Shopify(SHOP) The Motley Fool·2025-05-15 08:40Core Viewpoint - Shopify's stock has experienced a significant rally following positive news regarding U.S.-China trade tensions, despite a dip after its Q1 earnings report. The stock is up over 80% year-over-year and has shown modest gains for the year [1]. Financial Performance - In Q1, Shopify's revenue increased by 27% year-over-year to 620 million and merchant solution revenue soaring 29% to 1.17 billion, with adjusted earnings per share climbing 29% to 0.43 [4][5]. - Gross merchandise volume (GMV) increased by 23% to $74.8 billion, marking the seventh consecutive quarter of GMV growth of 20% or more [4][5]. Growth Drivers - Business-to-business GMV grew by 109% year-over-year, while international GMV growth was 31%, and cross-border growth reached 15% [5]. - Shop Pay, Shopify's online checkout solution, saw GMV increase by 57%, expanding to 39 countries [6]. - The Shop App, which aggregates products from Shopify stores, experienced a GMV surge of 94% [6]. Customer Expansion - Shopify is successfully moving upmarket, adding notable enterprise customers such as Purple, Lilly Pulitzer, and Birkenstock, along with new Tapestry brands [7][12]. Future Outlook - Management forecasts Q2 revenue growth in the mid-20s percentage range, with gross profits expected to grow at a high-teens percentage rate, which is above analyst consensus for revenue but below for gross profit [8]. - The company is adapting to tariffs with new features, including a duty-inclusive tool and an AI tariff solution [9]. Investment Considerations - Shopify's strong growth and customer acquisition are reflected in its subscription revenue growth and Shop Pay adoption [11]. - The stock is currently trading at approximately 25.5 times projected gross profits, which may be considered high compared to similar companies like Toast, which trades at a gross profit multiple of 14 [13].