Shopify Inc.’s loss narrowed in the fourth quarter as it began powering provincial and private marijuana e-commerce offerings and continued its push to grow its merchant base.
The e-commerce software company reported Tuesday a fourth-quarter loss of US$1.5 million compared with a loss of US$3 million in the same quarter a year earlier.
The company, which keeps its books in U.S. dollars, said the loss amounted to a penny per share for the quarter ended Dec. 31 compared with a loss of three cents per share a year earlier.
The quarter was the first to include the legal sale of recreational cannabis in Canada. Shopify helped power the online stores of several retailers with Ontario, B.C. and pot purveyor Tweed among the provinces and brands to rely on the company.
Shopify chief operating officer Harley Finkelstein hinted on a call with analysts that the platform’s ability to cope with the surge in demand for the substance could bode well for the company’s future.
“The Canadian cannabis push was really not only just to get a foothold in the Canadian market, but also ensure that we have a really good position globally as things begin to decriminalize,” said Finkelstein.
“It also positioned us…to be the first phone call that any other country thinks about when they’re thinking about regulating or allowing cannabis sales to the consumer to be allowed.”
Finkelstein also used the call to trumpet the company’s 54 per cent spike in revenues, which jumped from $222.8 million in the last three months of 2017 to $343.9 million for the latest quarter.
On an adjusted basis, Shopify reported a profit of 26 cents per share, up from an adjusted profit of 15 per share in the fourth quarter of 2017.
Analysts on average had expected a profit of 20 cents per share, according to Thomson Reuters Eikon.
Finkelstein attributed the increase to merchant success, pointing out that Proctor & Gamble, General Mills and Steve Madden were among the handfuls of new companies to join the ranks of Shopify’s 5,300 merchants in the last quarter.
Looking ahead, the company said it expects its revenue to be between $1.46 billion and $1.48 billion for 2019 and an operating loss between $140 million and $150 million for the year.
The company’s ability to attract large merchants like the brands Finkelstein mentioned has been in the spotlight ever since the company came under attack from short seller Andrew Left, when he targeted it just over a year ago. Left claimed Shopify relied too heavily on small merchants whose future business was uncertain and called on it to release more data around customer “churn.”
Shopify has offered little insight around its churn, but does publicize its gross merchandising volume (GMV), a number that measures merchandise sold through the company and hints at the company’s ability to retain merchants and customers.
Shopify said its fourth quarter GMV grew by $4.9 billion to reach $14 billion for the fourth quarter and $41 billion for 2018.
Companies in this story: (TSX:SHOP)
Tara Deschamps, The Canadian Press