- E-commerce platform cautions on Q1 2023 growth pace
- Beats forecasts for Q4 2022 as consumer spend holds up in holiday run-in
- Investors spooked, sparking sharp after-hours stock fall
Sometimes the numbers, even good ones, aren’t enough for investors, as Shopify (SHOP:NYSE) found out in after-hours trade overnight.
Shares in the e-commerce platform are set to open more than 10% lower when Wall Street reopens later today after unveiling a weaker-than-anticipated financial outlook despite reporting a surprise profit in the last three months of 2022.
Pre-market data shows Shopify opening down $5.04 at $48.35.
Financial markets always have an eye on the future, so investors were more spooked by Shopify’s underwhelming Q1 2023 projections despite beating estimates in Q4 2022. In short, the $67 billion Ottawa, Canada-based company sees high-teens revenue in the current three months, below the 23%-odd expansion previously predicted by analysts.
GROWTH SLOWDOWN WORRIES
This implies revenues rising from 2022’s Q1 revenue of $1.2 billion to around $1.4 billion, shy of analysts’ $1.48 billion previous projection. That would be $80 million worth of sales below expectations.
The financial outlook assumes that a surge in e-commerce demand during the pandemic will continue to ebb throughout this year, Shopify said. Customers are also expected to rein in spending on big-ticket items in response to higher living costs.
‘Our perspectives on outlook assume that inflation remains elevated, pushing consumers to discounted and non-discretionary purchases,’ said chief financial officer Jeff Hoffmeister on an earnings call with analysts. This could be management being sensible and nipping in the bud any perceived over-enthusiasm building among investors, but when you’re trading on a negative price to earnings multiple, you’re unlikely to get the benefit of the doubt.
Q4 BEATS ON TOP AND BOTTOM LINES
The financials were far better for the last quarter, with earnings blasting into the black at $0.07 per share when analysts had been anticipating a modest loss. This was thanks to above forecast gross merchandise value (a measure of sales) which increased 13% to $61 billion.
Revenues of $1.73 billion rose 25% year-on-year and came into well above the $1.65 billion analysts had predicted, with consumer spending across the holiday quarter holding up better than expected.
‘The strength of our Q4 and full year performance in 2022 is a testament to the resilience of our merchants,’ said Harley Finkelstein, Shopify’s president. ‘Despite persistent macroeconomic challenges, they continued to succeed on Shopify, growing sales and using more of our mission-critical tools to run their businesses,’ he said.
Bold words. Shareholders will be hoping that process runs true through the rest of 2023 too.
