Canadian e-commerce platform Shopify SHOP-T expects quarterly sales growth to be the slowest in two years due to economic uncertainty and weak consumer spending, with its U.S. stock trading lower in premarket trading. It fell by 16.5%.
E-commerce growth is normalizing after a post-pandemic downturn, but Shopify is at a disadvantage despite price hikes and new AI-based tools as consumers look to cut costs.
Adding to the pressure on the company, its core customers consist of small and medium-sized businesses (SMBs), which are vulnerable to the effects of persistently high inflation.
The company on Wednesday said it expected second-quarter sales to rise in the low teens, disappointing investors who had seen average growth of about 26% in the past few quarters.
Analysts expect sales to increase 19.35% in the current quarter, according to LSEG data.
The company expects operating expenses to increase by a low to mid-single digit percentage in the second quarter, after declining 4% in the first three months of the year.
This result includes the impact of the sale of its logistics division to freight forwarding company Flexport.
Shopify reported first-quarter revenue of $1.86 billion. In contrast, the average analyst estimate was for him to make $1.85 billion.
Excluding items, earnings per share were 20 cents, beating expectations by 17 cents.
