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Shopify headquarters in Ottawa. The company raised its revenue outlook as it invests in new AI tools for merchants.Chris Wattie/Reuters
Shopify SHOP-T projected current-quarter revenue growth above Wall Street estimates on Wednesday, signalling the company’s AI efforts were drawing more merchants to its suite of e-commerce services and driving broader consumer demand, sending its U.S.-listed shares SHOP-N up 26 per cent in premarket.
The company’s solid outlook and a second-quarter revenue beat are set to quell investor concerns about growing competition from new AI tools targeting small businesses that have dented Shopify’s shares.
If premarket gains hold, Shopify shares are set to recoup all losses this year. Through last close, the stock was down 23.4 per cent year-to-date.
While geopolitical tensions and gas price spikes resulting from the Iran war have put a strain on shopping budgets, consumers have still shown resilience thanks to a strong labour market and continued wage growth.
Through its partnerships with OpenAI, Google GOOGL-Q and Microsoft MSFT-Q, Shopify has also been able to drive consumer demand by helping retailers on its platform reach more customers through AI chatbots or search queries.
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Shopify’s AI tools – such as its Sidekick AI assistant – have also seen steady adoption from small- and medium-sized businesses that are increasingly leaning on AI to execute tasks faster and cheaper.
“This was a monster quarter … We power every kind of business, and with AI, we’re expanding what’s possible for all of them,” said Shopify president Harley Finkelstein.
The company, which generates revenue by taking a cut of sales from sellers on its platform and selling subscription plans to merchants, said it saw solid growth across all merchant sizes, product categories, and geographies in the quarter.
Gross merchandise volume (GMV), or the total value of goods sold on Shopify, rose 32 per cent to US$115.57-billion during the quarter ended June, helping total revenue jump 34 per cent to US$3.58-billion and beat analysts’ average estimate of US$3.45-billion, according to data from LSEG.
Shopify expects third-quarter revenue to grow in the low-thirties percentage range, above analysts’ estimate for a 26.3-per-cent increase. It forecast gross profit growth at a mid-to-high twenties percentage rate, versus expectations of a 24.1-per-cent rise.
