VANCOUVER — Shopify’s sales outpaced analysts’ expectations in its fourth quarter, typically the e-commerce firm’s busiest. But the Ottawa-based company’s outlook for the first three months of 2023 disappointed analysts, whose sales estimates were higher than the guidance Shopify provided.

The company’s shares had been climbing in recent days in anticipation of its earnings release, as analysts expected that Shopify’s early-to-the-trend layoffs would result in positive metrics and give its shares a bump. The firm laid off 10 per cent of its staff in late July 2022, ahead of many other Canadian tech firms that cut staff amid a cooling economy.

Higher-than-expected revenue:

Shopify’s revenue for the fourth quarter of 2022 rose 26 per cent from the same period in 2021. In the three months ended Dec. 31, revenue totalled roughly US$1.7 billion, up from nearly US$1.4 billion in the fourth quarter of 2021. Analysts had expected revenue of about US$1.65 billion.

“This past year our merchants had their most successful Black Friday, Cyber Monday selling period ever, generating $7.5 billion in sales over that period, a growth of 21 per cent year over year on a constant currency basis,” president Harley Finkelstein said Wednesday during a conference call with analysts. Over the four-day shopping frenzy, about 52 million customers around the world purchased from brands that use Shopify, he said, which is a 12 per cent bump from the same time the previous year.

Shopify’s full-year revenue was nearly US$5.6 billion, up from US$4.6 billion in 2021.

Other key numbers:

• Comprehensive loss for the fourth quarter was about US$602,000 compared to US$371,000 in the same quarter the previous year. That amounted to a net loss per share of US$0.49 for the quarter compared to US$0.30 the previous year.
• Comprehensive loss for 2022 was nearly US$3.5 million, compared to a net income of about US$2.9 million in 2021. That amounted to a net loss of US$2.73 per share for the year, compared to net earnings of US$2.34 per share in 2021.
• Gross merchandise volume (GMV) for the quarter increased 13 per cent to US$61 billion. Gross payments volume (GPV), or how much GMV it processes through Shopify Payments, for the quarter increased 23 per cent to US$34.2 billion.

Curbing the enthusiasm: Shopify provided an outlook for its current first quarter, which takes into account its recent subscription price hikes. In late January, it announced it was increasing the monthly cost of its basic plan, regular package, and advanced tier for new clients; existing clients could continue to pay their previous rates if they agree to annual plans by late April.

While analysts had expected sales growth for the first quarter to come in at nearly 20 per cent, Shopify said it expected revenue growth in the high teens, year over year.

Shopify said its first quarter “is our seasonally low” one. But it still feels “very good” about the new products and solutions it introduced last year. “That said, we’re also mindful of this macroeconomic environment,” said Jeff Hoffmeister, the company’s new CFO.

One analyst asked whether Shopify was planning to run the business profitably for all of 2023 based on its guidance. CEO Tobi Lütke replied that companies have to act differently when economic times are difficult than they do during a boom period. Shopify “has played the boom games,” he said, and he intends to have it play the “more recessive times sport similarly well.”

Market reaction: Shopify’s shares on the New York Stock Exchange rose over several days, closing at US$53.39, up 6.55 per cent, ahead of Wednesday’s earnings release. On the Toronto Stock Exchange, its shares followed a similar trajectory, closing up nearly seven per cent at $71.44.

The shares tumbled after investors digested the report and took note of the company’s guidance. On the NYSE, shares fell more than 10 per cent in after-hours trading.