By
Steve Muchoki
May 10th, 2024
According to a Barclays analyst, the weak Shopify Q1 2023 revenue outlook overshadows its more impressive Q4 2022 showing.
Shopify Inc (NYSE: SHOP) recently reported its Q4 2022 earnings results, which surpassed the consensus estimate. However, the Canadian e-commerce platform’s shares fell following a lower-than-expected March quarter revenue outlook. Shopify’s stock took a beating in 2022 but advanced 44% this year.
Following Wednesday’s market close, Shopify reported that revenue increased 26% to $1.7 billion during Q4 2022. In addition, the Ottawa, Ontario-based e-commerce multinational also reported earnings of 7 cents per share on an adjusted basis. However, this development marked a 50% drawdown from a year earlier.
Meanwhile, in the previous year, analysts had expected the company to sustain a loss of 1 cent on revenue of $1.65 billion for the last quarter.
Shopify Weak Quarterly Guidance Following Commendable Q4 2022 Outing
Shopify, which saw its stock plunge 15.9% to 44.91 on Thursday, provided a Q1 2023 revenue outlook that fell short of expectations. For the first three months of the new year, the company predicted revenue growth between 15% and 19%. However, analysts expected more than 20% revenue growth for the same period.
Commenting on the underwhelming 2023 first-quarter guidance by Shopify, Jefferies analyst Samad Samana explained in a note to clients:
“We believe that the revenue guide implies that Q1 gross merchandise volume will be weaker than expected. Management did note the uncertain macro (economy) was factored into the outlook.”
RBC Capital analyst Paul Treiber also weighed in on the ‘weak’ Shopify guidance for the present quarter in a note. As he put it:
“Guidance implies a return to negative EPS (we estimate a 5-cent loss), falling short of consensus at zero cent profit. Although Q1 guidance below consensus may reflect conservatism, the lack of annual guidance suggests limited near-term visibility to the sustainability of consumer spending.”
Meanwhile, UBS analyst Kunal Madhukar reported to clients, saying, “we are incrementally more negative on SHOP post earnings.” According to Madhukar, the reason for the downbeat vibes is due to Shopify’s “virtually flat merchant count year-over-year.” In addition, the UBS analyst also said that the e-commerce giant would no longer disclose such information.
Barclays Analyst Weighs In
Barclays analyst Trevor Young also voiced his opinion regarding Shopify’s unimpressive guidance for the first quarter of 2023. According to Young, several investors had hoped (in vain) for “more explicit 2023 commentary on operating income profitability.” Young added that the company’s latest quarterly outlook overshadows its respectable Q4 2022 showing. However, the Barclays analyst ascribed the less-than-stellar Q1 2023 outlook to conservatism by Shopify’s new CFO, Jeff Hoffmeister. Furthermore, Young also opined that Hoffmeister, who assumed the role in late October, looked to reset expectations with the latest guidance.
US Distribution Network & Avalanche NFT Support
Shopify establishes e-commerce websites geared towards facilitating the operations of small businesses and partners. The Canadian e-commerce giant is currently building a US distribution network to store and transport merchant customer products.
Last month, Shopify added support for Avalanche non-fungible tokens (NFTs) using its Venly blockchain app. According to the company, merchant clients can skip visiting popular NFT marketplaces like OpenSea. Instead, these clients can deploy Venly in minting the tokens on Avalanche.