OTTAWA — Shopify’s expectation-beating earnings sent the stock soaring on Tuesday, as the commerce company prepares for its busiest sales time of the year.

The Ottawa-headquartered firm reported US$2.16 billion in revenue in the third quarter, up 26.1 per cent from the same period last year. Shopify also predicted rosy numbers for the blockbuster holiday period.

Here’s what you need to know.

The top line: The company’s client base sold US$69.7 billion worth of products using its tools between July and September, a 24 per cent lift year over year. In particular, people bought more food, clothes and skincare from Shopify’s customers, CFO Jeff Hoffmeister said on the firm’s Tuesday earnings call. Growth was especially strong in Europe, where Shopify signed up major retailers Watches of Switzerland and the Body Shop.

Shopify makes most of its money when its customers do, by charging fees for transaction-linked services like payment processing, loans, advertising and shipping. Its revenue from that merchant-solutions business slightly outpaced its overall growth, bringing in US$1.55 billion in the third quarter. That means Shopify earned about 2.23 cents of every dollar its clients made.

Big new clients add more to gross merchandise volume, a measure of sales through Shopify’s technology. Last January, the firm added an à la carte offering, allowing major retailers and brands to use tools like checkout without having to subscribe to all its software. 

“This pathway to growth is really working,” said president Harley Finkelstein on the call. While Shopify starts by selling individual features, it’s ultimately targeting a total takeover of its clients’ commerce infrastructure. It’s also spending more on marketing to bigger retailers and brands.

Shopify landed 16 of these enterprise clients in the third quarter, according to Finkelstein, who said the firm isn’t pursuing bigger customers as a quick growth fix. “It is a massive opportunity to build for the long term.”

The reaction: Shopify’s share price rose as much as 27.2 per cent in Tuesday trading on the New York Stock Exchange, hitting a near-three-year high. It’s the second consecutive quarter that earnings have provided a major boost to the stock.

“Shopify’s growth story is intact,” wrote ATB Capital Markets analyst Martin Toner in an investor note, citing the firm’s “impressive” sales and free cash flow figures. The firm exceeded analysts’ consensus revenue estimate of US$2.12 billion as compiled by FactSet.