The results come one day after a 10 percent, company-wide reduction in staff.
Shopify has posted its financial results for the second quarter of 2022, pulling in $1.3 billion USD as the company’s growth continued to slow amid changing e-commerce conditions.
The revenue number represents just a 16 percent year-over-year increase. Shopify stated that its total reported revenue growth year-over-year was negatively impacted by approximately 1.5 percentage points “given the significant strengthening of the U.S. dollar relative to foreign currencies in the second quarter.”
The results come just one day after the company made a 10 percent staff reduction across its global workforce. The layoff amounts to approximately 1,000 employees.
CEO Tobi Lütke said the move was related to Shopify making a wrong bet on where the future of e-commerce spending was going amid COVID-19.
“Ultimately, placing this bet was my call to make and I got this wrong,” he wrote in a company-wide memo.
Following reports of the layoff, Shopify’s stock price on the Nasdaq dropped from $36.71 as of Monday closing at $31.55 by end of the day Tuesday.
The cuts come just more than a month after BetaKit reported that Shopify was undergoing a hiring slow down and had lowered its expectations regarding company growth.
The second quarter results mirror those from the first quarter of this year when Shopify’s revenue continued a pattern of slower growth. While the company still saw a 21 percent year-over-year (YoY) increase in revenue last quarter, pulling in $1.2 billion, that number was much smaller than previous YoY growth. The first quarter of 2021 saw a 110 percent YoY and marked the highest revenue growth in the company’s history – fuelled by COVID-19 lockdown and stimulus tailwinds.
This quarter’s numbers, while similar in dollar amount to Q2 2021 (which saw Shopify record its first-ever $1 billion revenue quarter), pale in comparison to the growth Shopify had been seeing in recent years.
The slowing of growth began in the third quarter of last year as Shopify started to see less bloated YoY growth numbers. Then, in the fourth quarter and year-end results Shopify continued to see more limited revenue growth and lowered its 2022 forecast.
Ahead of today’s earnings report, analysts cut their average consensus estimates for Shopify’s earnings.
During this quarter, Lütke also solidified his control of Shopify after shareholders voted in favour of giving the CEO a 40 percent voting stake after the changes to the governance structure were proposed in April.
Feature image source Shopify’s Glassdoor account.