Shopify to lay off 20% of workforce, revenue tops expectations

By

Cassidy STEPHENS

Published
May 4, 2023

Canada's Shopify Inc said on Thursday it would let go 20% of its workforce in a second round of layoffs and sold its logistics arm to freight forwarder Flexport, sending its U.S.-listed shares up 16% in premarket trading.

The company also reported better-than-expected results for the first quarter, as more merchants used its online tools and targeting services to attract customers tackling high inflation. A host of new tools have encouraged more businesses from Mattel to Coty to join the platform, allowing the company to hike its subscription fees.

Known as the e-commerce platform for small businesses, Shopify had ramped up its order fulfillment network, when it expected the pandemic-led e-commerce boom to persist. But by mid-2022, it said it had over overestimated growth levels and laid off 10% of its workforce in July.

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As the e-commerce boom brought by the global pandemic subsides, Shopify's spending in the fulfillment network has been more closely scrutinized by investors who worry the capital-intensive project could weigh on earnings.

The sale of the logistics unit Deliverr Inc, a company it acquired for $2.1 billion less than a year ago, was done in an all-stock deal that will give Shopify a 13% stake in Flexport - a startup in which it has made a previous investment.

Revenue was $1.51 billion in the quarter ended March 31, topping analysts' estimates of $1.43 billion, according to Refinitiv data. The company also posted a surprise adjusted profit of 1 cent per share, compared with expectations for a 4 cent loss.