Shopify, a Canadian eCommerce company, beat earnings expectations this quarter, according to a quarterly earnings call. Despite that, company stocks dropped on Tuesday, likely because the call didn’t do enough to counter accusations made in a Citron Research report released earlier this month.
Shopify CEO Tobias Lütke had some things to say about small business and retail during the earnings call.
“I don’t have time here to dig [into] why this is, but the change we want to make is that we want to give the small businesses a chance to survive and thrive. The world needs millions of small businesses to ensure sustainable future for economies and jobs instead of [a] handful of mega companies,” said Lütke during the call. The company is fully committed to retail, he said, stating that retail was shifting away from larger stores toward “laser-focused” brands and experience-based shopping.
Lütke also highlighted that changes in manufacturing and the retail supply chain are forcing big changes in the retail landscape. “You put all these things together and end up with a new formula,” he said, indicating that there’s little need for large inventories or retail locations in the new, online environment that Shopify inhabits.
Also during the call, COO Harley Finkelstein also addressed some of the allegations leveled against the company in the Citron Research report, which alleges that Shopify was paying some of its affiliates to recruit merchants for the site.
“Just to be clear, I mean some of the allegations about these so-called affiliates of ours, some of them are actually not even selling Shopify,” said Finkelstein. He went on to explain that some of the affiliates referenced in the report were not actual affiliates, and that those affiliates found not to be in compliance with Shopify standards would be kicked out of the program.
“We have a team of people, as I mentioned, that manually approve[s] these affiliates,” he said.
Five Killer Stats
- Shopify revenue grew 72 percent year-over-year to $171.5 million.
- Subscription revenue grew 65 percent to $82.4 million. Underlying monthly recurring revenue also grew 65 percent and ended the quarter at $26.8 million.
- Gross Merchandise Volume (GMV) grew to $6.4 billion, up 69 percent from last year’s third quarter.
- Shopify’s cash and marketable securities balance was $926.6 million, down slightly from $932.4 million on June 30, 2017.
- Shopify expects full-year 2017 revenue in the range of $656 million to $658 million.