• Shopify shares tumbled 19% after giving downbeat revenue and profit guidance for the second quarter
• The company beat earnings and revenue expectations for the first quarter, but slower growth projections overshadowed the results
• Shopify expects higher operating expenses in Q2 as it invests in areas like AI and marketing
Shopify reported its first quarter 2024 earnings on Wednesday, sending the stock tumbling after the company gave disappointing guidance for the current quarter.
Q1 Results Beat Expectations
The e-commerce platform beat expectations for earnings per share and revenue in the first quarter:
- Earnings per share: 20 cents adjusted vs. 17 cents expected
- Revenue: $1.86 billion vs. $1.85 billion expected
Q2 Guidance Spooks Investors
However, Shopify’s outlook for the second quarter worried investors. The company said it expects:
- Revenue growth to slow to high-teens percentage rate year-over-year
- Operating expenses to increase in the low- to mid-single digits quarter over quarter
Shopify attributed the weak guidance to headwinds from foreign exchange rates, softness in European consumer spending, and investments in marketing, R&D and AI.
Additional Q1 Highlights
Some other notable numbers from Shopify’s first quarter results:
- Net loss of $273 million, or 21 cents per share
- Gross merchandise volume increased 23% to $60.9 billion
The earnings report comes after Shopify laid off 20% of its workforce last year during the post-pandemic e-commerce slump. The company has been focused on investing in artificial intelligence capabilities while pulling back in other areas like logistics.
Shopify will likely face questions from investors about the impact of its investments on growth and margins after this quarter’s disappointing outlook. But the company maintains it is taking a long-term approach to position itself for the future.
