Shopify share price rose 7% at close to $1053.59 after record earnings on 29 July for Q2. Revenue was up 9.7% on the year to $714m, with gross merchandise volume (GMV) up 119% reaching and surpassing analyst estimates of $19.9bn with $30bn.
Before the company released its earnings, it filed an F-10 form with the SEC to raise $7.5bn of capital. Securities including Class A voting shares, preferred shares, debt securities, warrants, subscription receipts and units. Any sales will be able to be made within 25 months of the filing, in parts or in whole.
As total GMV grew 119% over Q2, there were huge increases through April and May at the peak of the Covid-19 pandemic which forced retail closures around the globe. GMV growth did decelerate in June and July though as some stores opened back up. GMV through POS however declined by 29% in Q2 for stores that used Shopify for in-store purchases.
Financials for the company in the quarter were positive across the board, showing a net income of $36m, compared to a loss in the same quarter of 2019 of $28.7m.
Temporary closures of brick and mortar stores benefit Shopify
The company highlighted that 39% of retail merchants with brick and mortar stores in English speaking geographies have adopted collection or pickup services in attempts to keep business alive in the current climate.
The company runs a free trial period for merchants and saw new stores on its platform grow 7% year-on-year as it expanded its 14-day trial to a generous 90 days at the beginning of the pandemic. The company expects to convert a good number of those merchants into paid subscribers as retailers do move to at the very least improve, if not move completely to ecommerce.
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Throughout Q2, Shopify continued to invest in its operations, including partnerships with Facebook, Walmart, and launch its chip & pin and contactless POS devices in Canada and Australia, which will continue to pay dividend when the world resumes normal service post-pandemic.
The company realizes the growth of its GMV over the quarter is exceptional but insists the trend of retail moving to ecommerce will continue.
As a result of Covid-19, the company predicts there will be a rise in entrepreneurialism – Shopify is also producing a television series that will debut on the Discovery channel featuring its own COO Harley Finkelstein.
Such ventures mean the company will continue strengthening its brand and increase awareness of being a major ecommerce player while bricks and mortar stores struggle.