SHOPIFY INC. (SHOP) Q1 2025 Earnings Summary

Executive Summary

Q1 delivered at-scale growth with profitability: revenue $2.36B (+27% YoY), GMV $74.8B (+23% YoY), operating income $203M, and free cash flow $363M (15% margin) .
Versus S&P Global consensus, revenue beat, while EPS and EBITDA were modest misses: Revenue $2.36B vs $2.33B estimate*; EPS $0.25 vs $0.262 estimate*; EBITDA $286M vs $337M estimate*. Mix shift to payments (64% GPV penetration) and PayPal wallet accounting weighed on profitability despite strong top-line momentum .
Q2 guide: revenue growth mid‑20s YoY, gross profit dollar growth high‑teens YoY, OpEx 39–40% of revenue, SBC ~$120M, FCF margin mid‑teens (similar to Q1) .
Strategic positives: Shop Pay GMV up 57% to >$22B, offline GMV +23%, B2B GMV +109% YoY, international GMV +31% YoY; enterprise traction continues . Catalysts include Affirm-powered Shop Pay Installments international rollout and renewed Global‑e multi‑year agreement; Shopify also added to the Nasdaq‑100 in May .

What Went Well and What Went Wrong

What Went Well

Durable growth with cash generation: revenue +27% to $2.36B, GMV +23% to $74.8B, FCF $363M (15% margin). “We are delivering both growth and profitability at scale” — President Harley Finkelstein .
Product/commerce flywheel: payments GPV penetration hit 64%; Shop Pay GMV +57% to >$22B; payments launched in 16 new markets; Shop App native GMV +94% YoY .
Broad-based demand: offline GMV +23%, B2B GMV +109%, international GMV +31% with Europe strength; management emphasized enterprise wins and pipeline resilience despite tariff uncertainty .

What Went Wrong

Profitability vs consensus: EPS ($0.25) and EBITDA ($286M) trailed S&P Global estimates ($0.262 and $337M), driven by payment mix (lower margin) and PayPal wallet accounting headwinds* .
GAAP optics: net other expense (incl. equity marks) of $(885)M drove GAAP net loss $(682)M; management highlighted non‑core nature of equity investment marks .
Margin mix headwinds to persist near term: CFO reiterated gross profit dollars to grow slower than revenue in Q2 given payments strength, PayPal accounting, and longer paid trials pressuring Subscription growth .

Financial Results

Headline metrics vs prior periods

Metric (USD)	Q1 2024	Q4 2024	Q1 2025
Revenue ($B)	$1.861	$2.812	$2.360
Gross Profit ($B)	$0.957	$1.352	$1.169
Operating Income ($M)	$86	$465	$203
GAAP Net Income (Loss) ($M)	$(273)	$1,293	$(682)
Free Cash Flow ($M)	$232	$611	$363
Free Cash Flow Margin (%)	12%	22%	15%
GMV ($B)	$60.855	$94.460	$74.750
MRR ($M)	$151	$178	$182

Segment revenue breakdown

Revenue ($M)	Q1 2024	Q4 2024	Q1 2025
Subscription Solutions	$511	$666	$620
Merchant Solutions	$1,350	$2,146	$1,740
Total	$1,861	$2,812	$2,360

KPIs and operating mix

KPI	Q3 2024	Q4 2024	Q1 2025
Payments GPV Penetration (%)	62%	64%	64%
Shop Pay GMV ($B)	$17 (+42% YoY)	$27 (+50% YoY)	>$22 (+57% YoY)
Offline GMV Growth YoY (%)	27%	26%	23%
B2B GMV Growth YoY (%)	145%	132%	109%
International GMV Growth YoY (%)	>30%	33% (outside NA)	31%
FCF Margin (%)	19%	22%	15%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Growth YoY	Q2 2025	—	Mid‑20s %	New
Gross Profit Dollar Growth YoY	Q2 2025	—	High‑teens %	New
OpEx as % of Revenue	Q2 2025	—	39%–40%	New
Stock‑Based Compensation	Q2 2025	—	~$120M	New
Free Cash Flow Margin	Q2 2025	—	Mid‑teens (similar to Q1)	New
Revenue Growth YoY	Q1 2025	Mid‑20s %	Actual +27%	Achieved/Above

Note: Management reiterated in Q2 that gross profit dollars will grow slower than revenue due to mix (payments/PayPal) and trial dynamics .

Earnings Call Themes & Trends

Topic	Q3 2024	Q4 2024	Q1 2025	Trend
AI/Technology	AI features across Inbox/Search; new CTO with AI pedigree	Continued AI adoption; efficiency and product velocity	“AI first” operating mantra; Sidekick re-architecture; internal MCP servers to scale decisioning	Increasing emphasis, internal and merchant-facing
Payments/Shop Pay	GPV 62%; Shop Pay $17B (+42%)	GPV 64%; Shop Pay $27B (+50%)	GPV 64%; Shop Pay >$22B (+57%)	Penetration steady; Shop Pay scaling
International	GMV >30% growth; EU strength	Non‑NA GMV +33%; enterprise logos	International GMV +31%; Europe +36% led by UK/NL/DE	Sustained outperformance ex‑NA
Offline (POS)	Offline GMV +27%	+26%; enterprise migrations	+23%; multi-location wins; same-day delivery pilots	Steady growth, larger logos
B2B	+145% GMV; expanding verticals	+132% GMV; record month	+109% GMV; continued momentum	High growth, small base
Tariffs/Macro	Monitoring, resilient cohorts	Monitoring; not core driver	De minimis/China 1% of GMV; limited impact to date; Q2 guide contemplates headwinds/FX tailwinds	Managed via product/tools
Partnerships	PayPal wallet integration/recognition dynamics	YouTube/Roblox/Oracle ecosystem	Affirm Shop Pay Installments global rollout; renewed 3‑yr Global‑e deal	Strengthening commerce network

Management Commentary

“Our Q1 results confirm two clear facts. First, we are delivering both growth and profitability at scale. Second, businesses perform better on Shopify” — Harley Finkelstein .
“Payments GMV penetration hitting 64%... Shop Pay GMV was up 57%... over $22 billion in GMV” — Harley Finkelstein .
“GMV in Q1 was $74.8 billion, up 23%... Europe grew 36%... offline growth of 23%” — CFO Jeff Hoffmeister .
“We expect Q2 revenue growth in the mid‑20s... gross profit dollars to grow in the high teens... OpEx 39%–40%... FCF margin in the mid‑teens” — CFO .
On gross margins: lower non‑cash revenues and PayPal wallet accounting are headwinds; payments mix from Plus/credit cards also weighs; other Merchant Solutions (e.g., Tax, FX) are accretive .

Q&A Highlights

Tariffs/de minimis: Only ~1% of overall GMV tied to China de minimis; too early for broad pricing effects; Q2 guide contemplates potential macro/trade headwinds (offset by FX) .
Enterprise adoption: Legacy/custom stacks are “brittle”; enterprise brands increasingly adopt components (Shop Pay/Checkout) then expand to full suite; pipeline remains strong .
Gross margin outlook: Subscription margin stable ~80%±; Merchant margins pressured by PayPal accounting and payments mix; non‑cash high‑margin partnership revenue roll‑offs also a factor .
Marketing/OpEx: Returns‑based marketing enables rapid flex up/down; AI boosts productivity, supporting operating leverage while investing for growth .
POS differentiation: Unified commerce, rapid feature velocity, and SI ecosystem drive multi‑location wins vs incumbents; offline GMV +23% .

Estimates Context

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($B) – Actual vs Consensus	$1.861 vs $1.847*	$2.812 vs $2.729*	$2.360 vs $2.332*
Primary EPS ($) – Actual vs Consensus	$0.20 vs $0.170*	$0.44 vs $0.432*	$0.25 vs $0.262*
EBITDA ($M) – Actual vs Consensus	$147 vs $193*	$549 vs $566*	$286 vs $337*
# of EPS Estimates	35*	34*	32*
# of Revenue Estimates	36*	41*	41*

Values marked with * retrieved from S&P Global.

Implications: Revenue outperformance continued, but mix (payments/PayPal) and investment cadence led to slight EPS/EBITDA under‑delivery in Q1. With Q2 gross profit dollars guided below revenue growth, models may tilt toward higher revenue/GPV but lower blended margins near term .

Key Takeaways for Investors

Growth at scale intact: GMV +23% and revenue +27% with seven consecutive quarters of GMV >20% and sustained double‑digit FCF margins; mid‑teens FCF margin reiterated for Q2 .
Mix is the margin debate: Payments penetration (64%) and PayPal wallet accounting support top line but compress margins vs consensus; management is prioritizing durable growth over near‑term FCF expansion .
Multi‑engine momentum: Offline (+23%), B2B (+109%), and international (+31%) diversify growth vectors, while Shop Pay’s scale (+57% to >$22B GMV) deepens monetization .
Enterprise runway: Component‑led land‑and‑expand motion (Shop Pay/Checkout) is converting to full‑suite migrations; SIs/partners (Global‑e, PayPal, Affirm) enhance attach and TCO value .
Tariff risk manageable so far: Limited direct exposure to de minimis; Shopify is shipping compliance tools (duty calc, tariffguide.ai, DDP labels) to blunt disruption .
Near‑term trading setup: Revenue resilience vs consensus with margin mix headwinds likely keeps the focus on GPV/payments attach vs gross margin trajectory and Q2 execution on guide* .
Medium‑term thesis: Unified commerce platform, global expansion, and AI‑enabled efficiency support sustained share gains and profitable growth, with optionality from Shop Pay and enterprise adoption .

Appendix: Additional Context

Affirm/Shopify to expand Shop Pay Installments internationally (Canada live; U.K. this summer; plans for AU/Western Europe) .
Renewed 3‑year strategic partnership with Global‑e for Managed Markets and preferred 3P MoR access/features .
Shopify added to Nasdaq‑100 effective May 19, 2025 .