Revenue beat leads to 25% increase in Shopify stock value

• Shopify shares soared 25% in early trading on Tuesday.
• The company, which develops software for businesses to operate online stores, predicted a positive outlook for the holiday quarter.
• Large customers are increasingly choosing Shopify, contributing to the company's third-quarter revenue surpassal.

The Canadian e-commerce company's revenue for the third quarter exceeded expectations, and its stock price increased by more than 25% in Tuesday morning trading. Additionally, the company provided an optimistic outlook for the holiday shopping season.

Here's how the company did:

• LSEG estimates may differ from the company's earnings of 64 cents per share.
• Revenue: $2.16 billion vs. $2.12 billion expected by LSEG

Shopify exceeded Wall Street's revenue growth expectations with a predicted growth rate of mid- to high-twenties in the current quarter, surpassing the anticipated 22.8% growth rate.

During the third quarter, the gross merchandise volume (GMV) on the platform increased by 24% year over year to $69.7 billion, exceeding the analysts' expectations of $68.1 billion.

Shopify offers software and services for online merchants, including advertising and payment processing tools. Despite the potential for reduced profits, the company has been investing heavily in marketing to increase market share. Shopify competes with major e-commerce companies like Amazon and eBay, as well as software providers such as BigCommerce and Wix.

During the quarter, a significant number of major retailers and companies signed up for Shopify's services, including Lionsgate Entertainment, Reebok, Off-White, Vera Bradley, and Hanes.

"Finkelstein stated that Shopify is becoming the preferred platform for commerce, not just for entrepreneurs, but for all types of businesses. The company is well-positioned for significant expansion among various merchant categories, sizes, locations, sales channels, and product offerings."

According to Jeff Hoffmeister, Shopify's CFO, the positive outlook for the fourth quarter is based on the same factors that have contributed to our successful revenue growth throughout the year, including the belief in the sustained growth of our merchants' GMV.

Year to date, Shopify shares have increased by approximately 45%, while the Nasdaq has experienced a growth of roughly 37%.