Shopify Q1 revenue growth exceeded expectations, will lay off 20% of employees and sell logistics department

According to foreign media reports, Canadian e-commerce giant Shopify announced on Thursday (May 4) that it would lay off 20% of its employees and sell its logistics department to freight forwarder Flexport. In addition, the company also reported that its first-quarter revenue and profits exceeded Wall Street analysts' expectations.

Shopify CEO Tobi Lutke announced the layoffs in a memo to employees, but he did not specify which departments would be affected.

The layoffs come less than a year after the e-commerce giant's first round of layoffs. In July last year, Shopify laid off 10% of its employees in response to the waning of the online consumption boom.

According to the terms of the agreement, after the completion of the sale, Shopify will acquire a 13% stake in Flexport. Flexport is currently valued at approximately US$8 billion, which means that the new shares acquired by Shopify this time are worth approximately US$1 billion. The transaction is expected to be completed in the second quarter of this year.

The logistics unit that Shopify is reportedly selling to Flexport includes Deliverr, a last-mile delivery company it acquired for $2.1 billion last May, in the company’s largest-ever acquisition.

Shopify also sold 6River Systems, a warehouse robot maker it acquired for $450 million in 2019, to British retail technology company Ocado.

The moves mark the end of Shopify's years-long effort to build its own logistics business, according to the report. Tobi Lutke called those efforts a "valuable side quest," but now the company is prioritizing its focus on new initiatives such as e-commerce and artificial intelligence.

As for the financial report, Shopify's first-quarter revenue was $1.51 billion, higher than analysts' expectations of $1.43 billion; adjusted earnings per share were $0.01 billion, better than analysts' expectations of a loss of $0.04 per share; GMV (gross merchandise volume) was $49.6 billion, higher than the expected $47.68 billion.

Looking ahead, Shopify expects second-quarter revenue growth to be similar to that of the first quarter, and second-quarter gross margin to be similar to that of the first quarter. The company also expects to achieve positive free cash flow in every quarter through 2023.

Editor ✎ Nicole/

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