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.
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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.
