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Earnings: Shopify falls as revenue growth slows once again in Q4

Despite reporting market-beating fourth-quarter results, shares of Shopify (SHOP) fell over 6% during pre-market trading on Tuesday, as investors remained worried about the deceleration in top-line growth.

Revenue for the quarter jumped 54% to $343.9 million, well above the management projection of $315-325 million, driven by robust growth in subscription revenue. The top-line also came above analysts’ projection of $327.13 million.

However, the 54% increase in Q4 revenue marks the fourth consecutive quarter of growth rate decline. Revenue growth has consistently declined in the past three quarters, registering at 68% in Q1, 62% in Q2 and 58% in Q3.

Image for representation (Photo by rawpixel on Unsplash)

Subscription Solutions revenue grew 42% to $133.6 million, driven by an increase in the number of merchants joining the Shopify platform. Meanwhile, Merchant Solutions revenue grew 63%, to $210.3 million on strong growth in Shopify Capital and Shopify Shipping.

Earnings came in at 26 cents per share, higher than the average analysts’ projection of 21 cents per share.

Shopify (SHOP) investors had a windfall last year, with the stock jumping almost 40% in the trailing 52 weeks, against a 15% decline witnessed by the industry.

Shopify q4 2018 earnings infographic

Monthly recurring revenue was up 37% compared to last year, while gross merchandise volume jumped 54% to $14 billion.

CEO Tobi Lütke said, “We made history in 2018: no other SaaS company has crossed the $1 billion-dollar revenue mark at a faster growth rate than Shopify has.”

READ: Shopify stock rallies after Q3 earnings beat

The management currently expects revenues in the range of $1.46 billion to $1.48 billion for fiscal 2019 and an operating loss between $140 million and $150 million. On an adjusted basis, the company is looking for operating earnings in the range of $10 to $20 million.

The forecast for the first quarter is an operating loss between $47 million and $49 million on revenues of $305 million to $310 million.

 

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