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Last Wednesday, Shopify (NYSE:SHOP) earnings, revenue and gross merchandise volume for the first quarter crushed analyst expectations As a result, shares of the stock soared 11.4% as e-commerce growth remained robust during the coronavirus pandemic.

Q1 Figures

For the quarter that ended on March 31st, investors had expected Shopify to post $865.48 million but it delivered $988.6 million instead. This achievement was enabled by the 137% growth of the "Merchant Solutions" business that expanded even at an even faster pace during the quarter than the company's aggregate 110% growth rate. This segment that encompasses payments, shipping, and capital services brought $668 million to the table, exceeding estimates of $560 million. In addition, subscription solutions revenue rose 71% to $320.7 million, also exceeding estimates of $284 million.

Net income was boosted by an unrealized gain of $1.3 billion from its partnership with Affirm Holdings Inc (NASDAQ:AFRM) which went public at the beginning of the year. Since last July, Shopify owns more than 20 million shares of the online payments company. It earned an adjusted $2.01 per share, including a $1.3 billion investment gain. Adjusted earnings were more than triple Wall Street's projected 75 cents per share.

How Sustainable Is The Pandemic Win?

Shopify became one of the biggest winners of the pandemic-fueled shift to e-commerce, as many brick-and-mortar stores were forced to temporarily shut down and people opted to stay indoors. The stock surged last year on the back of that momentum. However, upon the earnings call, Shopify executives said that even in areas where economies have reopened, there is proof that momentum remains strong as gross merchandise volume, the monetary-value of merchandise sold, more than doubled to $37.3 billion during the quarter.

Concerns

Executives warned that revenue growth could moderate this year as the vaccine rollout speeds up and consumers return to stores due to eased coronavirus restrictions. Executive departures have also been a concern and some analysts are questioning whether the business has reached a scale where it is self-sustaining beyond the individual contributions of several executives.

Another concern is how will investments in sales, marketing and R&D impact the operating margin as the company is building a U.S. distribution network to store and ship products for its customers – the merchants. Morgan Stanley analyst Keith Weiss believes demand for fulfillment services may disappoint near-term.

Outlook

No guidance for 2021 was provided. Although blowout results for the first quarter achieved to rekindle investor enthusiasm, writing another successful chapter in the post-IPO story of this Canadian e-commerce player, management is warning a slower growth pace is in the cards as the economy reopens and the pandemic finally becomes history.