Shopify Shares Surge On Strong Q3 Revenue, GMV Growth

Shopify Inc's SHOP third-quarter 2020 adjusted diluted earnings per share of $1.13 beat consensus of $0.51, and revenue of $767.4 million grew 96.5% year-over-year, beating consensus of $653.2 million.

Key Q3 Highlights: Merchant Solutions' revenue increased 132% YoY to $522.1 million, and Subscription Solutions' revenue increased 48% YoY to $245.3 million.

Gross Merchandise Volume (GMV) jumped 109% YoY to $30.9 billion, as an accelerated shift to digital commerce triggered by COVID-19 is continuing, as more consumers shop online. 

Gross Payments Volume (GPV) hiked 126% YoY to $14 billion, accounting for 45% of the GMV processed.

Adjusted gross margin contracted by 200 basis points YoY to 54%, while the adjusted operating margin improved a significant 1,400 basis points YoY to 17%.

Shopify generated an operating cash flow of $179.6 million in Q3 and ended the quarter with a $3.1 billion cash balance.

"We continue to evolve our global commerce operating system to make it easier for merchants to get online and start selling, get discovered, and get their goods to buyers while providing a delightful shopping experience," said Shopify CFO Amy Shapero.

Outlook: Shopify did not provide guidance for Q4 or full-year 2020 due to uncertainty related to the pandemic.

See Q3 presentation slide deck here.

Price Action: SHOP shares are trading higher by 5.4% to $1,075.6 in the pre-market session on the last check Thursday.

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