarter of its fiscal year, up 57 percent year-over-year.

The e-commerce company develops a platform and other services to help its customers, dubbed merchants, manage their online and physical stores.

Shopify saw a huge increase in sales during the COVID-19 pandemic, forcing many retailers to build up their online presence as public health precautions restricted brick-and-mortar outlets.

Ottawa ceramics shop Hintenberg Pottery Inc. made its first foray into online retail with Shopify in October 2019, a move creator Ginger McCoy says a few months later was "serious" with the pandemic unintentionally.

"If we hadn't done this in October, we wouldn't have been ready when March came," she told Global News, considering the public health measures that have prevented stores from welcoming customers into their stores for the first time. Its decade. will prevent. in business.

"Actually the online transfer, I would say, saved us," McCoy said.

While last quarter's revenue is a milestone for Shopify, the year-over-year growth is less than the 97 percent sales growth in last year's second quarter amid a massive migration to e-commerce.

Richard Tse, an investment analyst at National Bank Financial Markets, told Global News this week that most market watchers expected growth to slow a year after the pandemic escalated.

“Last year, the pandemic hit their second quarter drastically as merchants had to pivot online to survive. So, there's probably a scene out there that would be hard to replicate. There is probably no denying it,” he said on Tuesday.

“I think despite this, a lot of these changes we have seen in the market are permanent… so it allows them to really add a meaningful amount of traders.”

Shopify says it has more than a million merchants using its platform, but does not disclose exact figures.

Gross merchandise volume (GMV), the metric that tracks the value of all goods sold at its Shopify-backed stores, was $42.2 billion in the quarter, up 40 percent year-over-year.

While online sales dominated Shopify's pandemic-era results, chief financial officer Amy Shapero said during the company's conference call with analysts Wednesday morning that brick-and-mortar has made a comeback. In-person retail now makes up about the same percentage of GMV as the company did pre-pandemic, but at higher levels the total pie is now larger.

He also pointed to the United Kingdom as an indicator of what is to come. Thanks to a strong early vaccination campaign, the UK reopened its economy ahead of many other international markets,

GMV for the UK grew at a faster rate than the rest of the company's average, which Shapero said, adding that merchants who can use "multi-channel" selling - online as well as in-person approaches - are better suited for success.

Shopify President Harley Finkelstein said during the conference call on Wednesday that online and physical retail are no longer "mutually exclusive."

Now that Hintenberg Pottery has been set up for sale online, McCoy said she can't imagine going back. But the in-person experience has always been key to the wide-window Ottawa shop, and she expects it to be front and center as the store emerges from COVID-19 retail restrictions in Ontario.

But the impetus to shift online before the pandemic hit was a recognition that brick-and-mortar is no longer enough by itself.

“One of the reasons we didn’t go online before October in the 10 years we’ve been doing business is because we really value local, in-house, community development. Standing shoulder to shoulder with our neighbors Standing up, being face to face was a huge value for us,” she said.

"So we clinged to that, but that ship was sinking."

McCoy also credited Shopify's platform for helping its employees organize the store's inventory and streamline transactions, providing a lot of relief from the mental stress of its employees during the pandemic.

Finkelstein said during Wednesday's call that this type of relationship -- in which its merchants rely on the company for important aspects of the business -- is a goal for the company.

“We want to be the most important part of the software that our merchants use. We want to be that central operating system,” he said.