# Shopify’s revenue forecast fails to impress, shares fall
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-02-16
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Shopify's Revenue Forecast Fails to Impress, Shares
Meta Description: Shopify's revenue growth slows despite efforts, shares drop 11%. CFO cites inflation concerns. Company focuses on efficiency amid challenging macroeconomic
URL: https://financedigest.com/shopifys-revenue-forecast-fails-to-impress-shares-fallhtml

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Shopify’s revenue forecast fails to impress, shares fall

By Nivedita Balu

(Reuters) -Shopify Inc on Wednesday forecast slowing revenue growth for the current quarter despite price hikes and new product launches, signaling that macroeconomic challenges were weighing on its merchants’ online businesses.

U.S-listed shares of Shopify, which started 2022 as the most valuable Canadian [company before losing three-quarters of its value](https://www.financedigest.com/how-companies-get-value-from-data-science-production.html "How Companies Get Value from Data Science Production"), fell about 11% in extended trading, even after holiday-quarter results surpassed estimates.

Our perspectives on [outlook assume that inflation](https://www.financedigest.com/european-shares-set-for-weekly-gain-on-u-s-inflation-outlook.html "European shares set for weekly gain on U.S. inflation outlook") remains elevated, pushing consumers to discounted and non-discretionary purchases,” Chief Financial Officer Jeff Hoffmeister said on the earnings call.

“We are mindful of the environment in which we are operating now.”

Shopify executives said the company would focus on efficiency.

Expectations were high after the e-commerce company, which offers tools and services for businesses to set up their online stores, roughly doubled annual subscription [prices while taking measures such as workforce reduction to cut](https://www.financedigest.com/tesla-posts-record-quarterly-deliveries-after-price-cuts-up-4-from-q4.html "Tesla posts record quarterly deliveries after price cuts, up 4% from Q4") costs, bracing for a rough period as recession looms and shoppers tighten their purses.

It expects [revenue growth](https://www.financedigest.com/visa-revenue-growth-slows-more-as-tough-economy-sobers-spending.html "Visa revenue growth slows more as tough economy sobers spending") in the “high-teen” percentages, while analysts had forecast a rise of nearly 20%, according to Refinitiv data.

Still, Shopify added known [brands and luxury](https://www.financedigest.com/top-luxury-car-brands-in-the-world.html "Top luxury car brands in the world") labels from Swiss fashion designer Bally to chocolate maker Mars to a list of clients paying a premium price for its services.

The company, which traditionally catered to [small businesses](https://www.financedigest.com/5-common-tax-mistakes-small-businesses-make-in-australia.html "5 Common Tax Mistakes Small Businesses Make in Australia"), has been focusing on adding big brands to its clients list as they look to sell directly to consumers and use some of Shopify’s website creation and payment tools to set up their stores.

Investors were hoping that the headcount reductions and the price [increases would translate to operating leverage and higher profitability](https://www.financedigest.com/4-tips-for-landlords-to-increase-rental-property-profits.html "4 Tips for Landlords to Increase Rental Property Profits"), not a return to losses in the first quarter as is implied by guidance,” said Gil Luria, analyst at D.A. Davidson.

Fourth-quarter revenue rose 26% to $1.7 billion, compared with analysts’ average [estimate of $1.64 billion](https://www.financedigest.com/electric-kick-scooter-market-is-projected-to-reach-6-5-billion-by-2031-and-estimated-to-grow-at-11-5-cagr-between-2021-and-2031.html "Electric Kick Scooter Market is Projected to Reach .5 billion by 2031, And estimated to grow at 11.5% CAGR between 2021 and 2031").

On an adjusted basis, Shopify earned 7 cents per share, beating the [expectation of a 1 cent loss](https://www.financedigest.com/dollar-set-for-weekly-loss-amid-expectations-fed-will-slow-hikes.html "Dollar set for weekly loss amid expectations Fed will slow hikes").

(Reporting by Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli and Shailesh Kuber)


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