Shopify Reports Record First-Quarter Earnings, Stock Tumbles on Revenue Guidance

E-commerce giant Shopify has announced its first-quarter earnings report, surpassing analyst expectations with a profit of 20 cents per share on an adjusted basis. The company’s revenue also showed strong growth, reaching $1.9 billion in the first quarter of the year.

Despite the positive earnings, Shopify’s stock took a hit as the company provided guidance for the current June quarter that fell below Wall Street’s expectations. Jefferies analyst Samad Samana pointed out that the stock may struggle to rise without achieving higher operating margins of 18% to 20%.

During the first quarter, Shopify saw a 23% increase in gross merchandise volume, hitting $60.9 billion. Merchant solutions revenue rose by 20% to $1.4 billion, while subscription revenue surged by 34% to $511 million.

Shopify’s gross margin for the first quarter improved to 51.4%, up from 47.5% in the same period last year. However, concerns remain over the company’s operating expenses and profit margins.

In a bid to optimize its operations, Shopify sold its delivery and logistics business to Flexport in 2023, a move that alleviated investor worries surrounding escalating capital spending.

Following the earnings report, Shopify’s stock plummeted by 19.1%, hovering at $62.33 in early trading. The company’s guidance for revenue growth in the June quarter is in the high-teens percentage range, below analyst estimates.