Shopify Q3 Earnings Meet Estimates, Revenues Increase Y/Y

Core Insights - Shopify reported third-quarter 2025 non-GAAP earnings of 34 cents per share, matching the Zacks Consensus Estimate, but a decline of 5.6% year over year. Revenues reached $2.84 billion, exceeding estimates by 3.34% and showing a year-over-year increase of 31.5% [1][10]. Revenue Performance - Gross Merchandise Volume (GMV) for the third quarter was $92.01 billion, reflecting a 32% year-over-year increase. Offline GMV rose by 31%, while B2B GMV surged by 98%. International GMV grew by 41%, with Europe experiencing a 49% increase year over year [2][10]. - Merchant solutions revenues were $2.15 billion, accounting for 75.4% of total revenues, and increased by 38.2% year over year, driven by strong GMV and Shopify payments penetration [3][10]. - Subscription solutions revenues totaled $699 million, representing 24.6% of total revenues, with a year-over-year growth of 14.6% [4]. Profitability Metrics - Gross profit for the third quarter was $1.39 billion, up 24.4% year over year, but gross margin contracted by 280 basis points to 48.9% due to a shift from higher-margin Subscription Solutions to lower-margin Merchant Solutions [6][7]. - Adjusted operating income was reported at $465 million, a 15.7% increase year over year, with an operating margin of 16.4%, down 220 basis points from the previous year [9]. Operating Expenses - Total operating expenses reached $1.05 billion, a 25.5% increase year over year. Sales & Marketing expenses rose by 24% to $410 million, while Research & Development expenses increased by 13% to $375 million [8][9]. Cash Flow and Balance Sheet - As of September 30, 2025, cash and cash equivalents totaled $6.35 billion, up from $5.82 billion as of June 30. Free cash flow increased by 20.4% year over year to $507 million, with a free cash flow margin of 18% [11]. Future Guidance - For the fourth quarter of 2025, Shopify anticipates revenue growth in the mid-to-high twenties percentage range year over year, with gross profit expected to grow at a low-to-mid-twenties percentage rate [12].