Canadian ecommerce services provider Shopify on Tuesday beat analysts’ estimates for fourth-quarter revenue and profit on strong demand from merchants during the all-important holiday shopping season.

However, the company’s U.S.-listed and Toronto shares fell nearly 10%. Analysts pointed to the run-up in the stock for the decline and softer first-quarter projections, especially its fre cash flow (FCF) margin.

Shopify expects free cash flow margin for the first quarter – traditionally its lowest revenue quarter – to be in the high single-digit percentage of revenue. That compared with 21% in the fourth quarter.

“Investors were likely not expecting such a significant decrease in FCF margin from the fourth quarter to the first quarter,” William Blair analyst Matthew Pfau said.

Operating expenses is expected to be up at a “low-teens percentage rate” in the current quarter from the prior quarter, the company said, primarily due to marketing and employee-related costs.

Shopify expects free cash flow margin for the first quarter – traditionally its lowest revenue quarter – to be in the high single-digit percentage of revenue. That compared with 21% in the fourth quarter.
“Investors were likely not expecting such a significant decrease in FCF margin from the fourth quarter to the first quarter,” William Blair analyst Matthew Pfau said.

Operating expenses is expected to be up at a “low-teens percentage rate” in the current quarter from the prior quarter, the company said, primarily due to marketing and employee-related costs.

Merchants on the platform reached a record of $9.3 billion in sales over the Black Friday-Cyber Monday weekend, the company had said earlier, a 24% increase from a year earlier.

The company has been integrating AI-enabled features into multiple products with the help of Shopify Magic and its AI-enabled assistant “Sidekick” amid intensifying competition.

Meanwhile, the company expects the impact from a new pricing plan for its enterprise-focused offering, Shopify Plus, from the second half of the year.