Shopify forecasts slowing growth as Q1 revenues drop

In the latest financial report, Shopify disclosed its performance for the fourth quarter and provided guidance for the first quarter of the fiscal year. Shopify announced revenue of $2.81 billion for the fourth quarter, surpassing analysts' expectations of $2.73 billion. This reflects a significant growth of 31% compared to $2.14 billion in the same quarter from the previous year. However, the company's net income nearly doubled to $1.3 billion from $657 million a year earlier. The platform's gross merchandise volume reached $94.5 billion, slightly exceeding estimates from analysts. Despite this growth, Shopify acknowledged that the first quarter traditionally sees the lowest gross merchandise volume seasonally, which has led the company to forecast revenue growth for this quarter in the mid-20% range. This estimate falls short of the expectations provided by some analysts, who anticipated a higher growth rate of 24.4%. Analysts noted that this decline in growth from 31% in the fourth quarter is indicative of several factors, including the seasonal decline and potential headwinds from foreign exchange rates. The firm also expects operating expenses as a percentage of revenue to rise to 41%-42%. The implications of recent American tariffs imposed by President Donald Trump on major trading partners may also be affecting Shopify's revenue outlook, driven in part by changes in the de minimis trade rule impacting online retail from China.