Shopify Q2 Earnings Beat Estimates, Revenues Jump Y/Y, Shares Rise

Shopify SHOP reported second-quarter 2025 non-GAAP earnings of 35 cents per share, which beat the Zacks Consensus Estimate by 25%. The figure jumped 34.6% year over year.

Revenues of $2.68 billion surpassed the Zacks Consensus Estimate by 5.47%. The top line soared 31.1% year over year.

Following second-quarter 2025 results, SHOP shares rose 22% at the time of writing this article. Shopify shares have jumped 45.7% year to date, outperforming the Zacks Computer and Technology sector’s return of 10.9%.

SHOP’s Top Line Rides on Growing Merchant Base

Gross Merchandise Volume (GMV) in the second quarter was $87.84 billion, which increased 30.6% year over year. Same-store sales growth from existing merchants, a higher number of merchants on SHOP’s platform, and strong growth in Europe drove GMV in the reported quarter. Offline GMV increased 29% year over year while B2B GMV jumped 101%. International GMV grew 42% year over year, with Europe’s GMV increasing 42% year over year (49% on a constant currency basis).

Shopify is benefiting from strong growth in its merchant base. Merchant solutions revenues in the second quarter were $2.02 billion and accounted for 75.5% of Shopify’s total revenues. On a year-over-year basis, merchant revenues increased 36.6%, driven by strong GMV and increased penetration of Shopify payments. 
 

Shopify Inc. Price, Consensus and EPS Surprise

Shopify Inc. price-consensus-eps-surprise-chart | Shopify Inc. Quote

Shopify Payments’ GMV penetration hit 64% in the second quarter of 2025. Shop Pay GMV increased 65% year over year, and it processed $27 billion in GMV. Shop App native GMV jumped 140% year over year.

Subscription solutions revenues in the second quarter were $656 million and accounted for 24.5% of Shopify’s total revenues. On a year-over-year basis, subscription solutions revenues increased 16.5%.

Monthly Recurring Revenue (MRR) in the second quarter was $185 million, which increased 9.5% on a year-over-year basis. Plus category accounted for 35% of MRR in the reported quarter.

SHOP’s Operating Expenses Rise Y/Y

In the second quarter of 2025, gross profit was $1.3 billion, up 24.6% year over year. Subscription Solutions’ gross profit grew 15% year over year, while Merchant Solutions’ gross profit grew 32%.

Total operating expenses were $1.01 billion, up 25.7% year over year. As a percentage of revenues, total operating expenses declined 160 basis points (bps) to 37.7%.

Sales & Marketing (S&M) expenses increased 17.6% year over year to $415 million. As a percentage of revenues, S&M expenses decreased 180 bps year over year to 15.5%

Research & Development (R&D) expenses increased 13% year over year to $394 million. As a percentage of revenues, R&D expenses decreased 240 bps year over year to 14.7%.

General & Administrative (G&A) expenses jumped 103.3% year over year to $122 million. As a percentage of revenues, G&A expenses increased 160 bps to 4.6%.

Consequently, SHOP reported an adjusted operating income of $291 million, up 20.7% year over year. Operating margin contracted 90 bps year over year to 10.9%.

SHOP’s Balance Sheet Details

As of June 30, 2025, cash and cash equivalents (including marketable securities) totaled $5.82 billion, which increased from $5.51 billion as of March 31.

Free cash flow increased 26.7% year over year and 16.3% sequentially to $422 million. The free cash flow margin contracted 50 bps year over year to 15.7% in the reported quarter.

SHOP’s Q3 Guidance Positive

For the third quarter of 2025, Shopify expects revenues to grow in the mid-to-high twenties percentage rate on a year-over-year basis. The Zacks Consensus Estimate for third-quarter 2025 revenues is pegged at $2.63 billion, suggesting 21.72% growth from the figure reported in the year-ago quarter.

Gross profit is anticipated to grow at a low-twenties percentage rate on a year-over-year basis. 

Shopify expects GAAP operating expense as a percentage of revenues to be in the 38-39% range. 

The consensus mark for third-quarter 2025 earnings is pegged at 35 cents per share, indicating a 2.8% decline from the figure reported in the year-ago quarter. 

Free cash flow margin is expected to be in the mid-to-high teens.

Zacks Rank & Other Stocks to Consider

Shopify carries a Zacks Rank #1 (Strong Buy). 

OptimizeRx OPRX, StoneCo STNE and Vipshop VIPS are some other stocks worth considering in the broader Zacks Computer and Technology sector. Each of the three stocks currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

OptimizeRx shares have jumped 156.8% year to date. OptimizeRx is set to report its second-quarter 2025 results on Aug. 7.

StoneCo shares have appreciated 68.2% year to date. StoneCo is set to report its second-quarter 2025 results on Aug. 7.

Vipshop shares are up 13.1% year to date. Vipshop is set to report its second-quarter 2025 results on Aug. 14.

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This article originally published on Zacks Investment Research (zacks.com).

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