Shopify Inc. shares fell after the company projected slowing profit growth in the current quarter, with executives pledging to keep spending to boost sales growth.
The Canadian e-commerce company said it expects gross profit growth in the quarter ending in June to be in the mid-teens, compared with a year earlier. Analysts were looking for growth exceeding 20 per cent.
The profit guidance overshadowed a decent first quarter and a sales forecast that met Wall Street expectations, suggesting a limited impact from steep U.S. tariffs on Chinese goods.
On a call with investors, Shopify executives said they would continue to prioritize marketing investments that help boost revenues over cutting spending to increase profits.
“We are still a growth company,” Chief Financial Officer Jeff Hoffmeister said Thursday on a call with investors.
The shares fell as much 6.7 per cent in New York.
Investors are struggling to determine how the trade war will affect Shopify, which sells software used by e-commerce businesses. Many of those businesses source goods from China, which faces the steepest tariffs.
Shopify executives said price increases tied to tariffs have so far have been scarce and that more than half of their U.S. shoppers earn more than US$100,000 annually, making them less sensitive to rising prices.
Gross merchandise volume, the overall value of merchant sales across Shopify’s systems, was $74.75 billion during the first quarter, the company said in a statement. Analysts had projected $74.8 billion.
Shopify executives also said the company expects only minimal effects from the closing this month of a tariff loophole called “de minimis,” which let shipments from China of $800 or less enter the U.S. duty-free. Only about 1 per cent of Shopify’s gross merchandise volume came from China and qualified for the exemption, Hoffmeister said.
First-quarter sales were $2.36 billion, more than the $2.34 billion analysts were expecting.
Spencer Soper, Bloomberg News
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