Shopify reported total revenue up 46% to $1,123.7 million, year over year.
Subscription Solutions revenue up 37% to was $336.2 million, year over year
Merchant Solutions revenue up 51% to $787.5 million, year over year
Merchants’ GMV strong in Q3; $400 billion in cumulative GMV
Shopify Inc. (NYSE, TSX:SHOP), a provider of essential internet infrastructure for commerce, announced today strong financial results for the fourth quarter ended September 30, 2021.
Third-Quarter Financial Highlights
• Total revenue in the third quarter was $1,123.7 million, up 46% year over year.
• Subscription Solutions revenue was $336.2 million, up 37% year over year, primarily due to more merchants joining the platform.
• Merchant Solutions revenue was $787.5 million, up 51% year over year, driven primarily by the growth of Gross Merchandise Volume1 (“GMV”).
• Monthly Recurring Revenue2 (“MRR”) as of September 30, 2021 was $98.8 million. MRR increased 33%
• year over year, up from $74.4 million as of September 30, 2020 as more merchants joined the platform and the number of retail locations using POS Pro increased. Shopify Plus contributed $27.2 million, or 28%, of MRR compared with 25% of MRR as of September 30, 2020.
• GMV for the third quarter was $41.8 billion, an increase of $10.8 billion or 35% over the third quarter of 2020. Gross Payments Volume3 (“GPV”) grew to $20.5 billion, which accounted for 49% of GMV processed in the quarter, versus $14.0 billion, or 45%, for the third quarter of 2020.
• Gross profit dollars grew 50% to $608.9 million in the third quarter of 2021, compared with $405.1 million for the third quarter of 2020.
• Adjusted gross profit4 dollars grew 49% to $616.4 million in the third quarter of 2021, compared with $412.6 million for the third quarter of 2020.
• Operating loss for the third quarter of 2021 was $4.
• .1 million, or 0.4% of revenue, versus income of $50.6 million, or 7% of revenue, for the comparable period a year ago.
• Adjusted operating income4 for the third quarter of 2021 was $140.2 million, or 12% of revenue, compared with adjusted operating income of $130.9 million or 17% of revenue in the third quarter of 2020. • Net income for the third quarter of 2021 was $1,148.4 million, or $9.00 per diluted share, compared with net income of $191.1 million, or $1.54 per diluted share, for the third quarter of 2020. Q3 2021 net income includes a $1,340.8 million unrealized gain on our equity investments.
• Adjusted net income4 for the third quarter of 2021 was $102.8 million, or $0.81 per diluted share, compared with adjusted net income of $140.8 million, or $1.13 per diluted share, for the third quarter of 2020.
• At September 30, 2021, Shopify had $7.52 billion in cash, cash equivalents and marketable securities, compared with $6.39 billion at December 31, 2020.
Third-Quarter Business Highlights
• Shopify launched Shopify Markets, a product that makes cross-border commerce easier for entrepreneurs. With Shopify Markets, merchants can enter new markets easily, and increase buyer trust and conversion with tailored experiences for each market. By managing all cross-border commerce in Shopify’s centralized commerce platform, Shopify Markets gives merchants a unified view of their entire business across borders.
• Shopify began rolling out Shopify Balance, our money management product, to merchants in the United States. Shopify Balance offers merchants a no-fee money management account with fast access to their cash, a card for spending online, on mobile, or in-store, and rewards featuring cash back, perks, and discounts on every day spending.
• Shopify introduced TikTok Shopping to merchants, enabling merchants with a TikTok For Business account to add products that link directly to their online store checkout.
• Shopify continued to build the foundation of Shopify Fulfillment Network, adding capabilities including product bundling, regional tax settings, and tracking inbound transfer shipments of inventory.
• Shopify made strides with our All-New POS Pro software
Subsequent to Third Quarter 2021
• Shopify launched the Shopify Global ERP Program, which allows select ERP partners, initially including Microsoft, Oracle NetSuite, Infor, Acumatica, and Brightpearl, to build direct integrations into the Shopify App Store. This offering unlocks seamless workflows and greater data control for high-volume merchants, helping them transform data into actionable results as they scale on our platform.
• Shopify launched the Spotify channel, enabling artist-entrepreneurs on Spotify to connect their Spotify for Artists accounts with their Shopify online stores, where they can sync their product catalogues and seamlessly showcase products directly on their Spotify profile.
In view of these factors, we continue to expect to grow revenue rapidly in 2021, but at a lower rate than in 2020. For the full year 2021, we continue to expect the following:
• Subscriptions solutions revenue growth to be driven by more merchants around the world joining the platform in a number lower than the record in 2020, but higher than any year prior to 2020;
• The growth rates of subscription solutions and merchant solutions revenues to be more similar to each other than for 2020, or any year prior to 2020, as we do not expect the surge in GMV that drove merchant solutions in 2020 to repeat; and,
• Merchant solutions revenue growth to be driven by continued GMV growth from existing merchants, new merchants joining the platform, and expanded adoption of Shopify’s growing menu of merchant solutions, including established offerings such as Shopify Payments, Shopify Shipping, and Shopify Capital, both geographically and as merchants grow into them, while newer solutions such as Shopify Fulfillment Network and 6 River Systems contribute nascent but incremental revenue in their early stages.
The company’s stated its outlook for the remainder of 2021 is consistent with its assumptions announced in February.
Shopify expects rapid growth in 2021 revenues, but at a lower pace when compared with last year.
The company continues with its positive growth in 2021 gross profit dollars, expects the next quarter to generate the largest share of full-year revenue, and 2021 full-year adjusted operating income to be above the level we achieved in 2020.
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