Holiday Quarter Surpasses Expectations for Shopify, Yet Looming Expenses Weigh Down Shares

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Holiday Quarter Surpasses Expectations for Shopify: Canadian e-commerce platform Shopify’s strong demand from merchants during the pivotal holiday shopping season drove revenue and profit that above analysts’ projections for the fourth quarter.

Regardless of this achievement, Shopify’s shares listed in the United States and Toronto fell by about 10%. Speculators blamed the stock’s prior spike and weaker first-quarter predictions, especially for the FCF margin, for the drop.

Holiday Quarter Surpasses Expectations for Shopify

Shopify expects a free cash flow margin of low to mid-teens percent of revenue for the first quarter, down significantly from 21% in the fourth quarter (due to seasonal considerations).

William Blair analyst Matthew Pfau said, “Investors were likely not expecting such a significant decrease in FCF margin from the fourth quarter to the first quarter.”

Increases in marketing and employee-related expenditures are the main drivers of the anticipated “low-teens percentage rate” increase in operating expenses for the current quarter, according to the company’s disclosure.

Shopify merchants made $9.3 billion in sales over the Black Friday–Cyber Monday weekend, up 24% from the previous year.

Shopify has been responding to rising competition by incorporate AI-powered features into its goods through the use of tools such as Shopify Magic and its AI helper “Sidekick.”

The upcoming change to Shopify Plus’s price model is expected to have an effect starting in the second part of the year, according to the company. This change is aimed at businesses.

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