Shopify reports Q3 earnings miss due to tax provision

The Ottawa, Ontario-based company said it was hit with a one-time tax provision of $48.3 million related to its international expansion efforts.

E-commerce SaaS provider released its third quarter financial results on Tuesday and reported an unexpected loss that sent its shares tumbling more than 7% in early trading. The Ottawa, Ontario-based company said it was hit with a one-time tax provision of $48.3 million related to its international expansion efforts.

For the third quarter, Shopify reported an adjusted per share loss of 29 cents, down from a gain of 5 cents per share a year ago. Analysts were expecting adjusted earnings of 11 cents a share. 

As for the rest of the numbers, Shopify reported a net loss of $72.8 million, or 64 cents per share, on revenue of $390.5 million -- up 45% from a year ago. Analysts were expecting revenue of $383.7 million. 

Shopify said merchant solution revenue rose 50% to $225.0 million in the third quarter. Revenue from its subscription business increased 37% to $165.6 million.

Shopify is currently building out its AI-powered fulfillment network, which will see the company spend $1 billion over the next five years. As part of that spending, Shopfiy announced in September that it bought 6 River Systems, a warehouse automation and industrial robotics startup, for $450 million. In its financial release, Shopify said it's seeing strong interest from merchants as it continues to add partners and optimize the network. 

"Our strong results in the quarter were driven in part by the success of our international expansion, which is just one of the many ways we are investing in the platform," said Shopify CFO Amy Shapero, in a statement. "By carefully balancing these multiple opportunities that have different investment time horizons, we can keep investing in the innovations that will power merchants in the future while helping them grow rapidly today."

In terms of outlook, Shopify projected fourth quarter revenue of $472 million to $482 million and 2019 sales of $1.54 billion to $1.55 billion, up slightly from its previous range of $1.51 billion to $1.53 billion. Those projections are in line with Wall Street's estimates.