Shopify (ShopOn Wednesday, it reported first-quarter earnings that beat analyst estimates while revenues rose due to viewership. Shopify stock fell on the e-commerce company’s revenue and profit margin guidance for the current June quarter.
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Released before the market open, Shopify’s earnings for the quarter ended March 31 were 20 cents on an adjusted basis.
On the stock market today, Shopify stock fell 18.6% to close at 62.73.
“The second quarter included a slight decline in revenue expectations compared to the Street and slightly higher operating expense dynamics; hence the negative stock reaction,” Truist Securities analyst Terry Tillman said in a report.
Management cited costs related to the in-person summit as well as additional marketing spending to cover higher operating expenses in the second quarter.
Meanwhile, analysts said the recent price hikes have not yet resulted in an expected increase in revenue.
Analysts polled by Visible Alpha expected earnings of 16 cents, up from 1 cent in the same period a year earlier.
Revenue rose 23% to $1.9 billion versus estimates of $1.843 billion.
Furthermore, Shopify said its first-quarter gross merchandise volume from merchant transactions rose 23% to $60.9 billion versus estimates of $59.67 billion.
Shopify Stock Guidelines
Commercial Solutions revenue increased 20% to $1.4 billion versus estimates of $1.34 billion. Subscription revenue rose 34% to $511 million versus estimates of $499.3 million.
In the first quarter, gross margin was 51.4%, up from 47.5% a year earlier. But the trajectory of Shopify’s operating expenses remains an issue on Wall Street.
In the first quarter, adjusted operating margins were 10.8%, beating estimates of 10.2%.
“Overall, we think Shopify’s business momentum is strong, but we don’t see the stock moving higher without a path to operating margins in the 18% to 20% range,” Jefferies analyst Samad Samana said in a report.
Heading into Shopify’s earnings report, shares are up 2% in 2024 and 26% over the past year.
Revenue, margin forecast
For the current June quarter, Shopify said it expects: “Revenue to grow at a high percentage year-over-year rate, which translates to year-over-year growth in the low to mid-range regions.” 20s When adjusting for the impact of 300 to 400 basis points (3% to 4%) from the sale of our logistics business, second quarter gross margin is expected to decline approximately 50 basis points compared to the first quarter of 2024.
For the June quarter, analysts estimate $2.025 billion in revenue and $65.46 billion in GMV for SHOP shares.
The company in 2023 sold its delivery and logistics business to Flexport, alleviating Wall Street’s concerns about higher capital spending.
Shopify sets up e-commerce sites for small businesses, partnering with others to handle digital payments and shipping.
Meanwhile, SHOP stock carries a Relative Strength Rating of 77 out of a top 99, according to IBD inventory check.
Follow Reinhart Krause on Twitter @reinhardtk_tech For updates on artificial intelligence, cybersecurity, and cloud computing.
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