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- GMV reached $92 bln, up 32% yr/yr (30% in cc), marking the highest growth rate since 2021. Growth was broad-based across merchant sizes, with notable strength in merchants generating over $25 mln annually.
- International GMV surged 41%, particularly in Europe (49% growth), highlighting SHOP’s global traction.
- Monthly recurring revenue (MRR) rose 10%, with 35% from higher-priced Plus plans, though yr/yr comparisons were impacted by last year’s one-month paid trials and Plus pricing changes.
- Free cash flow margin hit 18% ($507 mln), up from 16% in Q2 and 15% in Q1, reflecting disciplined cost management.
- SHOP’s AI initiatives, including Sidekick (used by 750,000 shops in Q3) and agentic commerce tools like Catalog and Checkout Kit, are gaining traction. Partnerships with ChatGPT, Microsoft Copilot, and Perplexity position SHOP at the forefront of conversational commerce.
- The company expects Q4 revenue growth in the mid-to-high 20s, a step down from Q3’s 32%, reflecting a tough comparison to 4Q24’s high growth and lapping the PayPal (PYPL) partnership expansion.
- Gross profit growth for Q4 is projected in the low-to-mid 20s, with free cash flow margin slightly above Q3’s 18%, tempered by elevated payment losses and tax receivable timing.
Briefing.com Analyst Insight:
SHOP’s Q3 results underscore its ability to balance growth and profitability, with 32% GMV and revenue growth paired with an 18% free cash flow margin. The company’s AI-driven tools and international expansion are clear strengths, positioning it to capture the evolving commerce landscape. However, the stock’s post-earnings decline likely reflects investor caution around Q4’s softer guidance and ongoing tariff concerns, which have prompted modest price increases by merchants but no significant GMV impact yet. While SHOP’s diversified merchant base and enterprise wins (e.g., Estée Lauder, e.l.f. Cosmetics) bolster its resilience, the high valuation (P/S of roughly 20x) and potential macro headwinds suggest caution.
