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Shares of Shopify Inc. surged by more than 20 per cent on Wednesday, making it once again Canada’s most valuable company, after the e-commerce giant reported strong second-quarter profit and provided a rosy outlook for the third quarter, defying challenges posed by tariffs.
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The Ottawa-headquartered company, which provides software that helps businesses to sell their goods online, recorded a 31 per cent year-over-year revenue jump to US$2.68 billion for the three-month period ended June 30, while net income rose 24 per cent to US$1.3 billion.
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The company’s shares, meanwhile, were up more than 20 per cent near record highs in Wednesday afternoon trading in Toronto. Shopify’s market capitalization now hovers around $270 billion, surpassing the Royal Bank of Canada and making it Canada’s most valuable company.
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Shopify attributed its solid quarterly performance to accelerating growth in gross merchandise value (GMV) — the total value of goods sold via its platform — in North America, Europe and the Asia Pacific region. It has been targeting international growth since 2018.
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“Europe was a particular source of strength, where GMV grew 42 per cent on a constant currency basis,” chief financial officer Jeff Hoffmeister said in a statement, noting that Shopify’s total GMV jumped 31 per cent to US$87.8 billion in the quarter.
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For the third-quarter, Shopify forecasts revenue growth in the “mid-to-high twenties percentage rate” and profit growth at a “low-twenties percentage rate” year-over-year, indicating that it is faring better than expected despite concerns that United States President Donald Trump’s trade war would hit the company, particularly its revenue from merchant solutions.
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“We had factored into our guidance some potential impact from tariffs, which did not materialize,” Hoffmeister said on a Wednesday investor call.
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“Shopify flew through any tariff (and) macro-related uncertainties with a robust Q2 performance,” Citigroup Inc. analyst Tyler Radke said in a note. While investor sentiment on Shopify was “still mixed” heading into the second quarter, the company’s “blowout GMV performance, accelerating revenue, and strong top-line guidance” will likely offset any third-quarter concerns, Radke said.
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In recent years, Shopify has launched new artificial intelligence tools to draw in new sellers and hold onto current merchants. The platform in 2023 launched its AI toolkit called Shopify Magic that allows sellers, for instance, to use AI to edit photos and improve email marketing campaigns. In May, it introduced a new generative AI feature that helps merchants quickly build and design their online stores by punching in descriptive keywords.
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The integration of AI into its merchant tools and services could pay off for Shopify, according to some analysts. A Wednesday note from National Bank of Canada Financial Inc. analysts said that Shopify’s AI strategy will “reinforce” its technology leadership. It added: “We see AI becoming a structural growth and profitability lever for Shopify.”
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