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SHOPIFY INC. (SHOP) Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered broad-based outperformance: revenue up 32% to $2.84B, GMV up 32% to $92.0B, and free cash flow margin at 18% (nine consecutive quarters of double-digit FCF margins). Merchant Solutions grew 38% and Subscription Solutions 15% .
  • Against S&P Global consensus, Shopify posted a revenue beat (+$84M), EPS roughly in line, and strong EBITDA/EBIT beats; gross margin ran slightly below consensus due to mix and payments penetration. Bolded beats: Revenue, EBITDA, EBIT; margin miss modest. Values marked with * from S&P Global.
  • Q4 2025 guidance: revenue growth mid-to-high 20s YoY, gross profit dollars low-to-mid 20s, OpEx 30–31% of revenue, SBC $130M, FCF margin slightly above Q3; CFO flagged elevated payments losses and tax receivables timing as temporary drags, with losses already trending down .
  • Strategic catalysts: accelerating international and enterprise momentum (ELC partnership), AI stack adoption (Sidekick scale; agentic commerce integrations incl. ChatGPT and Microsoft Copilot), rising payments penetration (65% GPV) and Shop Pay GMV (+67% YoY to $29B) .

What Went Well and What Went Wrong

What Went Well

  • Payments scale and conversion drivers: GPV penetration reached 65%; Shop Pay GMV rose 67% YoY to $29B, reinforcing checkout leadership and conversion lift .
  • International acceleration and enterprise wins: International GMV grew 41% YoY (Europe standout); ELC strategic partnership underscores enterprise traction and brand mix diversification .
  • Operating leverage and cash generation: OpEx down to 37% of revenue from 39% last year, free cash flow of $507M at 18% margin; CFO emphasized disciplined headcount and AI-enabled productivity .
    • Quote: “We build. We ship. We grow... GMV up 32%, revenue up 32%, free cash flow margin at 18%.” — Harley Finkelstein .

What Went Wrong

  • Gross margin compression: Overall gross margin fell to 48.9% (vs. 51.7% LY), driven by mix toward Merchant Solutions and higher payments penetration, plus PayPal partnership accounting and AI/hosting costs .
  • Elevated transaction/loan losses: Reached 5% of revenue due to onboarding experiments and capital growth, though trending lower into Q4 per CFO .
  • MRR growth headwinds: Q3 MRR up 10% YoY with Plus at 35%, but standard MRR is lapping prior trial changes; comparability noise persists through Q1’26 .

Financial Results

Revenue vs Estimates and Prior Periods

MetricQ1 2025Q2 2025Q3 2025
Revenue Actual ($USD Millions)$2,360 $2,680 $2,844
Revenue Consensus ($USD Millions)*$2,332*$2,547*$2,760*
YoY Revenue Growth (%)27% 31% 32%

Values marked with * retrieved from S&P Global.

EPS vs Estimates

MetricQ1 2025Q2 2025Q3 2025
Primary EPS Actual ($USD)*$0.25*$0.35*$0.34*
Primary EPS Consensus ($USD)*$0.262*$0.287*$0.338*

Values marked with * retrieved from S&P Global.

Gross Margin vs Estimates

MetricQ1 2025Q2 2025Q3 2025
Gross Margin Actual (%)49.53%*48.6% 48.9%
Gross Margin Consensus (%) *50.18%*49.08%*49.35%*

Values marked with * retrieved from S&P Global.

Operating Income (EBIT) vs Estimates

MetricQ1 2025Q2 2025Q3 2025
Operating Income (EBIT) Actual ($USD Millions)$203 $291 $343
EBIT Consensus ($USD Millions)*$311*$365*$433*

Values marked with * retrieved from S&P Global.

Free Cash Flow

MetricQ1 2025Q2 2025Q3 2025
Free Cash Flow ($USD Millions)$363 $422 $507
Free Cash Flow Margin (%)15% 16% 18%

Segment Revenue Breakdown

MetricQ1 2025Q2 2025Q3 2025
Subscription Solutions Revenue ($USD Millions)$620 $656 $699
Merchant Solutions Revenue ($USD Millions)$1,740 $2,024 $2,145
Gross Profit ($USD Millions)$1,169 $1,302 $1,391

KPIs

KPIQ1 2025Q2 2025Q3 2025
GMV ($USD Millions)$74,750 $87,837 $92,013
MRR ($USD Millions)$182 $185 $193
Shopify Payments GPV Penetration (%)N/A64% 65%
Shop Pay GMV ($USD Millions)N/A$27,000 $29,000
Offline GMV Growth (% YoY)N/A29% 31%
B2B GMV Growth (% YoY)N/A101% 98%
Cross-Border GMV (% total)N/A15% 15%
International GMV Growth (% YoY)31% 42% (constant currency) 41%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue Growth (YoY)Q4 2025N/AMid-to-high 20sNew guide
Gross Profit Dollars Growth (YoY)Q4 2025N/ALow-to-mid 20sNew guide
Operating Expenses (% of Revenue)Q4 2025N/A30–31%New guide
Stock-based Compensation ($USD Millions)Q4 2025N/A$130New guide
Free Cash Flow MarginQ4 2025N/ASlightly above Q3New guide
Revenue Growth (YoY)Q3 2025Mid-to-high 20s Actual 32%Beat vs guide
Gross Profit Dollars Growth (YoY)Q3 2025Low 20s Actual +24%Slightly above
Operating Expenses (% of Revenue)Q3 202538–39% Actual 37%Better leverage
Free Cash Flow MarginQ3 2025Mid-to-high teens Actual 18%Beat

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Agentic CommerceLaunched Catalog, CheckoutKit; Copilot using CheckoutKit; Shop app AI enhancements Deep partnerships (ChatGPT, Perplexity), Commerce for Agents (Catalog, Universal Cart, CheckoutKit) rollout and scale Scaling and partner breadth expanding
Sidekick AdoptionAI store builder; ongoing merchant use 750k shops first-time in Q3; ~100M conversations; 8M in Oct Rapid adoption and daily usage
Payments Penetration64% GPV; Shop Pay GMV $27B (+65% YoY) 65% GPV; Shop Pay GMV $29B (+67% YoY) Continued penetration and growth
International ExpansionEurope GMV up 42% CC; product rollouts (Payments, Capital, installments) International GMV up 41%; Europe gains; revenue mix 21% from Europe Sustained acceleration, Europe contribution rising
Tariffs/MacroNo pull-forward; cross-border stable at 15%; de minimis impact limited Conditions similar; minor pricing uptick less than Q2; US inbound/outbound steady; cross-border 15% Stable; monitoring
Offline POSOffline GMV +29% Offline GMV +31%; notable retail-first brands onboard Strengthening
B2BB2B GMV +101% B2B GMV +98%; broad cohort strength High growth, slight deceleration
Enterprise WinsCanada Goose, Starbucks, Burton; SI-led momentum Estee Lauder partnership; many global brands going live Pipeline building; land-and-expand
Advertising/CampaignsScaling risk-free ads across channels; early ROI 4x YoY adoption; 9x YoY budget commitments; AI ranking improvements Early traction, product improving
Fulfillment/CarriersExpanded Payments to more countries; multi-entity support Added fulfillment partners and DDP options (DHL, Amazon MCF, etc.) Optionality expanding

Management Commentary

  • “We build. We ship. We grow… delivering consistent growth and profitability, quarter after quarter.” — Harley Finkelstein .
  • “Operating expenses were 37% of revenue… discipline on headcount… productivity rising through automation and AI.” — Jeff Hoffmeister .
  • “Shopify Payments reached 65% penetration… Shop Pay processed ~$29B, up ~67% YoY.” — Harley Finkelstein .
  • “International GMV grew 41%… Europe’s market share continues to gain.” — Harley Finkelstein .
  • “We expect Q4 FCF margin slightly above Q3… losses already trending back towards historical levels.” — Jeff Hoffmeister .

Q&A Highlights

  • AI channel ramp: Traffic from AI to stores up ~7x since January; orders attributed to AI searches up ~11x; management views agentic commerce as incremental GMV over time with monetization via GMV/payments .
  • Checkout prioritization: Shop Pay’s growing ubiquity positions it favorably in accelerated checkout flows; deep agent integrations make Shopify a default commerce partner .
  • Marketing efficiency/MRR: Performance marketing models improved; standard MRR showed first clean sequential growth (+4% QoQ) after trial changes; YoY MRR headwinds persist until Q1’26 .
  • Enterprise attach/land-expand: Large brands increasingly start with checkout/payments, then expand to full stack; attach rates expected to rise over multi-year cycles .
  • Tariffs/macro: Minimal changes in cross-border routes; slight downtick in price increases vs Q2; US demand steady; de minimis elimination impact limited .

Estimates Context

  • Q3 2025 vs S&P Global consensus:
    • Revenue: $2.844B vs $2.760B — bold beat* .
    • EPS: $0.34 vs $0.338 — in line/slight beat*.
    • EBITDA: $502M vs $448M — bold beat*.
    • EBIT: $494M vs $433M — bold beat*.
    • Gross Margin: 48.91% vs 49.35% — slight miss*.
  • Drivers: Strong GMV (North America outperformance), payments penetration (offsets margins initially), enterprise/international strength, and disciplined OpEx leverage .
  • Estimate implications: Raise revenue/EBITDA/EBIT trajectories; maintain cautious gross margin assumptions given mix/payments and PayPal partnership effects; reflect Q4 OpEx leverage and slightly higher FCF margin amid temporary payments losses and tax receivable timing .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Momentum durable: Three consecutive quarters of accelerating revenue growth and consistent double-digit FCF margins; OpEx leverage improving (37% of revenue) .
  • Payments and checkout are core growth engines: Rising GPV penetration and Shop Pay scale drive GMV and monetization, with initial margin drag offset by broader product attach over time .
  • International/enterprise mix de-risks: Europe strength and marquee enterprise wins (ELC) broaden growth vectors and resilience; expect continued land-and-expand .
  • AI positioning is a differentiator: Sidekick adoption and agentic commerce integrations (ChatGPT, Copilot) enhance merchant productivity and open new demand channels .
  • Near-term model: Bake in Q4 mid-to-high 20s revenue growth, OpEx at 30–31%, FCF margin slightly above Q3, with payments losses normalizing and modest FX tailwinds .
  • Watch margins: Gross margin likely constrained by mix/payments and partnership accounting; focus on EBIT/FCF as Shopify scales efficiently .
  • Balance sheet optionality: Convert settled in cash post-quarter; pro forma $6B cash/marketable securities and no debt supports investment and shareholder dilution discipline .

Additional references and documents read:

  • Q3 2025 8-K earnings press release and exhibits .
  • Q3 2025 earnings call transcript (full) –.
  • Q2 2025 8-K and earnings call – –.
  • Q1 2025 8-K –.
  • Press releases: Estée Lauder partnership ; Liquid AI partnership .

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