Shopify stock was up 22% today following an earnings beat and a healthy forecast for the rest of the year.

The company saw increased demand for its e-commerce software despite a slowdown in consumer spending.

The results are remarkable because competitors like Amazon and Etsy, on their respective earning calls recently, have complained of consumer spending slowdown negatively impacting their businesses. Shopify, however, made such complaints.

The company reported $2.05 billion in sales vs expectations of $2.01 billion. The EPS clocked in at $0.26 against expectations of $0.2. The company’s operating margin was noted at 15% against expectations of 12%.

Diversified across all types of companies

According to Shopify president Harley Finkelstein, his company was able to weather the consumer spending storm because of its diverse customer base.

I think a big part of the reason that we are not seeing the same thing that others might is because we simply have merchants across a ton of verticals and across a ton of [geographies].

The president also mentioned how some of the biggest brands continue to join Shopify’s platform. Brands like Casper, QVC, and Barnes & Noble started using the company’s products this quarter. This is one reason why the company was able to perform better than its competitors this quarter. Consumers are spending less, which means they are spending on quality.

Most high-quality brands are moving to Shopify, bringing with them their customers. As a consequence, Shopify continues to take market share from competitors.

Shopify Point of Sale is another source of revenue that did not exist 5 years ago in the form that it exists now. The gross merchandise value for Shopify’s PoS crossed the $100 billion mark this year.

The fact that a diverse set of businesses prefer Shopify to sell their products means that cyclicality matters less for the company than it does for its competitors. The weaker spending environment therefore isn’t as big a problem as the market thought.

What does it mean for investors?

Since February this year, Shopify stock has nearly halved. In hindsight, this was an overreaction to the assumption that a weaker consumer would lead to lower spending and hence lower earnings for the company. We now know that hasn’t been the case and that the company is upbeat on its performance for the rest of the year.

It may look like the market has overreacted to the earnings report. Despite that reaction, the stock is still available at an attractive price because of the 50% slump since February. Someone getting in now may still be able to squeeze some juice out of the improved short-term prospects of the company.

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