Shopify’s Six-Year Earnings Streak Shatters But Shares Rise

(Bloomberg) -- Shopify Inc. posted weaker-than-expected adjusted earnings in the third quarter, the first time it has disappointed analysts since its 2015 initial public offering, as merchants did less business across its platform than expected.

The Canadian e-commerce giant also warned that supply-chain delays and inflation would mean that the fourth quarter -- including the key holiday shopping season -- would represent a smaller percentage of overall annual sales in 2021 than in the past. But it said some of those sales may push forward to the next quarter.

“While the commerce market, both online and offline, may be impacted by supply chain delays or increased costs for materials, labor, shipping or advertising in the fourth quarter, and spending on Black Friday Cyber Monday may be pulled forward,” the company said in the earnings statement.

Shares fell more than 6% in premarket trading in New York, then staged a turnaround and were up 4.4% as of 10:24 a.m. to $1,421.

• Adjusted earnings per share were $0.81 versus analyst estimates of $1.23.
• Gross merchandise volume, the broadest measure of merchant sales flowing through Shopify, was $41.8 billion, lower than analyst estimates of $43.43 billion.
• Merchants-solutions revenue and subscription solutions revenue were lower than analysts expected

Shopify’s explosive growth accelerated during the global pandemic as widespread lockdowns caused people to embrace online shopping. As life has begun to return to normal, the biggest question for the company has been the extent to which the e-commerce boom could slow. 

For now, Shopify said only that it expects fourth quarter GMV “to continue to grow substantially faster than the commerce market.”

And while revenue growth will slow this year, it will still be strong, it said.

“The economy remains resilient, consumer spending on services and off-line retail is expanding, and e-commerce, after easing from its peak share as a percent of total retail, is growing at a more normalized pace relative to 2020,” Shopify said. 

“In view of these factors, we continue to expect to grow revenue rapidly in 2021, but at a lower rate than in 2020.”

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