An worker works at Shopify’s headquarters in Ottawa, Ontario, Canada.
Chris Wattie | Reuters
Shopify announced on Thursday that it was cutting its workforce by 20%. The news got here as reported first quarter profit which topped analysts’ estimates on each the upper and lower lines.
Shopify shares jumped over 26% initially of trading.
CEO Tobi Lütke announced job cut in a memo for workers posted on the corporate’s website. He didn’t specify which units shall be affected by the layoffs.
“I’m aware of the crushing impact this decision has on a few of you, and I even have not taken it flippantly,” Lütke wrote.
As of December 31, Shopify had roughly 11,600 employees and contractors securities filing.
The cuts mark the second round of layoffs on the Canadian e-commerce company. Shopify last July laid off 10% of its employees after Lütke said the corporate misjudged how long the e-commerce boom fueled by the Covid pandemic would last.
Lütke said Shopify is slimming down as an organization because it focuses on its core business, which is creating tools for businesses to sell products online. The corporate individually announced Thursday that it’s moving its logistics unit to Flexport, a sale that features Deliverr, the last-mile delivery company it acquired for $2.1 billion last May.
Shopify can also be selling 6 River Systems, a maker of warehouse robots that it acquired in 2019 for $450 million from British retail technology firm Ocado. The terms of the Flexport and Ocado deals weren’t disclosed.
The moves end Shopify’s years-long effort to construct its own logistics business. Lütke called the trouble a “worthy side job” that might change into an independent company in the longer term, but said Shopify was refocusing its priorities on e-commerce software, in addition to newer initiatives corresponding to artificial intelligence.
“Shopify is honored to be amongst the businesses most definitely to use AI to help our customers,” said Lütke.
Shopify also beat Wall Street estimates for the primary quarter. According to Refinitiv, the corporate reported revenue of $1.51 billion, up 25% over the previous yr and surpassing Wall Street’s $1.43 billion projection.
Earnings per share was 5 cents. Excluding items, Shopify earned 1 cent per share, while analysts had expected a lack of 4 cents per share. Within the year-ago period, Shopify posted a net lack of $1.5 billion, or $1.17 per share.
Explanation: This story has been updated to explain that excluding items, Shopify earned 1 cent per share, while analysts had expected a lack of 4 cents per share.