By Adriano Marchese
Shopify's second‑quarter profit outlook fell short of expectations as the company projected higher-than-anticipated operating expenses despite strong revenue growth.
The e-commerce giant, whose platform lets businesses sell, manage orders and process payments, has guided for second-quarter operating expenses at between 35% and 36% of revenue, with gross profit dollars growing at a mid-20s percentage rate.
The guidance highlights the dynamic shaping Shopify's current results where revenue continues to grow at a strong clip, but costs and a shift toward lower-margin merchant services revenue are weighing on profitability. Chief Financial Officer Jeff Hoffmeister expects these margin pressures to ease over time, but the near-term outlook points to slower growth ahead as year-over-year comparisons become more challenging.
Analysts are forecasting revenue to come in at $3.42 billion, representing a nearly 28% jump over the prior-year period.
Shopify is also looking to rein in costs by using more artificial intelligence internally and managing staffing levels, savings it plans to reinvest elsewhere, particularly in marketing.
"We can continue to drive those [costs] down as percentages, but marketing dollars themselves will be up year over year," Hoffmeister said in an earnings call.
The slightly higher-than-expected expenses put pressure on profitability for the second quarter, said Citi analyst Tyler Radke.
"The company's second-quarter sales guidance of high-20% growth year-over-year was slightly above consensus expectations in the mid-20s, although modestly higher-than-expected costs drove the second-quarter profitability outlook slightly below the Street," Radke said in a report.
Shares recently fell in Toronto by 9.1% to 157.67 Canadian dollars ($115.72).
In the first quarter, Shopify reported a net loss of $581 million, or 45 cents a share, compared with a loss of $682 million, or 53 cents a share, in the comparable quarter a year ago.
Adjusted earnings were 36 cents a share, topping expectations of 33 cents a share, according to FactSet.
Revenue rose to $3.17 billion from $2.36 billion, coming in ahead of projections of $3.12 billion. Revenue growth was made up of subscription solutions, which rose by $130 million to $750 million, and its larger segment, merchant solutions, which climbed to $2.42 billion from $1.74 billion.
Gross merchandise volume, a key metric that measures all orders processed through Shopify's platform, rose to $100.74 billion from $74.75 billion a year ago.
Write to Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
May 05, 2026 11:28 ET (15:28 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments