Shopify shares fall after quarterly revenue misses forecasts
Profit increased, but higher spending on the Sidekick AI assistant weighed on subscription margins, according to the company’s finance chief.
Shopify reported third-quarter revenue of $3.74 billion, a 32% increase that fell short of analysts’ $3.75 billion forecast. Bloomberg described it as the company’s first revenue miss since 2022. The stock ended trading 8.7% lower, CNBC reported, after falling as much as 17% during the session, according to Bloomberg.
The total value of orders through Shopify, known as gross merchandise volume, increased 29% to $119.15 billion. That was below the $120.03 billion forecast in StreetAccount data cited by CNBC. Subscription revenue came to $836 million, also missing estimates.
Profit measures improved despite those shortfalls. Net income reached $462 million, compared with $264 million a year earlier, while operating income increased to $568 million from $343 million. Adjusted per-share earnings were 49 cents, exceeding forecasts. Free cash flow represented 22% of revenue, versus 18% previously.
Shopify’s accounts showed that subscription business costs increased to $175 million from $128 million. Chief financial officer Jeff Hoffmeister said on the earnings call that additional spending on Sidekick, its AI assistant for merchants, was the main reason subscription gross margins narrowed. Support efficiencies partly offset that spending, he said.
For the fourth quarter, Shopify expects a low-thirties percentage increase in revenue and a slower, high-twenties rate of gross profit growth. President Harley Finkelstein told CNBC that merchandise volume had grown above 20% for 13 consecutive quarters.
