Shopify Q4 Earnings Miss Estimates, Revenues Increase Y/Y

Shopify SHOP reported fourth-quarter 2025 non-GAAP earnings of 38 cents per share, which missed the Zacks Consensus Estimate by 7.32%. The bottom-line figure increased 9.1% year over year.

Revenues of $3.67 billion surpassed the Zacks Consensus Estimate by 2.55%. The top line soared 30.6% year over year.

SHOP’s Top Line Rides on Growing Merchant Base

Gross Merchandise Volume (GMV) in the fourth quarter was $123.84 billion, which increased 31.1% year over year. Offline GMV increased 29% year over year while B2B GMV jumped 84%. International GMV grew 50% year over year, with Europe’s GMV rising 45% year over year (35% on a constant currency basis).

Shopify is benefiting from strong growth in its merchant base. Merchant solutions revenues in the fourth quarter were $2.89 billion and accounted for 78.8% of Shopify’s total revenues. On a year-over-year basis, merchant revenues increased 34.9%, 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 65.6% for the full year 2025. Shop Pay GMV increased 62% year over year to $43 billion in GMV. 

Subscription solutions revenues in the fourth quarter were $777 million and accounted for 21.2% of Shopify’s total revenues. On a year-over-year basis, subscription solutions revenues increased 16.7%.

Monthly Recurring Revenue (MRR) in the fourth quarter was $205 million, which increased 15.2% on a year-over-year basis. The Plus category accounted for 34% of MRR in the reported quarter.

SHOP’s Q4 Operating Details

In the fourth quarter of 2025, gross profit was $1.69 billion, up 25.2% year over year. Gross margin contracted 200 basis points (bps) year over year to 46.1% 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 18% year over year, while Merchant Solutions’ gross profit increased 30%. Subscription Solutions’ gross margin was 81%, up on a year-over-year basis, mainly due to a reduction in support costs as the company continues to operate more efficiently. Merchant Solutions’ gross margin came in at 36.8%.

Total operating expenses were $1.06 billion, up 19.7% year over year. Sales & Marketing (S&M) expenses increased 24.4% year over year to $433 million. Research & Development (R&D) expenses rose 11.1% year over year to $390 million. General & Administrative (G&A) expenses surged 11.6% year over year to $125 million.

However, as a percentage of revenues, total operating expenses declined 260 bps to 28.9%. S&M expenses as a percentage of revenues decreased 60 bps year over year to 11.8%. As a percentage of revenues, R&D expenses decreased 190 bps year over year to 10.6%. G&A expenses as a percentage of revenues decreased 60 bps to 3.4%.

Consequently, SHOP reported an adjusted operating income of $760 million, up 29.9% year over year. Operating margin contracted 10 bps year over year to 20.7%

SHOP’s Balance Sheet Details

As of Dec. 31, 2025, Shopify had cash and cash equivalents (including marketable securities) worth $5.78 billion compared with $6.35 billion as of Sept. 30.

Free cash flow increased 17% year over year to $715 million. The free cash flow margin contracted 230 bps year over year to 19.5% in the reported quarter.

SHOP Offers Q1 Guidance

For the first quarter of 2026, Shopify expects revenues to grow at a low-30% rate on a year-over-year basis. 

Gross profit is anticipated to grow at a high-20% rate on a year-over-year basis. 

Shopify expects GAAP operating expense as a percentage of revenues to be in the 37-38% range. 

Free cash flow margin is expected to be in the low-to-mid teens, slightly below Q1 2025.

SHOP's Zacks Rank & Stocks to Consider

Shopify carries a Zacks Rank #3 (Hold). 

Micron Technology MU, MongoDB MDB, and MKS MKSI are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector.

Micron Technology shares have gained 329% in the past 12-month period. This Zacks Rank #1 (Strong Buy) company is scheduled to release second-quarter 2026 results on Mar. 19, 2026. You can see the complete list of today’s Zacks #1 Rank stocks here.

MongoDB shares have returned 24.4% in the past 12-month period. MDB is scheduled to release its fourth-quarter 2026 results on Mar. 2, 2026. The company sports a Zacks Rank #1.  
 
MKS shares have gained 149.5% in the past 12-month period. MKSI is set to report its fourth-quarter 2025 results on Feb. 17, 2026. The company currently sports a Zacks Rank #1.

 

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