The firm anticipates revenue growth in the “low-twenties” percentage and “mid-twenties” when adjusted for adjustments linked to the disposal of its logistics business in the third quarter. Analysts predicted a 17.2% increase.
On Wednesday, Canada’s Shopify forecasted robust revenue growth and produced better-than-expected second-quarter earnings, aided by new signups and pricing hikes across its services.
As retail spending increases in response to evidence of stabilising macroeconomic conditions, merchants and enterprises are turning to Shopify, which provides tools for creating and managing online storefronts.
“We’re not only shipping products faster, but we’re also expanding our global merchant base,” said Shopify president Harley Finkelstein.
The firm anticipates revenue growth in the “low-twenties” percentage and “mid-twenties” when adjusted for adjustments linked to the disposal of its logistics business in the third quarter. Analysts predicted a 17.2% increase.
Following the results, Shopify’s U.S.-listed shares gained 7% before ending modestly down in extended trade, despite having gained almost 80% this year.
According to Refinitiv statistics, the increase in Shopify’s share price comes as the company’s revenue growth slows to around 20% in 2023 from an average of 60% in 2017-21.
In May, the firm planned to lay off 20% of its workers and sell its logistics division to goods forwarder Flexport in order to reduce expenses.
Shopify hiked the cost of several of its programmes in January and April of this year.
Total sales increased 31% to $1.69 billion in the second quarter, above analysts’ average expectation of $1.62 billion.
However, a $1.7 billion charge due to the disposal and subsequent employee reduction resulted in a $1.6 billion operational deficit. Shopify earned 14 cents per share after excluding the one-time item, exceeding forecasts of 5 cents.
“This could be a turnaround quarter for Shopify,” says Michael Schulman, chief investment officer at Running Point Capital Advisors.
“However, the market will continue to question whether its actions are sufficient to counter both stiff competition from established rivals and any mild economic cyclicality.”
