Published - February 16, 2023 @ 11:50 AM (EET)
After giving a sales outlook for the beginning of the year that fell short of analysts' expectations, Shopify Inc. (NYSE:SHOP) shares headed about 11% lower in after-hours Wednesday.
In a sign that macroeconomic challenges were weighing on its merchants' online businesses, the platform, designed to allow businesses of all sizes to sell their products online, said it expects revenue growth in the "high-teen" percentages, slightly below forecasts for 20% growth.
Meanwhile, with e-commerce still in the relatively early stages, making up less than 15% of retail sales in the US, Chief Executive Officer Tobias Lütke is working to recover from a miscalculation that the pandemic-fueled surge in online shopping would become permanent.
In 2020, during the early stages of the pandemic, the Canadian company grew dramatically, with sales rising 86%. However, last July, the company cut about 1,000 jobs, moving early amid a wave of staff reductions that continue to roil the tech industry.
Since then, the company has introduced measures to improve services for its small-business customers, created offerings for larger customers, implemented price increases, and rolled out new marketing, sales, and hardware tools to assist merchants in attracting more buyers.
Still, "investors were hoping that the headcount reductions and the price increases would translate to operating leverage and higher profitability, not a return to losses in the first quarter as is implied by guidance," said analyst Gil Luria at DA Davidson.
EARNINGS RESULTS
With its particular focus on empowering small businesses and establishing long-term relationships, Shopify's "one-stop shop" approach is still turning the company into a powerhouse.
For the fourth quarter, Shopify reported revenue of $1.73 billion, up 26% year-over-year, beating street estimates of $1.65 billion.
Elsewhere, subscription solutions revenue was up 14% year-over-year at $109.5 million, while gross merchandise volume grew 13% year-over-year to $61 billion. In the full fiscal year, Shopify had revenue of $5.6 billion, up 21% year-over-year.
Shopify President Harley Finkelstein said,
"The strength of our Q4 and full-year performance in 2022 is a testament to the resilience of our merchants." He added, "despite persistent macroeconomic challenges, they continued to succeed on Shopify, growing sales and using more of our mission-critical tools to run their businesses."
