Shopify Falls After Forecasting Bigger Operating Loss

  • Mobile orders surpass those on desktops for first time
  • Shares drop after 31 percent rally in last three months

Shopify Inc. shares fell Wednesday after the e-commerce software provider forecast bigger full-year losses and some investors sold after a recent jump in the stock.

The full-year operating loss will be $41 million to $47 million, Shopify said, compared with a previous forecast of $36 million to $42 million. Last month, Shopify secured new office space in Toronto that can accommodate as many as 700 employees, signaling more spending by the company.

The operating loss for the first quarter was $9.7 million, the company said, compared with $3.5 million a year earlier.

The stock fell 3.7 percent to $29.61 at the close in New York. While Shopify’s first-quarter revenue and its sales forecast exceeded analysts’ estimates, that wasn’t enough after a 31 percent climb in the shares over the past three months had raised hope for even better performance.

“Some investors are taking the profits -- some of the very substantial profits they’ve made over the past three months,” said Gil Luria, an analyst at Wedbush Securities. “The stock implied a very good quarter.”

Rising Costs

Costs from the company’s acquisition of online marketing startup Kit CRM and the recent strengthening of the Canadian dollar versus the U.S. greenback affected the forecast, Chief Financial Officer Russ Jones said in a phone interview.

“Those two things offset what typically would have fallen to the bottom line,” Jones said. “Investing is part of what we want to do because we want to have a much stronger platform when we move into the next phase, which is obtaining profitability.”

Revenue in the three months ended March 31 surged 95 percent to $72.7 million, Ottawa-based Shopify said in a statement, beating the average analyst estimate of $66.9 million. In the second quarter, sales will range from $79 million to $81 million, above the $74.8 million average analyst estimate. The Canadian company also forecast full-year sales of $337 million to $347 million, compared with a previous forecast of $320 million to $330 million and analysts’ estimates of $327.9 million.

Mobile orders surpassed those on desktop for the first time in the first quarter, Shopify said, as just over 51 percent of orders came from mobile devices. An integration with Facebook Inc.’s Messenger app makes it easier for merchants to engage in “conversational commerce” with customers, Shopify said.

“The era of mobile commerce has officially arrived,” founder and Chief Executive Officer Tobi Lutke said in the statement. “Mobile orders from Shopify merchants surpassed those of desktops in February, and have continued to climb since.”

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