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Last updated: February 13, 2024 at 8:30 a.m. ET
First Published: February 13, 2024 7:21am ET
Shopify reported better-than-expected profits in its latest quarter and is expected to improve its margins this quarter, but the company’s expense disclosures appear to be worrying Wall Street.
Shopify SHOP CA:SHOP’s stock price fell on Tuesday after the company, which enables businesses to run online shops, said it expected operating expenses to increase compared to the fourth quarter. It fell more than 8% in pre-market trading. This increase on a percentage basis is expected to be in the low teens for him.
“It’s a contrast…
Shopify reported better-than-expected profits in its latest quarter and is expected to improve its margins this quarter, but the company’s expense disclosures appear to be worrying Wall Street.
Shopify stock
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Shares fell more than 8% in premarket trading Tuesday after the company, which enables businesses to run online shops, said it expected operating expenses to increase compared to the fourth quarter. This increase on a percentage basis is expected to be in the low teens for him.
“In contrast to some of management’s recent analyst day comments on expense discipline (including the benefits of leveraging AI in operations), [first-quarter operating-margin] The guide is a little surprising,” Baird analyst Colin Sebastian said in a note to clients.
He believes a factor weighing on the stock is that the company expects operating expenses to increase “significantly” in the first quarter “due to heightened expectations on the buyer side” ahead of Shopify’s report. Ta.
The stock is up 45% in the past three months, as the S&P 500 SPX is up 14%.
“whole, [fourth-quarter results] High expectations met, but valuation and lack of margins could lead to continued upside [the stock] A rally is unlikely today,” Jefferies analyst Samad Samana said in a note to clients.
The company’s fourth-quarter net income was $657 million, or 51 cents per share, compared to Shopify’s net loss of $623 million, or 49 cents per share, in the year-ago period.
On an adjusted basis, Shopify’s earnings per share were 34 cents, up from 7 cents a year earlier and beating the FactSet consensus of 30 cents.
Shopify’s revenue increased from $1.7 billion to $2.1 billion, in line with FactSet consensus.
Total circulation rose 23% to $75.1 billion, compared to analysts’ expectations of $72.2 billion. This demonstrated accelerated growth, the company said in a release.
“As we move into 2024, we look forward to building on the momentum we achieved in 2023 and continuing to deliver a strong combination of top-line growth and profitability,” Chief Financial Officer Jeff Hoffmeister said in the release. ” he said.
Shopify expects its sales in 2024 to increase at a rate of “low 20%” compared to the previous year, or, taking into account the impact of the sale of its logistics business, to grow at a rate of “mid to high 20%.” .
The FactSet consensus of $8.39 billion implies expected growth of about 19%.
The company also expects first-quarter gross margin to improve sequentially by 150 basis points.
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