Shopify Inc. (TSX: SHOP) saw its shares decline sharply by nearly 20% following the release of financial results for the quarter ending March 31, 2024. While the company showcased growth across key metrics, it reported a significant net loss for the first three months of the year.
Gross Merchandise Volume (GMV) surged by 23% to $60.9 billion, marking an $11.3 billion increase compared to the same period last year. Revenue climbed by 23% to $1.9 billion, exhibiting a year-over-year growth of 29% after adjusting for the sale of logistics businesses.
Gross profit also surged by 33% to $957 million compared to the prior year. The gross margin for the quarter stood at 51.4%, a significant rise from 47.5% in Q1 2023, primarily attributed to the absence of the dilutive impact of logistics businesses and pricing changes on standard plans.
Despite lower operating expenses compared to last year, leading to an operating income of $86 million, the firm lodged other expenses amounting to $342 million. The firm then ended the quarter with a net loss of $273 million compared to last year’s $68 million net income. The bottomline translates to $0.21 loss per share.
Free cash flow amounted to $232 million, marking a substantial increase from $86 million in the previous year. The free cash flow margin for the quarter stood at 12%, compared to 6% in Q1 2023. As of March 31, 2024, cash and marketable securities totaled $5.2 billion, resulting in a net cash position of $4.3 billion after factoring in outstanding convertible notes.
Looking ahead to the second quarter of 2024, Shopify anticipates revenue growth at a high-teens percentage rate year-over-year, translating to a low-to-mid-twenties growth rate when adjusted for the impact of the sale of logistics businesses.
However, the firm expects a slight decrease of approximately 50 basis points in gross margin compared to Q1 2024, giving effect to the sale of its logistics business to Flexport last year.
Stock-based compensation is also projected to be $120 million, which would be a jump from $105 million in Q1 2024.
Shopify last traded at $84.72 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
