MW Shopify posts roaring holiday results but predicts its growth will slow

By Emily Bary

Shopify's stock has been choppy following a mixed batch of guidance for the current quarter. Is the forecast conservative?

Shopify Inc.'s stock was choppy in premarket action Tuesday following upbeat revenue performance in the latest quarter, but a mixed slate of guidance for the current one.

While Shopify (CA:SHOP) (SHOP) also met expectations with its revenue guidance for the current quarter, some investors may be disappointed by the pace at which revenue growth could slow following the roaring holiday quarter. The e-commerce company projects sales growth at a "mid-twenties" rate for the first quarter, which is largely consistent with the 24.6% rate implied by the FactSet consensus. But that's down from the 31.2% rate seen in the fourth quarter.

Shopify shares are down fractionally in Tuesday's premarket action.

The company said in a release that it expects its "strong merchant momentum" to carry from the fourth quarter to the first quarter, though Shopify also noted that the first quarter typically is the lowest for gross merchandise volume, a measure of the value of what gets sold on Shopify's platform.

Wedbush analyst Scott Devitt wrote that Shopify posted "solid results vs. great expectations" while flagging that there's likely "some level of conservatism" in the guidance. Shopify's growth for the fourth quarter came in above the top end of the company's guidance, suggesting there could be upside to this outlook as well.

Shopify's guidance also calls for gross profit to grow at a percentage rate in the "low twenties," while analysts were looking for about 23% growth there, according to Devitt.

TD Cowen's Daniel Chan wrote that the margin guidance "seems light."

"We will look for color on the drivers of the margin outlook and whether trade complications are expected to have any impact on Shopify's performance," he added.

For the fourth quarter, Shopify logged revenue of $2.81 billion, up from $2.14 billion a year before, whereas analysts were modeling $2.73 billion. Shopify also notched $94.45 billion in gross merchandise volume, up from $75.13 billion a year prior.

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-Emily Bary

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February 11, 2025 08:57 ET (13:57 GMT)

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