Shopify is seeing slower revenue in the first half of 2022. Stock is down.

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The time of dreams

Shopify Shares fell on Wednesday after the e-commerce software company reported fourth-quarter results that narrowly beat expectations but warned of revenue headwinds in the first half of 2022.

Shopify (symbol:

) posted adjusted quarterly earnings of $1.36 per share, beating forecasts of $1.30, on sales of $1.38 billion, beating expectations of $1.34 billion and rising 41% compared to the same quarter in 2020.

Annual revenue of $4.6 billion also beat expectations. The company reported adjusted earnings of $6.41 per share. Analysts had expected sales of $4.573 billion with earnings of $6.35 per share.

“The past two years have been amazing,” said Harley Finkelstein, president of Shopify. “We nearly tripled our revenue, more than doubled the GMV [gross merchandise volume] and the Shopify team, and the number of merchants using Shopify is almost twice as high as in 2019.”

For 2022, the e-commerce company expects year-over-year revenue to be lower in the first quarter and higher in the fourth due to three factors. The company believes the Covid-19-driven acceleration in e-commerce will not be repeated in the first half of 2022, but expects some business initiatives and investments to gain momentum during the year. Finally, certain contractual conditions will probably be unfavorable to the revenues of its subscription solutions for the first half of the year, in particular the first quarter.

Shopify predicted that revenue from its subscription solutions will grow as more merchants join the platform as a whole, with revenue from merchant solutions growing twice as fast as subscription solutions. The company expects capital expenditures of $200 million, stock-based compensation and related payroll expense of $800 million, and amortization of acquired intangibles of $28 million.

Shopify said it had a strong fourth quarter, buoyed by an “incredible holiday selling season,” according to chief financial officer Amy Shapero.

Merchant Solutions revenue was $1.03 billion, up 47% year-over-year, and Subscription Solutions increased 26% to 351.2 millions of dollars.

Gross merchandise volume in the fourth quarter was $54.1 billion, an increase of 31% over the previous year. Gross payment volume reached $27.7 billion, representing 51% of GMV processed during the quarter. Over the Black Friday weekend worldwide, sales on the platform reached more than $6.3 billion, the company said.

In fiscal 2021, Shopify rolled out a series of new initiatives to attract more merchants, such as TikTok Shopping, which allowed merchants with a TikTok for Business account to connect directly to their store’s checkout. online from popular content app. The company also launched new retail hardware in six new markets, including Europe and Australia, and a money management product for merchants in the United States.

The shares fell 6.1% to $835.11 in premarket trading on Wednesday.

Write to Sabrina Escobar at [email protected]

Sallie R. Loera