Tech companies predict a complicated future. In recent weeks we have begun to know the economic results for the second quarter of 2022. Shopify has been the last company to present the figures and it has not brought very good news, total revenue in the second quarter grew by just 16% compared to last year and have reached $1.3 billion; Last year at this time they marked a milestone by breaking the barrier of 1,000 million dollars for the first time. As expected, these revenues have been affected by the current context, such as the significant strengthening of the US dollar in relation to foreign currencies.
Amy Shapero, CFO of Shopify He explained in the statement that it has happened in the last quarter: “Offline trading grew faster in the second quarter, where our exposure is lower but growing, we continue to see increased adoption of our solutions, enabling our merchants to remain agile in the face of a challenging macro environment and highlighting the breadth and resilience of our business model…GMV growth from our merchants continued to outpace growth in the broader US online and offline retail markets as consumers shopped at more surfaces.«
The GMV for the second quarter has been $46.9 billion, which represents a growth rate compared to the second quarter of 2021 of 11%. Meanwhile he gross payment volume (GPV) grew to $24.9 billion. Presenting an exponential growth of 48%.
Revenues from subscription solutions have grown by 10%, reaching $366.4 billion. The Canadian company explains that this is due to «that more merchants have joined the platform and reflect our change in terms to make sales in our app and theme stores free for partners up to their first million dollars a year, terms that were not in effect until the third quarter of 2021«.
However, the net loss for the second quarter of 2022 has been 1,200 million dollars. While last year they were only 879 million dollars.
Shopify isn’t the only company having problems
The top 25 global retailers by market capitalization (MCap) reported a decline in 19.4% on your MCap accumulated in the second quarter of 2022I observe GlobalData. It also notes that the top six US companies (Amazon, Walmart, Home Depot, NIKE, Costco and Target) each lost more than $25 billion in valuation.
Ragupathy Jayaraman, GlobalData Business Fundamentals Analysthas commented that “Due to the strict lockdowns resulting from the COVID-19 pandemic, retail businesses were able to improve their e-commerce options. In addition, pharmaceutical and DIY retailers have also benefited from the pandemic. However, normality is returning to the markets as more consumers visit physical stores.”.
In addition, it points out that the growing inflationary pressures and the increase in interest rates by the Federal Reserve gave «as a result a sell-off in shares in the second quarter«. Another of the reasons to which he attributes this situation is the conflict between Russia and Ukraine, which has brought about an increase in the price of energy.
In contrast, the Chinese retail giants Alibaba, Pinduoduo and JD.com reported market cap growth in the current cycle. However, this situation could be short-lived with the Chinese government’s numerous regulatory crackdowns on organizations continuing to raise concerns among investors.
Outlook 2022
- GMV’s growth, although affected by persistent inflation, will continue to outperform the broader retail market in the second half of 2022;
- Merchant Solutions revenue will continue to grow as a percentage of GMV, driven by Shopify Payments, Shopify Capital, Shopify Markets, Shop Pay Installments, and Shopify Fulfillment (including Deliverr), and will continue to benefit from partner revenue growth;
- The number of new merchants joining the platform in the second half of 2022 will be higher than in the first half of 2022 as our localized subscription pricing and other merchant initiatives gain traction;
- Merchant Solutions’ year-over-year revenue growth will more than double Subscription Solutions’ growth for the full year of 2022;
- Both GMV and total revenue in 2022 will be spread more evenly across the four quarters, similarly to 2021, given mounting pressure on consumer spending on goods and currency headwinds from the stronger US dollar we expect in the second half of this year;
- Due to this larger combination of Merchant Solutions contributing to overall revenue and Deliverr, which we expect to dilute, dollar gross profit growth will track revenue growth; Y
- Operating expense growth, excluding one-off items, slowed significantly year-over-year in the third quarter and again in the fourth quarter.
