Shopify reported mixed first-quarter results, posting a larger-than-expected loss while achieving growth in revenue. The company announced a loss of 53 cents per share, which is not comparable to analysts’ expectations, and its revenue reached $2.36 billion, also falling short of some estimates. For the second quarter, Shopify projected gross profit growth in the high-teens percentage range, below the 20.1% growth analysts had forecasted. The company also expects revenue to increase by a mid-20s percentage, while Wall Street had anticipated around 22% growth.
Shopify’s platform helps merchants run online businesses and provides services like advertising and payment processing tools. Many of its clients are small- to medium-sized businesses, which leaves the company somewhat exposed to the impact of President Trump’s tariffs on Chinese imports. These tariffs, which now total 145%, were expanded recently when the president closed a trade loophole that allowed goods from China under $800 to enter the U.S. duty-free. Shopify’s CFO, Jeff Hoffmeister, noted that the end of this exemption was not expected to have a significant immediate impact, with just 1% of the company’s gross merchandise volume linked to affected Chinese imports.
Despite the tariff concerns, Shopify’s customer base of higher-income consumers (over half of U.S. buyers have incomes above $100,000) is seen as less sensitive to price fluctuations. The company believes this demographic provides some insulation from the effects of tariffs and other market challenges. Shopify has also introduced a “buy local” feature to help users filter products by country of origin.
Shopify’s gross merchandise volume (GMV), a key metric for the company, reached $74.75 billion during Q1, slightly missing the forecast of $74.8 billion. Revenue from subscription solutions came in at $620 million, just below the projected $621.5 million. The company reported a net loss of $682 million for the quarter, or 53 cents per share, compared to a loss of $273 million, or 21 cents per share, during the same period last year. This decline highlights the challenges Shopify faces amid the ongoing tariff and trade policy uncertainties.
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