Shopify stock sinks as it warns of slower growth amid tepid ...

By Staff Reuters

Shopify announced that it’s cutting its workforce by 20 per cent, meaning an estimated 1,800 workers from the Ottawa-based e-commerce company will be laid off. Shopify CEO Tobi Lutke says affected staff will receive 16 weeks of severance pay and medical benefits – May 4, 2023

Canadian e-commerce platform Shopify forecast its slowest quarterly revenue growth in two years against the backdrop of an uncertain economy and tepid consumer spending, sending its U.S. shares slumping nearly 20 per cent in early trading Wednesday.

While e-commerce growth has been normalizing after a post-pandemic slump, consumers have been looking to cut down on costs, putting Shopify at a disadvantage despite price hikes and new AI-based tools.

Adding to the company’s pressure, its core clientele is made up of small and medium-sized businesses (SMBs) that have been more susceptible to the hit from sticky inflation.

The company said on Wednesday it expected second-quarter revenue to grow at a high-teens percentage, disappointing investors who had seen average growth of about 26 per cent over the past few quarters.

Analysts estimated current-quarter revenue to grow 19.35%, according to LSEG data.

The company expects operating expenses to be up at a low-to-mid-single digit percentage rate for the second quarter, compared with a 4% fall in the first three months of the year.

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The results included the impact of the sale of its logistics arm to freight forwarder Flexport.

Shopify reported a loss in its latest quarter as its revenue increased 23 per cent compared with a year ago.

The e-commerce software company, which keeps its books in U.S. dollars, says its net loss amounted to US$273 million or 21 cents US per diluted share for the quarter ended March 31.

The result for the quarter compared with a profit of US$68 million or five cents US per diluted share in the same quarter last year.

Revenue for the quarter totalled US$1.86 billion, up from US$1.51 billion in its first quarter last year.

With files from the Canadian Press

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Sriraj Kalluvila)