Global Courant 2023-05-04 20:40:42
An employee works at Shopify’s headquarters in Ottawa, Ontario, Canada.
Chris Wattie | Reuters
Shopify announced on Thursday that it will cut 20% of its workforce. The news came as it reported profit for the first quarter which beat analysts’ estimates on both the top and bottom lines.
Shares of Shopify rose more than 26% in early trading.
CEO Tobi Lutke announced the job cuts in a memo to employees posted on the company’s website. He did not specify which units will be affected as a result of the layoffs.
“I recognize the crushing impact this decision has on some of you and have not taken this decision lightly,” Lütke wrote.
Shopify had approximately 11,600 employees and contractors as of December 31 a securities file.
The cuts mark the second round of layoffs for the Canadian e-commerce company. Shopify laid off 10% of its workforce last July after Lütke said the company misjudged how long the pandemic-fueled e-commerce boom would last.
Lütke said Shopify is slimming down as a company as it focuses on its core business of creating tools for businesses to sell products online. The company announced separately Thursday that it is transferring its logistics unit to Flexport, a sale that also includes Deliverr, the last-mile delivery company it acquired for $2.1 billion last May.
Shopify also sells 6 River Systems, the warehouse robot manufacturer it acquired for $450 million in 2019, to British retail technology company Ocado. The terms of the Flexport and Ocado deals were not disclosed.
The moves end Shopify’s years of efforts to build its own logistics business. Lütke called that effort a “valuable side quest” that could be an independent company in the future, but said Shopify is shifting its priorities to ecommerce software, as well as newer initiatives like artificial intelligence.
“Shopify is privileged to be one of the companies with the best opportunities to use AI to help our customers,” said Lütke.
Shopify also beat Wall Street estimates for the first quarter. The company reported revenue of $1.51 billion, up 25% from a year earlier, surpassing Wall Street’s $1.43 billion forecast, according to Refinitiv.
It posted earnings of 5 cents per share. Excluding items, Shopify earned 1 cent per share, while analysts expected a loss of 4 cents per share. During the same period last year, Shopify reported a net loss of $1.5 billion a year ago, or $1.17 per share.
Clarification: This story has been updated to clarify that Shopify, excluding items, earned 1 cent per share, while analysts expected a loss of 4 cents per share.
