Shopify revenue growth drops off
Ottawa stock market favourite takes hit
Shopify Inc. reported its slowest quarterly revenue growth in about seven years and delivered a big miss on profit, sending the Canadian e-commerce giant’s U.S. shares quickly tumbling 15 per cent early Thursday.
Global e-commerce growth has eased from the frenetic pace seen during the pandemic, when brick-and-mortar retailers set up an online presence to reach stuck-at-home customers. Rivals Amazon. com Inc. and ebay have also disclosed the hit from slowing demand for online shopping.
Shopify’s first-quarter revenue rose 22 per cent to US$1.2 billion, a far cry from the nearly 100 per cent growth during the early days of the pandemic. Analysts on average had expected revenue of US$1.24 billion, according to Refinitiv IBES data.
Gross merchandise volume, a widely watched industry metric, rose 16 per cent to US$43.2 billion but missed expectations of US$45.43 billion.
Firms are also dealing with surging costs of transportation and labour, as well as customers reining in spending due to surging inflation.
To counter the slowdown, Shopify is ramping up investments to widen its delivery network to better compete with larger rivals.
Towards this, the company on Thursday announced a Us$2.1-billion cash-andstock deal to buy logistics firm Deliverr. The U.s.-based firm handles more than a million orders per month for thousands of merchants across the United States, the company said.
“The goal is not for us to spend $10 billion on building assets.. The plan is to stay asset-light,” Shopify’s president, Harley Finkelstein, said in an interview, adding that the company would only build a few key hubs for distribution.
First-quarter adjusted profit per share of 20 U.S. cents was well short of expectations of 63 cents.
Total operating expenses jumped 67.3 per cent to US$735.6 million in the quarter.
U.s-listed shares of Shopify were standing at about US$418 in premarket trading Thursday after the news was released. The shares have lost about 65 per cent this year.