Shopify’s Q4 Earnings vs. Analyst Predictions
Shopify posted record numbers in Q4, growing massively over the course of 2020. In fact, the company reported a quarterly revenue of $977.7 million, translating to a 94% increase in comparison to the same quarter in 2019. This figure also beat out expert projections as well as the business was only expected to make $906.82 million. The trend for outperforming predictions continued once again for the company in its Q4 earnings per share, with Shopify reporting an adjusted net income of $198.8 million, or $1.58 per share. Analyst expectations were significantly lower, with Q4 earnings per share sitting at $1.21.
The largest area of growth for the business was merchant solutions revenue at $698.3 million, representing a YOY (year-over-year) expansion of 117%.
On the year, the company has had incredible success as more and more businesses have utilized their services to create strong online platforms amidst the COVID-19 pandemic. In fact, in large part to the pandemic, the company saw a major rise in new business as the number of new consumers purchasing items from Shopify merchants rose to 457 million, a 52% increase. The company also significantly expanded the channels for sales as well, now allowing merchants to sell through Facebook Shops, Walmart, Pinterest, and the TikTok marketing channel.
Shopify’s Outlook on 2021 and Stock Market Response.
Despite the massively successful quarter, Shopify stock has been down in pre-market trading. The company has seen shares drop by almost 3%. The drop can be largely attributed to the business outlook posted for 2021 that Shopify added to their Q4 report. While the company does expect to continue to grow, new business and revenues will most likely slow as the vaccine rollout continues, putting more emphasis back on in-person shopping instead of the near-exclusive market that ecommerce experienced in 2020.
In a statement released with the Q4 report, company President Harvey Finkelstein said, “The spirit of entrepreneurship was strong in 2020, as our merchants’ resilience and ability to adapt helped many of them thrive in a difficult year. Shopify is at the heart of our merchants’ businesses with entrepreneurs around the world trusting us with their livelihoods. This year, we are doubling down on creating a frictionless path to successful entrepreneurship, as we continue to build a future-proof commerce solution to serve generations to come.”
About the Author
Tom Price is a writer focusing on entertainment and sports features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.