Shopify posts 26 percent YoY revenue jump, but growth still below pandemic highs

Shopify building
Shopify beats analyst projections in Q4 with over $1.7 billion USD in revenue.

Shopify generated revenue of more than $1.7 billion USD in the fourth quarter of 2022, marking a 26 percent jump compared to the same period in 2021, according to the company’s latest earnings report.

For Shopify, this increase is larger than its year-over-year growth rate in Q3 2022.

Shopify also forecasts that its revenue growth will slow during Q1 2022.

The Ottawa-based e-commerce giant released its Q4 and full-year 2022 financial results today following market close, posting total revenue of $1.7 billion in Q4 and topping analyst expectations of $1.65 billion, according to Bloomberg.

Though its business continues to grow despite challenging market conditions and a broader e-commerce slowdown, Shopify’s Q4 results still pale in comparison to the growth the company saw during its COVID-19 highs.

Shopify also forecasts that its revenue growth will slow during the first quarter of 2022, anticipating “revenue growth in the high-teen percentages” on a year-over-year basis in Q1. In response, the company’s share price has fallen around 10 percent in after-hours trading.

“While our financial outlook assumes that the COVID-triggered acceleration of ecommerce continues to return to a more normalized rate of growth in 2023, there is elevated inflation and continued caution around consumer spending due to a variety of macroeconomic factors,” stated Shopify in the company’s Q4 earnings report.

In the fourth quarter, Shopify experienced a record-breaking Black Friday-Cyber Monday. “We had a strong Black Friday Cyber Monday and continue to outperform the broader e-commerce market, but we are mindful of the environment in which we are operating now,” said Shopify CFO Jeff Hoffmeister during Shopify’s Q4 earnings call.

As Hoffmeister noted, Shopify has historically experienced “a sequential seasonal decline from Q4 to Q1 due to the strong holiday selling season,” adding that the company expects this trend to continue in 2023.

RELATED: Shopify CTO Allan Leinwand to depart company, citing “personal reasons”

“We recognize a challenging economic backdrop and are focused on carefully balancing our growth investments with strict operational discipline,” said Hoffmeister.

Shopify posted a net loss of nearly $624 million in Q4. In 2022 as a whole, Shopify pulled in almost $6 billion in total revenue and recorded a net loss of approximately $3.5 billion.

Shopify’s latest earnings report comes as it looks to recover following a rollercoaster pandemic. Shopify experienced tremendous growth when COVID-19 forced many to shop online instead of at physical stores. These conditions led to a boom in e-commerce demand that Shopify rode to become Canada’s most valuable public company.

But around late 2021, Shopify’s growth began to decelerate as pandemic forces dissipated and customers moved back to buying goods in person. Amid this shift, combined with a broader tech downturn fuelled by rising interest rates, Shopify’s revenue growth slowed and its share price plummeted.

RELATED: After two quarters of sluggish growth, Shopify increases revenues in Q3 2022 but eyes future quarters for road to recovery

In response, Shopify slowed hiring, cut more than 10 percent of its staff—approximately 1,000 employees—revamped its approach to compensation, and replaced Amy Shapero as CFO with Morgan Stanley banker Jeff Hoffmeister. Shapero isn’t the only executive to depart Shopify in recent months, as CTO Allan Leinwand is leaving the company, marking the firm’s third C-suite departure since last September alongside COO Toby Shannan’s retirement.

This year, Shopify has taken a number of steps towards improving its bottom line, including raising the cost of its subscription plans by 30 percent for new merchants, and launching Commerce Components, a composable commerce stack targeted at larger, high-value enterprise retailers.

Following all of these changes, Shopify’s share price has partially rebounded from its 2022 slide. But the company still faces challenging conditions moving forward amid shifting e-commerce market conditions and a looming recession.

Feature image courtesy Shopify.

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories and breaking news. His coverage is more complete than his moustache. He was also the winner of SABEW Canada’s 2023 Jeff Sanford Best Young Journalist award.

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