Shopify Inc (NYSE:SHOP) stock plunges 15.93% (As on February 19, 11:24:20 AM UTC-4, Source: Google Finance) after the company forecast slowing revenue growth for the current quarter despite price hikes and new product launches, signaling that macroeconomic challenges were weighing on its merchants’ online businesses. Gross Merchandise Volume (“GMV”) increased 13% to $61.0 billion, an increase of $6.9 billion over the fourth quarter of 2021, up 17% on a constant currency basis. Gross Payments Volume (“GPV”) grew to $34.2 billion, representing 56% of GMV processed in the quarter, versus $27.7 billion, or 51%, for the fourth quarter of 2021. Merchant Solutions revenue increased 30% to $1.3 billion compared to the prior year, up 32% on a constant currency basis, driven primarily by the growth of GMV, our increased attach rate – most notably from Shopify Payments and the addition of Deliverr – and lastly greater revenue contribution from partners. Subscription Solutions revenue increased 14% to $400.3 million compared to the prior year, primarily due to more merchants joining the platform as well as higher variable platform fees and apps. Monthly Recurring Revenue (“MRR”) as of December 31, 2022 increased 7% to $109.5 million compared to the prior year.
SHOP in the fourth quarter of FY 22 has reported the adjusted earnings per share of 7 cents, beating the analysts’ estimates for the adjusted loss per share of 1 cents. The company had reported the adjusted revenue growth of 26 percent to $1.7 billion in the fourth quarter of FY 22, beating the analysts’ estimates for revenue of $1.64 billion.
It expects revenue growth in the “high-teen” percentages, while analysts had forecast a rise of nearly 20%, according to Refinitiv data. The gross margin is expected to be slightly higher than the fourth quarter gross margin. The company said its 2023 financial outlook includes pricing changes to its subscription plans; the expected impact of Shopify Fulfillment Network and Deliverr; and increased personnel-related expenses.
Still, Shopify added known brands and luxury labels from Swiss fashion designer Bally to chocolate maker Mars to a list of clients paying a premium price for its services. The company, which traditionally catered to small businesses, has been focusing on adding big brands to its clients list as they look to sell directly to consumers and use some of Shopify’s website creation and payment tools to set up their stores.