Shopify to lay off 20% of staff but revenue beats estimates

Canada’s Shopify said on Thursday it would let go 20% of its workforce in a second round of layoffs and sold its logistics arm to freight forwarder Flexport, sending its US-listed shares up 16% in premarket trading.

The company reported better-than-expected results for the first quarter as more merchants used its online tools and targeting services to attract customers tackling high inflation.

A host of new tools have encouraged more businesses from Mattel to Coty to join the platform, allowing the company to hike its subscription fees.

Known as the e-commerce platform for small businesses, Shopify had ramped up its order fulfilment network when it expected the pandemic-led e-commerce boom to persist. But by mid-2022, it said it had overestimated growth levels and laid off 10% of its workforce in July.

As the e-commerce boom brought by the global pandemic subsides, Shopify’s spending in the fulfilment network has been more closely scrutinised by investors who worry the capital-intensive project could weigh on earnings.

The logistics unit Deliverr, a company it acquired for $2.1bn less than a year ago, was sold in an all-stock deal that will give Shopify a 13% stake in Flexport, a start-up in which it has made a previous investment.

Revenue was $1.51bn in the quarter ended March 31, topping analysts’ estimates of $1.43bn, according to Refinitiv data.

The company also posted a surprise adjusted profit of 1c per share, compared with expectations for a 4c loss.

Reuters