Shopify Inc. Sales Surge 93%

By Joe

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Shopify (NYSE: SHOP) reported second-quarter results on Aug. 3. The provider of cloud-based commerce solutions is enjoying booming demand for its services among merchants of all sizes.

Shopify results: The raw numbers

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Data source: Shopify Q2 2016 earnings press release.

What happened with Shopify this quarter?

Subscription revenue surged 72% year over year to$43.7 million, with the number of merchants using Shopify's platform rising to more than 300,000, up from 275,000 in Q1 and 175,000 in the second quarter of 2015.

Sales for Shopify's merchant solutions segment -- which includes the company's payments and shipping services -- grew even more rapidly, increasing 121% to$43 million driven primarily by the growth of Shopify Payments.

Together, that helped total revenue soar 93% year over year to $86.6 million, which exceeded Shopify's guidance for second-quarter revenue of between $79 million and $81 million.

Monthly recurring revenue (the number of merchants with a subscription times the average subscription fee) as ofJune 30, 2016, was$14.4 million, an increase of 70% from the prior year. And gross merchandise volume-- which represents the total dollar value of orders processed on Shopify'splatform -- jumped 106% to$3.4 billion in the second quarter.

"Today's entrepreneurs are tomorrow's multi-million dollar businesses, and that many use Shopifyto get there is the foundation of our business model," said founder and CEO Tobi Ltke in a press release. "Our mission is to add value for merchants, and it is clear the additions to the platform we have made over the past year are doing this. Merchant adoption continues to grow across all of them, including the rollout of new sales channels, Facebook Messenger,Shopify Shipping, andShopify Capital."

Still, Shopify remains unprofitable, with net loss expanding to $8.4 million from $3.3 million in the prior-year period.

Looking forward

For the third quarter, Shopify expects to generate revenue of between $93 million and $95 million, along with a GAAP operating loss of $9 million to $11 million.

Additionally, Shopify boosted its full-year 2016 revenue outlook to $361 million to $367 million, up from its previous forecasts of $337 million to $347 million issued in May and $320 million to $330 million given back in February.

Shopify also said that it now anticipates a smaller operating loss of $37 million to $41 million, compared to prior estimates of $41 million to $47 million.

"We are pleased to report our fourth consecutive quarter of year-on-year revenue growth of greater than 90%," added CFORuss Jones. "The strong growth in new merchant adds and even stronger growth of their sales indicate that theShopifyplatform is meeting the growing demand for multi-channel retail in ways that no other software can."

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Joe Tenebruso has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Shopify. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.