Shopify stock was dropping Wednesday after the e-commerce software company reported fourth-quarter earnings that narrowly beat expectations, but cautioned about revenue headwinds in the first half of 2022.
SHOP) posted an adjusted quarterly profit of $1.36 a share, beating forecasts for $1.30, on sales of $1.38 billion, topping expectations for $1.34 billion and rising 41% from the same quarter in 2020.
Annual revenue of $4.6 billion also beat expectations. The company reported adjusted earnings of $6.41 a share. Analysts were expecting sales of $4.573 billion with earnings of $6.35 a share.
“The last two years have been extraordinary,” said Harley Finkelstein, Shopify president. “We nearly tripled revenue, more than doubled GMV [gross merchandise volume] and the Shopify team, and the number of merchants using Shopify is nearly twice as big as 2019 levels.”
For 2022, the e-commerce company expects year-over-year revenue to be lower in the first quarter and highest in the fourth due to three factors. The company believes the acceleration of e-commerce driven by Covid-19 will not repeat itself in the first half of 2022, but foresees certain commercial initiatives and investments to gain momentum over the course of the year. Lastly, there will be some contract terms that likely will be headwinds to its subscription solutions revenue for the first half of the year, especially the first quarter.
Shopify predicted that its subscriptions solutions revenue will grow as more merchants join the platform overall, with merchant solutions revenues growing at twice the rate of subscription solutions.
Investors were focusing on Shopify’s post-pandemic performance on Wednesday, wrote Scott Kessler, global lead of Third Bridge’s technology sector.
“People are focusing on two topics related to Shopify and the pandemic,”…