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🛍️ Shopify: Breaking holiday record
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🛍️ Shopify: Breaking holiday record

Is e-commerce not dead after all?

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App Economy Insights
Nov 29, 2022
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🛍️ Shopify: Breaking holiday record
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Hello there! 👋

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Shopify (SHOP) made headlines in the past few days after a record holiday weekend.

So the holiday shopping season is an excellent opportunity to look closer at the company's recent performance.

Today, we’ll cover the following:

  1. Shopify Q3 FY22.

  2. Recent business highlights.

  3. Key quotes from the earnings call.

  4. What to watch looking forward.


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The Black Friday Cyber Monday weekend numbers are in for e-commerce activities.

According to Adobe Analytics:

  • Online Black Friday spending in the US grew +2.3% Y/Y to $9.1 billion (ahead of expectations of $8.9 billion).

  • Online Cyber Monday sales grew 5.8% Y/Y to $11.3 billion (ahead of expectations of $11.2 billion).

Altogether, the “Cyber Weekend” grew +4% Y/Y to $35.3 billion.

Holiday shopping trends. Source: Adobe Analytics

When evaluating a business within a secular trend, it’s critical to review whether it outperforms its peers. Now let’s turn to Shopify’s performance.

On Black Friday, Shopify merchants’ sales grew +17% Y/Y to $3.4 billion (or +19% Y/Y fx neutral). So they outperformed the rest of the industry by a wide margin.

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App Economy Insights @EconomyApp
$SHOP Shopify breaks Black Friday record. • Sales grew +17% Y/Y to $3.4 billion. • Sales grew +19% Y/Y fx neutral. • Shopify POS grew +27% Y/Y. It turns out e-commerce is not dead?
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7:26 PM ∙ Nov 26, 2022
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Shopify’s holiday weekend (including Cyber Monday) grew +19% Y/Y to $7.5 billion (or +21% Y/Y fx neutral), an even stronger performance.

Here are some of the key numbers:

  • 52 million consumers worldwide (+18% Y/Y).

  • 73% of sales were on mobile, 27% on desktop (well ahead of the rest of the industry, which showed 48% of Black Friday orders made on mobile).

  • Cross-border represented 15% of global orders.

Of course, some of the growth was driven by inflation. For example, the Apparel category, which is the largest one for Shopify, saw 4.1% inflation Y/Y in October 2022. However, overall consumer growth shows that it was much more than an inflation-induced performance.

Before we dive deeper, let’s discuss how Shopify makes money.

Shopify provides the essential internet infrastructure for commerce “from first sale to full scale.”

The ecosystem includes:

  • A multi-channel front end (display, manage, market, and sell products).

  • A single integrated back-end (dashboard, inventory management, payment, fulfillment, shipping, marketing, customer support, analytics, cash, and financing).

  • A data advantage (rich data to inform merchant decisions).

In short, Shopify enables merchants to build their own brand, leverage mobile technology, sell internationally, and handle massive spikes in visits thanks to a flexible infrastructure. As a result, merchants can start small and expand without making significant investments upfront.

Like many other e-commerce businesses, a key metric for Shopify is its GMV (Gross Merchandise Volume), the total dollar value of orders facilitated through the platform.

Turning to the financials:

  • Revenue has two main components:

    • 💳 Merchant Solutions (~72% of overall revenue).

      • Shopify Payments (payment processing and currency conversion fees).

      • Shopify App Store (apps to run a business on Shopify).

      • Shop Pay Installment (buy now, pay later).

      • Shopify Balance (cash management).

      • Shopify Capital (financing).

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