Shopify revenue soars as Covid-19 boosts online shopping

18 Feb 2021584 Views

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The e-commerce platform’s fourth-quarter revenue was up 94pc on the previous year, well above analysts’ expectations.

It has been nearly one year since Covid-19 started sweeping across the world and sending many countries into lockdown, and e-commerce platforms are still enjoying the benefits of a soaring online shopping market.

Yesterday (17 February), e-commerce company Shopify reported adjusted earnings of almost $200m in the fourth quarter of 2020, compared to $50m a year prior.

The company’s revenue for the quarter was more than $977m, up 94pc on the same quarter the previous year. This also beat analysts’ forecasts of $913m.

Total revenue for Shopify for the full-year 2020 was more than $2.9bn, an 86pc increase compared to 2019.

The company said its subscription solutions revenue was up 53pc year over year, primarily due to more merchants joining the platform.

Shopify’s growth is not surprising given the sharp rise in online shopping in the past year, with Covid-19 restrictions forcing many bricks-and-mortar businesses to shut.

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In Ireland, a new report from Wolfgang Digital revealed that Irish online retail sales grew by 159pc in 2020. This is up from average annual growth of 32pc between 2017 and 2019. Wolfgang Digital said that in 2019, only 41pc of Irish merchants were making more than €1m online. In 2020, this rose to 67pc.

Growth expected to normalise

In a statement, Shopify said it is a “merchant-first company”, with a mission to make commerce better for everyone.

“In 2020, this translated to releasing features that focused on helping entrepreneurs to get online fast and start selling easily, to get discovered by buyers, and to get their products to buyers.”

However, the company noted that the sharp growth of e-commerce due to the pandemic “will likely resume a more normalised pace of growth.”

It expects its 2021 subscriptions solutions revenue growth to be driven by more merchants joining the platform. The company anticipates that this will be at a lower number than the previous year, but still higher than any other year before 2020.

The company has big expansion plans for 2021. At the beginning of this year, Shopify announced plans to hire more than 2,000 engineers globally and expand its Irish workforce.

While the company doesn’t disclose customer numbers on a country-by-country basis, John Riordan, who heads up the company’s Irish operations, recently said the rate of growth in 2020 was “exceptional in Ireland”.

Jenny Darmody is the deputy editor of Silicon Republic

editorial@siliconrepublic.com