Indian envoy warns of 'big red line,' days after charges laid in Nijjar case
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
Shopify Inc.'s stock plummeted to the lowest level in nearly two years Wednesday after the e-commerce giant warned that its revenue growth will slow this year as the globe eases up on restrictions meant to quell the COVID-19 pandemic.
The Ottawa-based company's stock fell to a low of $914 as it announced it expects revenue growth for 2022 to be lower than the 57 per cent revenue growth it achieved in 2021. Shares were down more than 18 per cent to $926.17 in late-morning trading, the lowest level since May 2020.
Chief financial officer Amy Shapero attributed the lower guidance to the health crisis along with the company's decision not to take any share of the first $1 million in revenue developers make every year on the array of booking features, subscription tools and other products they design for Shopify software.
“We believe that the COVID-triggered acceleration of e-commerce that spilled into the first half of 2021 in the form of lockdowns and government stimulus will be absent from 2022 and there is caution around inflation and consumer spend near-term,” she said, in a call with analysts.
Her remarks come as the glow around Canada's tech darling has started to wane after two years of the pandemic prodding people to shop online more and encouraging businesses to roll out digital stores, delivering a wave of new sales and customers to Shopify.
In recent months, people have shifted some of their purchases back to brick-and-mortar, where Shopify has less of an advantage.
The shift pushed the company, which keeps its books in U.S. dollars, to report a net loss of US$371.3 million or US$2.95 per diluted share for the quarter ended Dec. 31, weighed down by a US$509.7-million net unrealized loss on equity and other investments. The fourth-quarter result compared with net income of US$123.9 million or 99 cents per diluted share in the fourth quarter of 2020.
Those results and the move away from intense pandemic measures have also hampered Shopify's stock. Its shares have plunged after topping $2,000 late last year.
Harley Finkelstein, Shopify's president, remained upbeat about the company's outlook and performance.
“The evolution in commerce that fast forwarded over the past two years offers more selling opportunities to makers, creators, influencers and curators,” he said, on the same call as Shapero.
“Their resilience and our drive to build them the best products for modern commerce puts Shopify and our merchants out ahead.”
He noted that Shopify ended 2021 with a merchant base that is twice as large as it was two years ago and now includes Quebec dairy producer Saputo, star football player Tom Brady's Brady Brand, German meal kit seller HelloFresh and apparel brand French Connection.
Finkelstein also pointed out that Shopify's annual revenue in 2021 was nearly triple that of 2019 and its most recent quarter saw gains too.
Shopify's fourth quarter revenue totalled US$1.38 billion, up more than 40 per cent from US$977.7 million a year earlier.
On an adjusted basis, Shopify earned US$1.36 per diluted share in its most recent quarter compared with an adjusted profit of US$1.58 per diluted share in the fourth quarter of 2020.
Analysts on average had expected an adjusted profit of US$1.24 per share and nearly US$1.33 billion in revenue, according to financial markets data firm Refinitiv.
Looking forward, Shopify will keep trying to lure in such brands with an increased focus on its fulfilment network.
It opened a self-operated, leased warehouse in Atlanta last year and plans to build that service out by offering two-day delivery coverage for more than 90 per cent of the U.S. population. It is looking at how to serve larger clients through the network.
The company also intends to focus on hiring in a competitive environment that saw its top rival Amazon.com Inc. more than double its base salary cap to $350,000 from $160,000 this month.
Shopify executives said the company will hire even more in 2022 than it did in 2021, when it brought on at least 2,021 new technical staff. The company now has a workforce of roughly 10,000, but acknowledged there are pressures in the labour market.
“There is a big talent scramble in the world,” Shopify founder Tobi Lutke said on the same call as Shapero and Finkelstein.
“There's a lot of shuffling going on, but Shopify is on the good side of the shuffling it seems.”
This report by The Canadian Press was first published Feb. 16, 2022.
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