Shopify Inc.’s president says the company is holding up well as consumer spending shows signs of softening, attributing the relative strength to the wide variety of merchants that use its platform. Harley Finkelstein told analysts on a Wednesday earnings call that the company’s merchants appear to be “outperforming and doing better than others.”
Finkelstein explained that Shopify’s merchant base spans many verticals and geographies, which helps smooth out regional or industry-specific slowdowns. The Ottawa-based e-commerce software provider serves a broad spectrum of sellers, from small independent shops to multinational brands. Recent additions to its roster include growing names such as jeweler Mejuri and apparel retailer Evereve, alongside familiar brands like Toys “R” Us, Barnes & Noble and Casper.
This diverse mix of merchants has helped Shopify manage an environment of reduced consumer spending driven by high inflation and elevated borrowing costs in several of its key markets. While many retailers have pointed to weaker demand, Shopify executives say the company has not seen a dramatic pullback across its overall business.
Shopify’s Q2 earnings
On the same earnings call, chief financial officer Jeff Hoffmeister said the company experienced neither “any significant deterioration or improvement” during the second quarter, indicating a relatively stable quarter amid uncertain consumer trends.
Shopify reported a net income of $171 million, or $0.13 per diluted share, for the quarter ended June 30. That contrasts with a net loss of $1.31 billion, or $1.02 per diluted share, in the comparable quarter a year earlier, when the company recognized a $1.34 billion charge related to the sale of its logistics business. All figures are reported in U.S. dollars.
Revenue for the quarter climbed to $2.05 billion, up from $1.69 billion a year ago. Subscription solutions revenue reached $563 million, rising from $444 million, while merchant solutions revenue totaled $1.48 billion, up from $1.25 billion in the prior-year quarter. Those increases reflect both growth among existing customers and expansion across different product and service lines.
“We are at our strongest yet,” Finkelstein said following the release of the results, underscoring the company’s view that its platform remains resilient even as broader retail conditions shift.
Following the earnings report, Shopify shares on the Toronto Stock Exchange rose sharply, climbing 17.9% to close at $87.87.
Reactions from analysts
Analysts noted the quarter as evidence of Shopify’s durable position in e-commerce. Daniel Chan of TD Securities described the results as a demonstration of “Shopify’s e-commerce leadership and continued ability to gain market share,” especially given the mixed backdrop for consumer spending. He also pointed out that parts of the company’s guidance were “better than expected.”
For the third quarter, Shopify projected revenue growth in the low-to-mid-twenties percentage range year over year. Hoffmeister said the company plans targeted hiring in sales and research and development to support future growth, while expecting overall headcount to finish the year with “minimal” net change. Shopify reported having 8,300 employees at the end of 2023.
The company has undertaken workforce reductions in recent years as part of restructuring efforts to sharpen its focus. In May 2023, Shopify reduced its staff by approximately 20%, and it previously cut about 1,000 positions in July 2022. Those moves were framed as steps to concentrate resources on core operations and long-term priorities.
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