Shopify Inc. soared after reporting third-quarter sales that beat analystsâ estimates, a sign that the Canadian e-commerce company is gaining momentum as spending continues to shift from stores to websites.
Revenue for the period rose about 26 percent to $2.16 billion, the company said in a statement Tuesday, beating the $2.12 billion average estimate of analysts surveyed by Bloomberg.
The US-traded shares increased almost 14 percent in early trading. As of the Monday close, the stock had gained about 23 percent this year.
Shopify said it expects percentage revenue growth for the current quarter ending in December to be in the mid to high twenties on a year-over-year basis. Analysts were looking for 23 percent.
In an effort to boost growth, President Harley Finkelstein has been investing heavily in marketing, even if doing so crimps profit margins. Third-quarter operating income was $283 million, compared with analystsâ estimates of $337 million.
Shopify also has been attracting larger companies such as Toys R Us as customers, after years of mostly targeting mom-and-pops. Shopify is betting that the order volume generated by bigger retailers will help it grow more quickly than by relying on its existing base of smaller firms.
Shopify abandoned plans to build a logistics operation that would have helped it grow by selling more services to customers it already has. Without that, the company needs to find new customers.
Gross merchandise volume, the overall value of merchant sales across Shopifyâs systems, was $69.7 billion, beating Wall Street projections of $67.8 billion.
Amazon.com Inc., a Shopify rival, also reported strong third-quarter results earlier this month, with revenue from the online store unit increasing 7 percent to $61.4 billion.
By Spencer Soper
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