Shopify Falls Despite Q1 Earnings Beat

Shopify Inc (NYSE:SHOP) announced first-quarter earnings results on Tuesday morning.

What Happened

The company reported revenue of $214.3 million in the first quarter, which beat estimates of $202 million. Its adjusted net income for Q1 2018 was $4.2 million, or 4 cents per share; It recorded a loss of $3.5 million, or 4 cents per share in Q1 2017.

Shopify improved its platform in March by expanding shopping on Instagram to the UK, Australia, Canada, Germany, France, Italy, Spain and Brazil. Additional 35 countries were added in April. An integration with Google Pay on Shopify stores was also launched in March.

Why It's Important

The market consensus for Shopify earnings was a loss of 5 cents per share. The results came in better than expected, but the market wasn't happy with Q2 2018 forecast. The company reported said it expects an operating loss of $5 million to $7 million, while the market expected a smaller loss of $3.6 million.

"Gross merchant volume, the total amount of goods sold on all Shopify-run sites, grew 64 percent from a year earlier, compared with an 81 percent increase in the same quarter last year," Bloomberg's Gerry De Vynck noted. "That metric has become a key number investors zero in on."

What's Next

The company expects to reach a full year 2018 revenue in the range of $1 billion to $1.01 billion and and adjusted operating profit in the range of $0 to $5 million.

The stock dropped 8.6 percent, trading around $122.34 at time of publication.

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