SHOP's Merchant Solutions Revenue Growth Picks Up: More Upside Ahead?

Shopify’s SHOP capacity to monetize the economic activity on its platform is evident in the rapid acceleration of its Merchant Solutions segment revenues, which jumped 38.2% year over year in the third quarter of 2025 to $2.15 billion. Rising sales among existing merchants and new additions resulted in a 32% increase in Gross Merchandise Volume (GMV), which reached $92.01 billion. Merchants with annual GMV below $25 million generated a significant majority of Shopify’s GMV, while merchants with GMV greater than $25 million
grew at a faster pace in the reported quarter.

The increased use of Shopify Payments, which attained a 65% penetration of GMV in the third quarter, drove the Merchant Solutions segment revenues. Shop Pay processed $29 billion in GMV, marking 67% year-over-year jump. Merchant Solutions’ revenues were significantly driven by 31% growth in the offline commerce category and the remarkable 98% rise in the B2B segment, fueled by existing merchants adopting Shopify’s solutions and go-to-market initiatives that target more B2B specific verticals and merchants.

New merchant-friendly tools like Shop Minis, Shop Cash, Sign in with Shop and Shop Pay solutions are helping Shopify win merchants rapidly. Shopify expects mid-to-high 20% revenue growth for the fourth quarter of 2025, led by sustained strength in Merchant Solutions. Continued expansion of payment solutions across more countries, further adoption of AI and agentic commerce technologies, and strategic performance marketing investments are expected to drive ongoing acceleration. International growth, especially in Europe and emerging markets, is a key catalyst.

The Zacks Consensus Estimate for fourth-quarter 2025 Merchant solutions revenues is pegged at $2.79 billion, indicating 30% growth from the figure reported in the year-ago quarter. The consensus mark for fourth-quarter 2025 revenues is currently pegged at $3.58 billion, suggesting 27.3% growth from the figure reported in the year-ago quarter.

Tough Competition Hurts SHOP’s Prospects

Shopify is facing stiff competition in the e-commerce marketplace from the likes of eBay EBAY and Amazon AMZN.

eBay is a significant player in e-commerce, with 134 million active buyers and a GMV of $20.11 billion in the third quarter of 2025. The company leverages generative AI to enhance ads and listings, driving advertising revenues 23% on a forex-neutral basis. eBay’s intensified focus on high-growth “focus categories”, such as collectibles, refurbished goods, fashion and circular economy products, continues to drive meaningful marketplace expansion. 

Amazon dominates the U.S. e-commerce market, driven by its “Buy with Prime" service, which combines its payments and fulfillment services and makes them available at checkout on other websites while promising faster delivery for Prime members. Amazon’s vast customer base, logistics and AI tools make it a formidable competitor worldwide.

SHOP’s Share Price Performance, Valuation & Estimates

Shopify shares have jumped 48.3% in the past six-month period, outperforming the broader Zacks Computer and Technology sector’s return of 21.3% but underperforming the Zacks Internet Services industry’s appreciation of 75.2%.

SHOP Stock’s Performance

Shopify stock is overvalued, with a forward 12-month price/sales of 15.87X compared with the broader sector’s 6.55X. SHOP has a Value Score of F.

SHOP Valuation

The Zacks Consensus Estimate for 2025 earnings is pegged at $1.45 per share, unchanged over the past 30 days and suggests 11.5% growth over 2024’s reported figure.

Shopify Inc. Price and Consensus

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

Shopify currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research