Canada’s Shopify returned to a profit in the third quarter, driven by strict cost controls and adoption of artificial intelligence to attract more merchants to its services, sending its U.S. shares 18 per cent higher before the bell.
The company has launched AI-powered tools and offerings such as the Shopify Magic suite and app Sidekick to stay ahead in the hyper-competitive e-commerce business while also investing to improve its shipment speeds.
Shopify, which offers tools and services for businesses to set up their online stores, has also expanded its partnerships.
The company said in August that Amazon would release an app in the Canadian company’s ecosystem that would give Shopify’s U.S.-based merchants access to “Buy with Prime” option outside of Amazon.com for the first time.
Buyer beware: Shopify is not an online marketplace
“We believe this is win/win for both companies but especially for SHOP, because merchants will continue to maintain 100 per cent control of their brand and their customer data in Shopify’s admin,” Evercore ISI analysts said ahead of the earnings on Tuesday.
Total revenue increased 25 per cent to $1.71 billion for the three months to September, the company said on Thursday, beating analysts’ average estimate of $1.67 billion, according to LSEG data.
Net income attributable to shareholders on a diluted basis was 55 cents per share, compared with a loss of 12 cents a year earlier.
Meanwhile, expenses fell nearly 23 per cent to $779 million in the quarter.
Excluding items, the company earned 24 cents per share, beating estimates of 14 cents.
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