Categories Analysis, Technology

Shopify (SHOP) anticipates secular tailwinds for digital commerce transformation in 2022

Shopify expects its revenue growth to be lower in the first quarter of 2022 and highest in the fourth quarter of the year

Shopify Inc. (NYSE: SHOP) delivered better-than-expected earnings results for the fourth quarter of 2021 on Wednesday. However the company’s forecasts for a slowdown in revenue growth for the first half of 2022 did not impress the Street and the stock plummeted over 17% during the day.

Quarterly performance

Total revenue rose 41% to $1.38 billion from the year-ago period surpassing estimates. Net loss was $2.95 per share compared to EPS of $0.99 last year on a reported basis. Adjusted EPS dropped to $1.36 from $1.58 last year but still came ahead of analysts’ projections.

Notable trends

Shopify said it has nearly tripled revenue and more than doubled gross merchandise volume over the last two years and the number of merchants using its platform is now nearly twice as big as the levels seen in 2019.

The company’s Q4 results were driven by a strong holiday selling season during which its merchants saw their collective sales grow faster than the overall ecommerce industry over the Black Friday Cyber Monday weekend.

Gross merchandise volume (GMV) for the fourth quarter rose 31% year-over-year to $54.1 billion while gross payments volume (GPV) grew 45% to $27.7 billion. Monthly recurring revenue (MRR) crossed $100 million for the first time and increased 23% YoY. Shopify Plus contributed 29% of MRR compared to 25% last year.

Revenue from Subscription Solutions increased 26% YoY to $351.2 million helped by more merchants joining the platform. Merchant Solutions revenue grew 47% to $1 billion driven by growth in GMV.

Expectations for 2022

Shopify believes that the changes brought on by the pandemic over the past two years to the way in which merchants and consumers operate have broadened the prospects for entrepreneurship and digital commerce.

For 2022, the company anticipates continued secular tailwinds for entrepreneurship and digital commerce transformation. Although factors such as lockdowns and government stimulus that were seen in the first half of 2021 will be absent this year, economic growth is anticipated to support the rise of ecommerce.

Shopify expects revenue growth for full year 2022 to be lower than the 57% growth in revenue achieved in 2021. Despite this, the company expects its revenue growth to outpace the growth of ecommerce helped by the expansion of its services to more merchants in more geographies and the contribution of newly-added products.

Shopify expects its revenue growth to be lower in the first quarter of 2022 and highest in the fourth quarter of the year. This is because it does not expect the pandemic-driven growth in ecommerce that was seen in the early part of 2021 to repeat in the first half of 2022. The changes in terms with apps and theme developers as well as the timing of certain initiatives and investments will also impact revenue growth trends.

Click here to read the full transcript of Shopify’s Q4 2021 earnings conference call

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

Most Popular

MU Earnings: Micron’s Q4 profit declines but beats estimates

Micron Technology Inc. (NASDAQ: MU) Thursday said its fourth-quarter profit declined from last year, hurt by a sharp fall in revenues. Earnings, however, beat the market’s projection. On an adjusted

What are Philip Morris’ (PM) anticipations for the near term?

Shares of Philip Morris International Inc. (NYSE: PM) were down 1% on Thursday. The stock has dropped over 9% year-to-date. Although the tobacco industry has felt the pinch of inflation,

Key highlights from CarMax (KMX) Q2 2023 earnings results

CarMax, Inc. (NYSE:KMX) reported second quarter 2023 earnings results today. Net revenues rose 2% year-over-year to $8.1 billion. Net earnings were $125.9 million, or $0.79 per share, compared to $285.2 million,

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top