Shopify Q3 Earnings Meet Estimates, Revenues Increase Y/Y

Shopify SHOP reported third-quarter 2025 non-GAAP earnings of 34 cents per share, in line with the Zacks Consensus Estimate. The bottom-line figure declined 5.6% year over year.

Revenues of $2.84 billion surpassed the Zacks Consensus Estimate by 3.34%. The top line soared 31.5% year over year.

SHOP’s Top Line Rides on Growing Merchant Base

Gross Merchandise Volume (GMV) in the third quarter was $92.01 billion, which increased 32% year over year. Offline GMV increased 31% year over year while B2B GMV jumped 98%. International GMV grew 41% year over year, with Europe’s GMV increasing 49% year over year (42% on a constant currency basis).

Shopify is benefiting from strong growth in its merchant base. Merchant solutions revenues in the third quarter were $2.15 billion and accounted for 75.4% of Shopify’s total revenues. On a year-over-year basis, merchant revenues increased 38.2%, 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 65% in the third quarter of 2025. Shop Pay GMV increased 65% year over year to $29 billion in GMV. Shop App native GMV jumped 140% year over year.

Subscription solutions revenues in the third quarter were $699 million and accounted for 24.6% of Shopify’s total revenues. On a year-over-year basis, subscription solutions revenues increased 14.6%.

Monthly Recurring Revenue (MRR) in the third quarter was $193 million, which increased 10.3% on a year-over-year basis. Plus category accounted for 35% of MRR in the reported quarter.

SHOP’s Q3 Operating Details

In the third quarter of 2025, gross profit was $1.39 billion, up 24.4% year over year. Gross margin contracted 280 basis points (bps) year over year to 48.9% due to unfavorable mix shift from Subscription Solutions to Merchant Solutions and strong results from the low-margin payments business.

Subscription Solutions’ gross profit grew 14% year over year, while Merchant Solutions’ gross profit grew 33%. Subscription Solutions’ gross margin was 81.7% down slightly on a year-over-year basis due to higher hosting costs needed to support growing merchant transaction volumes and SHOP’s continued geographic expansion, as well as higher AI usage. Merchant Solutions’ gross margin contracted 150 bps to 38.2%.

Total operating expenses were $1.05 billion, up 25.5% year over year. Sales & Marketing (S&M) expenses increased 24% year over year to $410 million. Research & Development (R&D) expenses increased 13% year over year to $375 million. General & Administrative (G&A) expenses inched up 0.9% year over year to $115 million.

However, as a percentage of revenues, total operating expenses declined 180 bps to 36.8%. S&M expenses as a percentage of revenues decreased 90 bps year over year to 14.4%. As a percentage of revenues, R&D expenses decreased 220 bps year over year to 13.2%. As a percentage of revenues, G&A expenses decreased 120 bps to 4%.

Consequently, SHOP reported an adjusted operating income of $465 million, up 15.7% year over year. Operating margin contracted 220 bps year over year to 16.4%.

SHOP’s Balance Sheet Details

As of Sept. 30, 2025, cash and cash equivalents (including marketable securities) totaled $6.35 billion, which increased from $5.82 billion as of June 30.

Free cash flow increased 20.4% year over year to $507 million. The free cash flow margin contracted 100 bps year over year to 18% in the reported quarter.

SHOP's Q4 Guidance Details

For the fourth quarter of 2025, Shopify expects revenues to grow in the mid-to-high twenties percentage rate on a year-over-year basis. 

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

Shopify expects GAAP operating expense as a percentage of revenues to be in the 30-31% range. 

Free cash flow margin is expected to be slightly above the third quarter of 2025’s reported figure.

Zacks Rank & Upcoming Earnings to Consider

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

Fair Isaac FICO, StoneCo STNE and Simulations Plus SLP are some other top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector.

Fair Isaac shares have dropped 19.3% year to date. This Zacks Rank #1 company is scheduled to release fourth-quarter fiscal 2025 results on Nov. 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

StoneCo shares have returned 136.2% year to date. StoneCo is scheduled to release third-quarter 2025 results on Nov. 6. StoneCo sports a Zacks Rank #1.  
 
Simulations Plus shares have dropped 39% year to date. Simulations Plus is set to report its fourth-quarter fiscal 2025 results on Dec. 1. Simulations Plus currently flaunts a Zacks Rank #1. 

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