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Shopify shares rise as executives blaze trail back to profitability after layoffs

Shopify Inc.’s president says the company is focused on reducing operating expenses while striving to return to profitability.

“If you look at the seven years since (our) IPO, five of those years, we’ve been profitable. We plan to return to profitability,” Harley Finkelstein said on a conference call to discuss the company’s latest financial results.

“We’ve said this year is an investing year, but this is a company that thinks deeply about managing expenses and growing revenue, and ultimately this is a company that likes to be profitable and we’ll come back to that.” “

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Finkelstein’s comments come months after Shopify laid off 10 percent, or about 1,000, of its employees and admitted it misjudged the growth of e-commerce.

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The Ottawa-based company bet that the number of online purchases would jump five or 10 years ahead of what was predicted before the pandemic, but when COVID-19 measures were lifted, people went back to shopping habits instead of the health crisis.


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The company, which keeps its books in U.S. dollars, on Thursday reported a net loss of $158.4 million, or 12 cents per diluted share, in its most recent quarter, compared to net income of nearly $1.15 billion, or 90 cents per diluted share a year ago.

Net loss for the quarter ended September 30 included a net gain of $171.9 million on equities and other investments, while results a year ago included a net unrealized gain of $1.3 billion on equities and other investments included other investments.

Revenue for the quarter was nearly $1.37 billion, compared to $1.12 billion in the same quarter last year.

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Though Shopify’s stock price rose nearly 17 percent to $46.16 following the morning news, the company doesn’t expect to be able to stem its losses any time soon.

It is expected to end the year with an adjusted operating loss, said outgoing CFO Amy Shapero.

On an adjusted basis, Shopify reported a net loss of $30.0 million, or 2 cents per diluted share, in the third quarter, compared to adjusted net income of $102.8 million, or 8 cents per diluted share, in the third quarter of 2021.

There are also signs of an economic headwind. Retailers are grappling with higher material and shipping costs, and last year’s supply chain challenges remain.

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Meanwhile, consumers are finding that everything costs more, putting a strain on their shipping patterns.

“Higher inflation and rising interest rates will continue to negatively impact consumers’ purchasing power for consumer goods and services,” Shapero said.

However, she remains confident that Shopify can weather such conditions, in part because the company’s revenue has increased and expenses have been reduced.

The company reported an increase in subscription revenue to $376.3 million compared to $336.2 million in the prior year, while revenue from merchant solutions was $989.9 million versus $787.5 million -Dollar.

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“The discipline and rigor we continue to apply across the business, beginning with software development through commercialization of our solutions, will position us well for long-term growth and improved profitability as we exit this macro cycle,” she said.

Shapero and Finkelstein devoted much of the call to discussing a range of investments the company is focused on to overcome economic challenges and find profitability.

The largest is its fulfillment network, which helps merchants ship goods to consumers and is seen as a way Shopify is upping the ante in the battle with Amazon.com Inc.

Finkelstein said the company has become more aware of the types of products it wants to handle. He noted that the company isn’t interested in shipping perishable goods anytime soon, instead targeting apparel, consumer goods, and items smaller than a microwave oven.

The financial report was the last for Shapero to step down. The Company has announced that Jeff Hoffmeister will assume the position of Chief Financial Officer following Shapero’s departure.

The company also recently named Kaz Nejatian as chief operating officer, reporting to new chief revenue officer Bobby Morrison and chief growth officer Luc Levesque.


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https://globalnews.ca/news/9230150/shopify-q3-earnings-offline-business-push/ Shopify shares rise as executives blaze trail back to profitability after layoffs



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