EPS of $0.01 beat estimates of ($0.04) and revenues of $1.51B beat estimates of $1.43B. Its Q1 GMV of $49.6B increased by 15%. In the quarter, the company launched its Commerce Components (CCS) platform, allowing for a composable stack for enterprise retail and also a new AI shopping assistant powered by ChatGPT. Revenues grew by 25% against the prior year, and gross profits grew by 12%, although its gross margins slid from 53.0% in the prior year to 47.5%. Free cash flow grew from $41M to $86M, to which it mostly used to add to its cash balance.
SHOP announced it will be selling the majority of its logistics business, to Flexport, a leading tech-driven global logistics platform. SHOP will receive stock representing a 13% equity interest in Flexport, on top of its existing equity interest. Flexport will become the official logistics partner for Shopify and the preferred provider for Shop Promise.
For Q2 2023, management expects revenue growth to resemble the first quarter's growth, operating expenses to decline by mid-single digits relative to Q1 2023, and free cash flows for each quarter of 2023 of ~$100M. The stock is up significantly on the news, and we feel that this is an appropriate decision that allows it to focus on its core business, achieve consistent profitability, and gain a logistics partner in the process.