Canadian e-commerce platform Shopify is expecting its slowest quarterly revenue growth in two years due to an uncertain economy and subdued consumer spending. This has led to a nearly 20% drop in its U.S. shares in early trading on Wednesday.
Despite efforts to increase prices and introduce new AI-based tools, Shopify is facing challenges as e-commerce growth returns to pre-pandemic levels. The company’s core customer base of small and medium-sized businesses (SMBs) is particularly vulnerable to the impact of rising inflation.
Shopify has projected second-quarter revenue growth to be in the high-teens percentage range, disappointing investors who had been accustomed to approximately 26% growth in previous quarters. Analysts have estimated that current-quarter revenue will increase by 19.35%.
Operating expenses for the second quarter are expected to rise at a low-to-mid-single digit percentage rate, compared to a 4% decrease in the first quarter of the year. The company also reported a loss in its latest quarter, despite a 23% increase in revenue compared to the same period last year.
Shopify’s net loss for the quarter ended March 31 was US$273 million or 21 cents US per diluted share, a significant contrast to the US$68 million profit or five cents US per diluted share in the previous year’s quarter. Revenue for the quarter reached US$1.86 billion, up from US$1.51 billion in the first quarter of the previous year.
The company’s results for the quarter also reflect the impact of the sale of its logistics arm to freight forwarder Flexport. With these developments, Shopify continues to navigate a challenging economic environment while striving to maintain its position in the e-commerce market.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Sriraj Kalluvila)