Shopify predicts slowdown in revenue

(Ottawa) Shopify shares fell Wednesday as the company reported a loss in its latest quarter and forecast slower revenue growth for the next quarter in its financial outlook.

The e-commerce software company, which reports in US dollars, says its net loss was US273 million, or 21 US cents per diluted share, for the quarter ended March 31.

The quarter’s result compares to a profit of US$68 million, or five US cents per diluted share, for the same period last year.

Revenue for the quarter was 1.86 billion, up 23% from 1.51 billion at the same time in 2023.

The results caused Shopify’s stock price to fall $19.59, or 18.5%, to $86.16 at the close of trading on Wednesday.

Revenue growth is expected to slow in the next quarter to above 10%, the company said in its outlook.

She attributed the forecast to the sale of Shopify’s logistics business. This news was announced last May when the company also revealed that it was reducing its workforce by approximately 20%.

The outlook calls for revenue growth to decline by 3% to 4% in the second quarter on an annual basis.

Shopify also expects its gross margin to decline half a percentage point from the first quarter.

Other issues in the forecast include a stronger U.S. dollar and “some weakness in European consumer spending,” Chief Financial Officer Jeff Hoffmeister told analysts on a conference call Wednesday.

“In Europe and particularly in the United Kingdom (…) we are seeing some economic slowdown,” he said, noting that Shopify was doing “exceptionally well” in this market recently.

The company says revenue from its merchant solutions totaled $1.35 billion, up from $1.13 billion a year earlier, while revenue from its subscription solutions totaled $511 million, up from $382 million in the same period. quarter last year.

On an adjusted basis, Shopify says it earned 20 US cents per diluted share for the first three months of 2024, up from an adjusted profit of one US cent per share in the first quarter of 2023.

That compares to analyst expectations of 17 US cents per diluted share, according to LSEG Data & Analytics.

Following last year’s job cuts, Shopify has held its workforce steady for three consecutive quarters, President Harley Finkelstein said.

He believes Shopify can limit headcount growth while “achieving a continued combination of consistent revenue growth and profitability,” in part through automation.

“Over the past 18 months, we have put considerable effort into creating efficient infrastructure and systems, which are instrumental in streamlining our work and maintaining our product releases at high speed,” said Mr. Finkelstein.

“Essentially, these systems and infrastructure act as enablers, allowing us to operate with greater efficiency and speed,” he continued.

Mr. Hoffmeister highlighted greater use of artificial intelligence (AI) for merchant support. It said more than half of Shopify’s merchant support interactions in the first quarter were AI-assisted “and often resolved entirely with the help of AI.”

AI also enabled 24/7 live support in eight languages ​​that were previously only offered during certain times of the day.


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