Shopify has released its Q1’19 earnings report, posting higher-than-anticipated profits driven by strong growth in subscription revenue. A number of factors, like Shopify’s increase in the total number of new merchants on the platform and several initiatives to make the merchant experience more sophisticated, contributed to the e-commerce platform giant’s strong growth in the quarter.
Total earnings, comprised of merchant and subscription solutions revenues, grew 50% year-on-year, rising to $320.5 million. Merchant solutions revenue saw the stronger increase of the two categories, growing 58% in the quarter to reach $180M, while subscription solutions revenue, primarily driven by the high number of merchants joining the platform, posted a 40% annual growth rate to reach $140.5 million. Overall, the platform’s $44.2 million in MRR means a 36% increase on last year.
In terms of the platform’s operating volume, gross merchandise volume (GMV) grew by almost $4 billion to reach $11.9 billion for the quarter, 41% of which was made up of gross payments volume ($4.9 billion). GMV grew 50% year-on-year, demonstrating a strong increase in merchant sales over the past twelve months. Operating losses of $35.8 million (11% of revenue) led to an adjusted net income of $10.3 million ($0.09 per share) for the quarter, an increase of 145% year-on-year.
As one of the most prominent platforms for creating an e-commerce storefront and standalone brand, Shopify’s increase in new merchants, as well as their confidence in the sector (as indicated by investment in the merchant user experience) is more widely indicative of a continuously-growing online commercial environment.
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