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Why Shares of Shopify Popped Today

What happened

Shares of cloud-based e-commerce platform-provider Shopify (NYSE: SHOP) soared on Tuesday following a blowout second-quarter report. Shopify handily beat analyst estimates across the board, maintaining a blistering pace of growth. The stock closed about 12.5% higher.

So what

Shopify reported second-quarter revenue of $151.7 million, up 75% year over year and about $8 million higher than the average analyst estimate. Subscription-solutions revenue jumped 64%, to $71.6 million, driven by a record number of merchants joining the platform, while merchant-solutions revenue surged 86%, to $80.1 million, driven by a 74% increase in gross merchandise value. Gross merchandise value hit $5.8 billion during the quarter, with $2.2 billion of that being processed by Shopify Payments.

Non-GAAP earnings per share (EPS) came in at a loss of $0.01, up from a loss of $0.04 during the prior-year period and $0.06 better than analysts were expecting. GAAP net loss was $14.0 million, or $0.15 per share, down from a loss of $8.4 million, or $0.10 per share during the same period last year.

Shopify CFO Russ Jones sounded an optimistic tone:

Now what

Shopify expects its momentum to continue into the third quarter. The company sees revenue coming in between $164 million and $166 million, up 64% to 66% year over year, although it expects to continue posting losses on both GAAP and non-GAAP bases. For the full year, Shopify expects to produce revenue between $642 million and $648 million, up from $389 million in 2016.

Along with its second-quarter results, Shopify announced that its customer base has reached 500,000 businesses in 175 countries. Shopify's platform has some major momentum behind it, and investors like what they see.

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Timothy Green has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Shopify. The Motley Fool has a disclosure policy.