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Shopify Expects Revenue to Surge in 2016

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Reuters
Reuters
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By
Reuters
Reuters
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February 17, 2016, 11:21 AM ET
Shopify Inc. Headquarters As Company's Third-Quarter Sales Beat Estimates
Shopify Inc. stickers are displayed in a bowl at the company's headquarters in Toronto, Ontario, Canada, on Wednesday, Nov. 11, 2015. Shopify, the Canadian e-commerce software maker that sold shares in an initial public offering in May, raised its revenue forecast after beating analysts estimates in its second quarter as a listed company. Photographer: Kevin Van Paassen/Bloomberg via Getty ImagesKevin Van Paassen/Bloomberg/Getty Images

Canada’s Shopify (SHOP), a maker of software that helps retailers manage online stores, forecast a sharp jump in 2016 revenue as the company reported a record number of new merchants signed up for its service in the fourth quarter.

The Ottawa-based company, which went public in May, said the total value of sales processed on its platform more than doubled from a year ago, hitting $2.8 billion in the quarter that includes both post-Thanksgiving and Christmas shopping.

Its U.S.-listed shares surged 19% to $24.47 and it jumped 18% to C$33.58 in Toronto in early trade on Wednesday.

The company’s founder and chief executive, Tobi Lütke, said Shopify had “cracked the code” on mobile commerce, with almost half its orders in the quarter made via mobile phone.

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Shopify has in recent months struck deals allowing retailers to sell products from Amazon.com and from social media networks operated by companies including Facebook (FB), Twitter (TWTR), and Pinterest.

The company has also partnered with taxi-hailing service company Uber for its UberRUSH same-day delivery service.

“This company will never ever be limited by its ambitions,” Lütke told investors and analysts on a conference call.

Shopify said it expects revenue to rise to $320 million-$330 million in 2016 from $205.2 million reported for 2015.

Revenue jumped 33% to $70.2 million in the fourth quarter ended Dec. 31 from the third quarter, helped by strong holiday shopping.

However, the company’s net loss widened to $6.3 million from $4.8 million a year ago, mainly due to higher costs.

Cost of revenue rose 44%, while total operating expenses increased 27%.

On a per-share basis, net loss attributable to shareholders widened to 8 cents per share from 6 cents.

The company said it expects an adjusted operating loss of $16 million-$22 million in 2016, compared to $7.7 million in 2015.

Additional reporting by Anet Josline Pinto in Bengaluru; Editing by Kirti Pandey and Meredith Mazzilli.

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