Shopify Shares Tumble on Lower Sales Guidance; $2B Deliverr Buy Planned

Shopify said Thursday it agreed to acquire fulfillment technology provider Deliverr for $2.1 billion. Deliverr’s logistics network serves over a million orders per month for thousands of U.S. merchants, it said. “While adding Deliverr this year will impact profitability in 2022, it's well worth it because it accelerates our ambitions around” Shopify Fulfillment Network, said President Harley Finkelstein on the quarterly earnings call. Deliverr’s software, talent, data and scale will enable SFN to give merchants more control of their inventory across sales channels, Shopify said. Shopify shares hit a 52-week low Thursday at $395.86 before closing at $413.09, down 14.91%, after it projected lower first-half revenue growth vs. 2021. As consumers began returning in February to travel, dining out and shopping in stores, explosive growth in online shopping “moderated,” said Finkelstein. For Q1, revenue grew 22% to $1.2 billion vs. 110% growth in the year-ago quarter. Shopify’s gross merchandise value in Q1 last year jumped 114%, said Chief Financial Officer Amy Shapero, noting the 2021 surge in online shopping due to COVID-19 pandemic lockdowns and stimulus. Also affecting results were inflation, which pushed more consumer spending online and offline toward discount retailers, she said. Shapero said a comparable number of merchants will join Shopify’s platform this year based on what the company saw in Q1, resulting in fewer merchant adds than last year due to “a tight and transitional labor market.” Finkelstein also referenced Shopify’s Shop Promise that will show two-day and one-day delivery promises on merchants' online stores and across social media. On Shopify’s reaction to Amazon’s extension of Prime delivery to third-party merchants, CEO Tobi Lutke said Shopify is “actually thrilled” that Amazon wants to share its infrastructure with small merchants across the internet. Whatever leads to more entrepreneurship “helps the vision of a company,” Lutke said. Shopify tools can help small businesses manage complex retail strategies, he said.