Shopify Inc (NYSE:SHOP) stock rose 0.064% (As on May 9, 11:26:56 AM UTC-4, Source: Google Finance) after the company reported a surprise net loss in the first quarter after the sale of its logistics business last year and gave downbeat guidance. The company posted a loss of $273 million after a profit of $68 million a year earlier. Gross merchandise volume, the overall value of merchant sales across Shopify’s systems, increased 23 percent in the first quarter to $60.9 billion, above Wall Street projections of $59.5 billion. The largest impact on the changing growth rate is that the company is lapping the quarter where it introduced price hikes across its monthly plans. Last year, Shopify hiked the cost of its Basic, Shopify and Advanced plans, noting at the time that its prices had remained largely unchanged for the last 12 years. Hoffmeister says the price hikes, which went into effect in April last year, will have “a smaller combined benefit” in the second quarter, “resulting in a headwind to the revenue growth, quarter-over-quarter.”
Moreover, Merchant Solutions revenue increased 20% to $1.4 billion compared to the prior year, driven primarily by the growth of GMV and continued penetration of Shopify Payments. Gross Payments Volume (“GPV”) grew to $36.2 billion, representing 60% of GMV processed in the quarter, versus $27.5 billion, or 56%, for the first quarter of 2023.
SHOP in the first quarter of FY 24 has reported the adjusted earnings per share of 20 cents, beating the analysts’ estimates for the adjusted earnings per share of 17 cents. The company had reported the adjusted revenue growth of 29 percent to $1.9 billion in the first quarter of FY 24, beating the analysts’ estimates for revenue of $1.84 billion. Subscription Solutions revenue increased 34% to $511 million compared to the prior year, driven by the growth in the number of merchants and the pricing increases on the standard subscription plans
Shopify said it expects second-quarter revenue to grow at a high-teens percentage pace. Gross margins for the second quarter are expected to fall by about 50 basis points, while operating expenses will be up low-to-mid single digits. Shopify said its forecast will be affected by the sale of its logistics business to U.S.-based Flexport, a move that was first announced last May. Also weighing on the forward guidance is a strong U.S. dollar and softness in European consumer spending, specifically in the United Kingdom.