Shopify (NYSE:SHOP) shares trade about 17% higher in pre-market Thursday after the company issued a business update and reported Q1 earnings.
In a memo to staff, CEO Tobias Lutke said the company will cut 20% of its global workforce while Flexport will buy Shopify Logistics.
“It’s often said that larger companies are more sluggish but this is not because of their size, it's because of all the side quests and distractions they accumulate along the way. This happens because larger companies can afford to be somewhat inefficient, especially during stable economic boom times. But once they need to adapt to some new paradigm they can’t. They will get replaced by more focused competitors, or collapse outright,” Lutke wrote.
“We are heading into a decade of high velocity and massive change. We will require speed, agility, and a great deal of innovation.”
The company expects to incur a severance charge in the range of $140 to $150 million in the second quarter of 2023 related to the workforce reduction.
On the earnings side, Shopify reported EPS of $0.01 on revenue of $1.5 billion, better than the expected loss per share of $0.04 on revenue of $1.43B.
For this quarter, the company sees the gross margin percentage to be similar to Q1 levels.