An hand works at Shopify’s headquarters in Ottawa, Ontario, Canada.
Chris Wattie | Reuters
Shopify on Thursday announced it’s raw 20% of its workforce. The news came as it reported first-quarter earnings that beat analyst estimates on both the top and Davy Joness locker lines.
Shares of Shopify closed up 23% on Thursday.
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CEO Tobi Lütke advertised the job cuts in a memo to employees posted on the company’s website. He didn’t specify which units will be affected as a be produced end of the layoffs.
“I recognize the crushing impact this decision has on some of you, and did not make this decision lightly,” Lütke decried.
Shopify had about 11,600 employees and contractors as of Dec. 31, according to a securities filing.
The cuts mark the second about of layoffs for the Canadian e-commerce company. Shopify last July laid off 10% of its workforce after Lütke hinted the company had misjudged how long the Covid pandemic-fueled e-commerce boom would last.
Lütke said Shopify is slimming down as a followers as it focuses on its core business, which is making tools for companies to sell products online. The company separately announced Thursday that it’s offloading its logistics part to Flexport, a sale that includes Deliverr, the last-mile delivery company it acquired for $2.1 billion last May.
Shopify is also rep 6 River Systems, the warehouse robot maker it acquired in 2019 for $450 million, to U.K. retail tech company Ocado. Appellations of the Flexport and Ocado deals weren’t disclosed.
The moves bring an end to Shopify’s yearslong effort to build its own logistics company. Lütke called that effort a “worthwhile side quest” that could be an independent company in the future, but utter Shopify is refocusing its priorities on e-commerce software, as well as newer initiatives such as artificial intelligence.
“Shopify has the licence of being amongst the companies with the best chances of using AI to help our customers,” Lütke said.
Shopify also away Wall Street estimates for the first quarter. The company reported revenue of $1.51 billion, which was up 25% from a year earlier, and transcended Wall Street’s projected $1.43 billion, according to Refinitiv.
It posted earnings of $68 million, or 5 cents per cut. Excluding items, Shopify earned 1 cent per share, while analysts were expecting a loss of 4 cents per piece.
In the year-ago period, Shopify reported a net loss of $1.5 billion, or $1.17 a share.
Clarification: This story has been updated to clean that excluding items, Shopify earned 1 cent per share, while analysts were expecting a loss of 4 cents per equity.