Shopify shares plunged to their lowest level in nearly two years on Wednesday after the e-commerce giant warned that its revenue growth would slow this year as restrictions eased due to the COVID-19 pandemic. .
Posted at 11:35 a.m.
Updated at 5:29 p.m.
The Ottawa company said its revenue growth in 2022 was expected to be lower than the 57% seen in 2021, which had the effect of sending its stock tumbling to a low of $914 on the Toronto Stock Exchange. The stock, which had crossed the $2,000 mark in November, ended the session down 17%, at $938.91 – its lowest level since May 2020.
Chief Financial Officer Amy Shapero attributed the lower forecast to the health crisis as well as the company’s decision not to take any share of the first $1 million in revenue developers earn each year across the range of features. booking, subscription tools, and other products they design for Shopify’s software.
“We believe the COVID-triggered acceleration in e-commerce, which continued through the first half of 2021 with government lockdowns and stimulus, will be absent from 2022 and there is caution regarding the short-term inflation and consumer spending,” she said on a conference call with analysts.
His remarks come as the star of Canada’s tech darling has begun to fade after a two-year pandemic that has seen people shop more online and encouraged businesses to roll out digital stores, bringing new sales and new customers to Shopify.
In recent months, people have shifted some of their purchases to physical stores, where Shopify has less of an advantage.
Against this backdrop, the company on Wednesday posted a net loss of US$371.3 million, or US$2.95 per share, for the quarter ended Dec. 31. Its result was dragged down by an unrealized loss of US$509.7 million on equity investments and other investments.
That result compared with net income of $123.9 million, or 99 cents per share, for the fourth quarter of 2020.
Shopify President Harley Finkelstein remained optimistic about the company’s outlook and performance.
“The evolution of commerce that has accelerated over the past two years is providing more selling opportunities for makers, creators, influencers and curators,” he said on the conference call.
“Their resilience and our dedication to providing them with the best products for modern commerce puts Shopify and our merchants first. »
He noted that Shopify ended fiscal 2021 with twice the merchant base of two years ago, which now includes dairy producer Saputo, star footballer Tom Brady’s Brady brand, German kit seller HelloFresh meals and the French Connection clothing brand.
Mr. Finkelstein also pointed out that Shopify’s annual revenue in 2021 was almost three times greater than that of 2019 and that its last quarter also saw gains.
Fourth-quarter revenue totaled US$1.38 billion, compared to US$977.7 million in the same period a year earlier.
On an adjusted basis, Shopify earned US$1.36 per share in the most recent quarter, compared to adjusted earnings of US$1.58 per share in the fourth quarter of 2020.
Analysts on average had expected adjusted earnings of US$1.24 per share and revenue of nearly US$1.33 billion, according to forecasts compiled by financial data firm Refinitiv.
A competitive environment
In its outlook, Shopify said it will continue to try to attract such brands by placing more emphasis on its distribution network.
It opened a rented, self-contained warehouse in Atlanta last year, and plans to expand that service by offering two-day delivery coverage to more than 90% of the US population. She is looking for ways to serve larger clients through the network.
The company also intends to focus on hiring in a competitive environment that has seen arch-rival Amazon.com more than double its base salary cap to $350,000 this month from at $160,000.
Shopify executives said the company will hire even more in 2022 than it did in 2021, when it welcomed at least 2021 new technical employees. The company now employs around 10,000 people, but recognizes that there are pressures in the labor market.
“There’s a great rush for talent around the world,” Shopify founder Tobi Lutke observed on the conference call.
“There are a lot of changes going on, but Shopify is on the right side of the changes it seems. »