Shopify (SHOP) Q2 Revenue Jumps 31%

Core Viewpoint - Shopify reported strong financial results for Q2 2025, with significant revenue growth and robust gross merchandise volume, despite rising operating expenses and loan loss provisions [1][5][12]. Financial Performance - GAAP revenue reached $2,680 million, exceeding analyst expectations by 5.15% [1][5]. - Year-over-year revenue growth was 31.1%, up from $2,045 million in Q2 2024 [2][5]. - Gross profit was $1,302 million, reflecting a 24.6% increase from the previous year [2][7]. - Operating income increased to $291 million, up from $241 million in Q2 2024 [2][7]. - Free cash flow was $422 million, maintaining a margin of 16% year-over-year [2][7]. Gross Merchandise Volume (GMV) - GMV climbed 31% year-over-year to $87,837 million, with European GMV rising 42% on a constant currency basis [6][8]. Operating Expenses and Loss Provisions - Operating expenses rose 26% year-over-year to $1,011 million [8]. - Provision for transaction and loan losses increased from $42 million in Q2 2024 to $80 million in Q2 2025 [8]. Business Model and Success Drivers - Shopify's platform supports millions of merchants globally, focusing on scalability, ecosystem expansion, and AI integration [3][4]. - Key success factors include platform reliability, merchant solutions, and continuous product innovation [4]. Product Innovation and Acquisitions - The company introduced AI-driven features like Shopify Magic and Sidekick to enhance merchant efficiency [9]. - Shopify acquired Vantage Discovery to improve product search capabilities [9]. Future Outlook - Management expects GAAP revenue growth in the mid-to-high twenties percent range for Q3 2025 [12]. - Operating expenses are projected to be 38-39% of revenue, with free cash flow margin anticipated in the mid-to-high teens [12]. Areas to Monitor - Investors should watch for updates on merchant acquisition rates, international growth, and expense trends [13]. - The increase in transaction and loan losses is a key area for risk monitoring [13].