Key Takeaways Shopify's GMV and revenues rose 32% in Q3 2025, with growth accelerating across consecutive quarters. An expanding merchant base and AI-powered tools are fueling performance and driving free cash flow gains. SHOP's valuation remains a concern, trading at a premium P/S ratio well above peers like AMZN and WIX.Shopify (SHOP) shares have returned 41.6% in the trailing 12-month period, outperforming the broader Zacks Computer and Technology sector’s rise of 20.4%. The outperformance can be attribu ...

Shopify Inc’s (NASDAQ:SHOP) latest Winter 2026 Edition showcases the company's continued push to strengthen its platform across artificial intelligence, checkout, marketing, and merchant tools.JP Morgan analyst Reginald L. Smith maintained an Overweight rating on Shopify.Also Read: Shopify’s ‘Standout’ Growth And ‘Major Untapped’ Ad Opportunity Impress Wall StreetAdvances in AI and Sidekick IntegrationSmith said Shopify's Winter 2026 Edition shows clear progress across AI, checkout, marketing, and platform ...

Shopify (NYSE:SHOP) FY Conference December 09, 2025 07:00 PM ET Company ParticipantsKeith Weiss - Managing DirectorJeff Hoffmeister - CFOKeith WeissAll right, so we'll get kicked off here. Thank you, everyone, for joining us. My name is Keith Weiss. I run the US Software Equity Research Franchise here at Morgan Stanley, and I'm very pleased to have with us from Shopify CFO Jeff Hoffmeister. Jeff, thank you for joining us.Jeff HoffmeisterGreat, of course. Good to see you, Keith.Keith WeissSo, it's a super ex ...

The forecasters. The predictors say that this will be another record shopping season in aggregate. The data are available to you. What are you seeing. What what are the trends.Yeah, you know, I heard what Spencer said there. I mean, look, Friday was another record breaking Black Friday weekend. We saw about $6.2% billion in sales for Black Friday.That's up about 25% from last year. We saw peak sales of $5.1% million per minute on Friday. That happened around noon on Friday.That's up from 4.6% million last y ...

Core Insights - Shopify's accelerating GMV momentum is significantly boosting its Merchant Solutions, which is its largest revenue driver, with a 32% GMV increase indicating strong transaction growth [1][4] Merchant Solutions Performance - Merchant Solutions is thriving as Shopify Payments penetration reached 65% in Q3 2025, with Shop Pay also gaining traction among both small merchants and global brands [2] - The international GMV growth, particularly in Europe, is enhancing Shopify's global presence, supported by improved payment and fulfillment options [3][10] - Shopify's product innovation, including AI-powered tools and expanded logistics partnerships, is contributing to sustained GMV growth, with projections of 28.78% revenue growth in 2025 and 21.93% in 2026 [4] Competitive Landscape - Shopify is facing increasing competition from Commerce.com and Wix.com, both of which are rapidly advancing in the e-commerce sector [5][6] - Commerce.com is appealing to large brands with its enterprise-focused solutions and partnerships with major companies like PayPal and Microsoft [6] - Wix.com has transformed into a comprehensive e-commerce platform, enhancing its competitiveness through affordability and AI integrations [7] Stock Performance and Valuation - Shopify's stock has increased by 47.9% year-to-date, outperforming the broader technology sector but lagging behind the internet services industry, which has risen by 63.2% [8] - The stock is considered overvalued with a forward price/sales ratio of 14.76X compared to the sector's 6.61X, and it holds a Value Score of F [11] - The Zacks Consensus Estimate for 2025 earnings is $1.46 per share, indicating a 12.31% year-over-year growth [14]

Core Insights - Shopify shares have appreciated 31.3% in the past six months, outperforming the Zacks Computer and Technology sector's growth of 28.5% [1][10] - The question arises whether investors should buy, hold, or sell the stock at present [1] Merchant Base and Growth - Shopify's expanding merchant base is a critical pillar for long-term growth, with GMV increasing by approximately 32% year over year in Q3 [2] - Monthly recurring revenues reached a new record, indicating growth in paid subscriptions and higher ARPU as more merchants adopt advanced plans [2] - The quality of Shopify's merchant ecosystem is strengthening, with significant GMV contributions from long-term merchants, highlighting platform stickiness and retention [3] - International expansion is contributing to GMV growth, particularly in Europe, and deeper adoption of Shopify Payments and AI tools is increasing wallet share per merchant [4][5] Financial Performance - Shopify's free cash flow margin was 18% in Q3 2025, marking the ninth consecutive quarter of double-digit performance [6] - The free cash flow margin for the first nine months of the year held at 16%, showcasing consistent cash-generating capabilities [6] - Management expects the fourth-quarter free cash flow margin to exceed third-quarter levels, indicating confidence in sustaining strong cash flows [8] Competitive Landscape - Shopify faces intense competition from Amazon, Adobe, and MercadoLibre, which are expanding their platforms and pressuring Shopify's market position [9][10] - Amazon is a significant threat with its "Buy with Prime" initiative and enhanced AI shopping experience [9] - Adobe Commerce is preferred by large businesses needing customization, posing a challenge in the enterprise segment [11] - MercadoLibre is gaining traction in Latin America with strong GMV growth and a seamless ecosystem [12] Valuation and Market Position - Shopify's forward price-to-sales ratio is 14.95X, significantly higher than the Zacks Internet Services industry's average of 7.08X, indicating overvaluation [16] - Shares are trading below the 50-day moving average, suggesting a bearish trend and limited near-term upside [20] Conclusion - Shopify benefits from a growing and diversified merchant base and strong free cash flow, supporting long-term expansion [22] - However, rising competition and high valuation raise concerns for investors despite solid fundamentals [22] - The recommendation is to hold the stock at present [23]

Core Viewpoint - The Supreme Court is set to hear arguments regarding the legality of President Trump's tariffs, which could significantly impact millions of businesses across the nation [1][2]. Company Insights - Shopify has reported a strong performance with nearly $90 billion in Gross Merchandise Volume (GMV), reflecting a 32% increase for the quarter [5]. - The company is focused on ensuring that its merchants are well-prepared for potential changes resulting from the Supreme Court's decision regarding tariffs [6][10]. - Shopify's AI tool, Sidekick, has been adopted by approximately 750,000 stores, facilitating better decision-making for merchants [12][14]. Industry Trends - Consumer confidence remains resilient, with shoppers continuing to make purchases, although they are becoming more selective about the brands they support [4][27]. - The upcoming holiday shopping season is expected to be significant, with merchants already preparing promotions and deals [10][11]. - The e-commerce market is evolving, with Shopify capturing about 12% of the U.S. e-commerce market, indicating its substantial role in the industry [9].

Financial Data and Key Metrics Changes - Q3 delivered 32% GMV growth, 32% revenue growth, and an 18% free cash flow margin, consistent with previous quarters [8][36] - Revenue grew 27% in Q1, 31% in Q2, and 32% in Q3, with free cash flow margin holding steady at 15% in Q1, 16% in Q2, and 18% in Q3 [8][36] - Q3 gross profit grew 24%, with gross margin at 48.9%, down from 51.7% in the prior year [39][41] Business Line Data and Key Metrics Changes - Merchant solutions revenue increased 38%, driven by strong GMV performance, while subscription solutions revenue grew 15% [37][39] - ShopPay processed $29 billion in GMV in Q3, up 67% year-over-year, indicating strong adoption [18][58] - B2B GMV was up 98% year-over-year, with significant growth across various verticals [29][36] Market Data and Key Metrics Changes - International GMV grew 41% in Q3, with Europe showing a 49% increase [21][35] - Revenue from Europe accounted for 21% of overall revenue in Q3, up from less than 18% two years ago [21] - Offline GMV increased 31%, reflecting the growing importance of retail-first brands [28][36] Company Strategy and Development Direction - The company is focused on leveraging AI to enhance merchant capabilities and streamline operations [10][14] - International expansion and the development of offline and B2B channels are key strategic priorities [5][22] - The company aims to simplify the commerce experience for merchants, enhancing their ability to compete globally [19][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to changing market conditions and technological advancements [4][6] - The outlook for Q4 anticipates revenue growth in the mid- to high-20s% year-over-year, with expectations for continued strong performance [46][48] - Management highlighted the importance of maintaining a balance between growth and profitability, with a focus on long-term merchant success [44][49] Other Important Information - The company has maintained a flat to down headcount for over two years, focusing on productivity and efficiency [42][43] - The partnership with OpenAI and other AI leaders is expected to enhance the shopping experience and drive traffic to Shopify stores [53][54] Q&A Session Summary Question: Integration with OpenAI and its impact on transactions - Management noted a significant increase in AI-driven traffic and orders attributed to AI searches, indicating early success in this area [53][54] Question: Instant checkout solutions and their prioritization - Management emphasized the popularity of ShopPay and its role as a leading accelerated checkout solution, positioning it favorably among consumers [58][59] Question: Marketing investments and their efficiency - Management confirmed that marketing investments are driving merchant adoption effectively, with a focus on maintaining tight guardrails for spending [63][64] Question: Success in the enterprise business - Management highlighted the strong pipeline and success in attracting large brands, indicating a broad spectrum of verticals being targeted [68][69]

Financial Data and Key Metrics Changes - Q3 delivered 32% GMV growth, 32% revenue growth, and an 18% free cash flow margin, consistent with previous quarters [8][36] - Revenue grew 27% in Q1, 31% in Q2, and 32% in Q3, with free cash flow margin holding steady at 15% in Q1, 16% in Q2, and 18% in Q3 [8][36] - Q3 gross profit grew 24%, with gross margin at 48.9%, down from 51.7% in the prior year [39][41] Business Line Data and Key Metrics Changes - Merchant solutions revenue increased 38%, driven by strong GMV performance, while subscription solutions revenue grew 15% [37][39] - ShopPay processed $29 billion in GMV in Q3, up 67% year-over-year, indicating strong adoption [18][58] - B2B GMV was up 98% year-over-year, with significant growth across various verticals [29][36] Market Data and Key Metrics Changes - International GMV grew 41% in Q3, with Europe showing a 49% increase [21][35] - Revenue from Europe accounted for 21% of overall revenue in Q3, up from less than 18% two years ago [21] - Offline GMV increased 31%, indicating strong performance in retail channels [28][35] Company Strategy and Development Direction - The company is focused on leveraging AI to enhance merchant capabilities and streamline operations [10][14] - Shopify aims to expand its international presence and enhance its product offerings to lower barriers for merchants [5][22] - The strategy includes building a robust ecosystem that supports various merchant types and channels, including B2B and offline sales [24][28] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of AI in transforming commerce and enhancing merchant success [10][30] - The company expects Q4 revenue growth to be in the mid- to high-20s% year-over-year, facing a high benchmark from the previous year [46] - Management remains optimistic about maintaining consistent growth and profitability while investing in future opportunities [44][48] Other Important Information - The company has a cash balance of $6 billion and no debt following the settlement of a convertible note [45] - Operating expenses were $1 billion for the quarter, representing 37% of revenue, down from 45% in 2023 [42][43] - The company is seeing increased transaction and loan losses, primarily due to higher losses in the payments business [43] Q&A Session Summary Question: Integration with OpenAI and its impact - Management noted that AI-driven traffic to Shopify stores has increased 7x, with orders attributed to AI searches up 11x since January [53] Question: Instant checkout solutions prioritization - Management emphasized that ShopPay processed $29 billion in GMV in Q3, indicating its popularity among consumers [58] Question: Marketing investments and efficiency - Management confirmed that marketing investments are driving merchant adoption and are closely monitored for efficiency [63] Question: Success in the enterprise business - Management highlighted the strong pipeline in the enterprise segment, with notable brands migrating to Shopify [69]

Financial Data and Key Metrics Changes - Q3 delivered 32% GMV growth and 32% revenue growth, with an 18% free cash flow margin, consistent with previous quarters [10][60] - Revenue grew 27% in Q1, 31% in Q2, and 32% in Q3, while free cash flow margin increased from 15% in Q1 to 16% in Q2 and 18% in Q3 [10][11] - Gross profit grew 24%, with overall Q3 gross margin at 48.9%, down from 51.7% in the prior year [64][66] Business Line Data and Key Metrics Changes - Merchant Solutions revenue increased 38%, driven by GMV growth and increased penetration of Shopify Payments, which reached 65% [61] - Subscription Solutions revenue grew 15%, with MRR up 10% year over year, led by growth in Plus plans [62][63] - B2B GMV was up 98% year over year, with strong performance across various verticals [50][58] Market Data and Key Metrics Changes - International GMV grew 41% in Q3, with Europe accounting for 21% of overall revenue, up from less than 18% two years ago [36][37] - Offline GMV increased 31%, attracting more retail-first brands globally [48][58] - Cross-border GMV remained consistent at 15% of total GMV, with stable inbound and outbound demand [71] Company Strategy and Development Direction - The company is focusing on AI integration to enhance merchant capabilities and streamline operations, positioning itself as a leader in agentic commerce [8][27] - Continued international expansion and product enhancements are aimed at lowering barriers for merchants and capturing growth in new markets [6][36] - The strategy emphasizes building a robust ecosystem that supports merchants across various channels, including online, offline, and B2B [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain consistent growth and profitability while adapting to technological changes [9][51] - The upcoming holiday season is expected to leverage AI tools and infrastructure to enhance merchant performance [52][53] - Q4 revenue growth is projected to be in the mid to high 20s year over year, with expectations for continued strong performance in gross profit [72][74] Other Important Information - The company has maintained a disciplined approach to operating expenses, reducing them from 45% in 2023 to 37% in Q3 2025 [67] - Free cash flow for Q3 was $157 million, or 18% of revenue, slightly ahead of expectations [69] - The company has no debt and a cash balance of $6 billion following the settlement of a convertible note [70] Q&A Session Summary Question: Initial observations from OpenAI integration - AI-driven traffic to Shopify stores has increased sevenfold, with orders attributed to AI searches up elevenfold since January [78] Question: Instant checkout flow and accelerated checkout solutions - Shop Pay processed $29 billion in GMV in Q3, up 67% year on year, positioning it as the leading accelerated checkout option on Shopify [86] Question: Marketing investments and MRR efficiency - The company is focused on driving merchant growth through effective marketing investments, with a flexible approach to spending [92] Question: Success in the enterprise business - The enterprise segment is seeing significant interest from large brands, with a strong pipeline and successful go-to-market strategies [100]