Shopify, which aims to be the e-commerce backend for brands of all sizes, continued its strong growth in the fourth quarter and was profitable for the year.
But the company's stock came under pressure, falling 11.8% to $78.68 in midday trading, as Wall Street questioned how much it would cost to sustain that growth.
While e-commerce remains an Amazon-dominated game, Shopify is steadily bringing more merchants on board and selling services that help brands grow their businesses.
Some of the notable companies that joined the platform last year include Nike Strength, Dollar Shave Club, Banana Republic Home, Authentic Brands Group, Oscar de la Renta, Everlane, On Running, and more.
The company's fourth-quarter comprehensive profit was $667 million, up sharply from a $601 million loss in the same period last year.
Revenue for the quarter ended Dec. 31 rose 24% to $2.1 billion as gross merchandise volume (the value of goods sold through Shopify's e-commerce platform) rose 23% to $75.1 billion. became.
The quarter helped Shopify return to profitability for the year, with profits totaling $152 million in 2023, compared to a loss of $3.5 billion in 2022.
Revenue for the year increased 26% to $7.1 billion, and GMV increased 20% to $235.9 billion, an increase of $38.7 billion year over year.
Like other technology companies, Shopify experienced significant growth during the pandemic, but was then forced to pivot as growth slowed. The company cut its workforce in 2022 to refocus on its business.
Shopify President Harley Finkelstein told analysts on a conference call that it's been a “tremendous year.”
“Commerce moved fast and we moved faster,” Finkelstein said. “We restructured the company to be flatter, more agile, and built for every corner of commerce, never losing sight of our mission to make commerce better for everyone.
“As a result, we continue to break down barriers, accelerate the power of entrepreneurship and drive success for our sellers,” he said. “No matter which way you look at our business, whether it's merchants, products or channels, we've seen tremendous growth. We capped off the year with a great fourth quarter.”
Operating expenses in the fourth quarter were down 22% compared to the same period last year due to the sale of a logistics business, headcount reductions and the absence of real estate impairment charges. Compared to the third quarter, expenses decreased by he 1%.
However, Shopify said its operating expenses for the first quarter will increase in the low teens compared to the fourth quarter due to marketing and employee-related expenses.
Analysts peppered Mr. Finkelstein with questions about rising expenses, but he said the company plans to remain disciplined.
“In the last 18 months or so, we've made incredible improvements across our go-to-market and growth engines and optimized several things,” he said. “It optimizes the way we work. It not only drives automation and increased efficiency, it also diversifies our marketing efforts to support our growth. I mean we can actually have incredible rigor and discipline when we see opportunities that enable us to do things. That doesn't mean we just spend money when we don't see them.”
