Shopify $SHOP stock tumbled about 9% shortly after markets opened Tuesday, as investors weighed second-quarter guidance that pointed to decelerating growth against first-quarter results that topped expectations.
The commerce software company posted 34% revenue growth in Q1, but its outlook for high-twenties growth in Q2 rattled investors
Bloomberg / Getty Images
Shopify $SHOP stock tumbled about 9% shortly after markets opened Tuesday, as investors weighed second-quarter guidance that pointed to decelerating growth against first-quarter results that topped expectations.
For the second quarter, the company said it expects revenue to grow at a "high-twenties percentage rate" from a year earlier, down from the 34% growth it posted in the first quarter. Gross profit dollars are expected to grow at a mid-twenties rate, with free cash flow margin in the mid-teens.
First-quarter results were stronger across the board. Within that performance, merchant solutions stood out, with its 39% gain marking the segment's strongest showing in over four years, Bloomberg reported. Gross merchandise volume, the total dollar value of orders processed through the platform, surpassed $100 billion for the quarter.
Coming into Tuesday, Shopify shares had already lost 21% of their value since the start of the year.
"Q1 delivered broad-based growth across geographies, merchant sizes, and channels, with over $100 billion of GMV in the first quarter alone," CFO Jeff Hoffmeister said in a statement. "The durability of this model allows us to invest strategically in growth, both in the merchant-facing tools that drive commerce innovation and in the internal capabilities that let us build and ship faster."
President Harley Finkelstein pointed to the company's position in AI commerce. "Shopify has entered the AI era with a clear edge: strong, durable growth and two decades of commerce intelligence," he said in a statement.
Operating expenses in the second quarter are expected to come in at 35% to 36% of revenue, with stock-based compensation of $145 million, the company said.
Shopify, which is headquartered in Ottawa, powers commerce for millions of businesses in more than 175 countries.
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