Overview
Since the Report − 2.5%
Revenue grew 31.6% year over year, EPS beat the estimate by 4.3%; the stock fell 5.2% in its first reaction.
- RevenueQ3
- $3.74B
- ▲ 31.6% · 0.2% Below Estimate
- EPSAdjusted
- $0.49
- Estimate $0.47 · 4.3% Beat
Verdict
HOLDShopify grew third-quarter revenue 31.6% and beat the adjusted earnings estimate by 4.3%. The stock fell as much as 13% intraday after gross merchandise volume and subscription revenue came in slightly below estimates, and was down 5.2% as of 12:41 ET. The number to watch in the fourth quarter is whether GMV growth returns to 30%.
Close on Report DayNov 3
$148.13▼ 5.2%Report-Day Move
- Market Cap(Today)
- ≈ $186 B
- 1Y Return(At Report)
- − 14%
- P/E(At Today's Price · $1.75 · Trailing 12M)
- 82.5
- PEG(Next Year Estimate)
- 2.87
- Net Margin(Trailing 12M)
- 14.5%
Earnings Summary
In 30 Seconds- Revenue rose 31.6% to $3.74B, and adjusted earnings per share of $0.49 beat the estimate by 4.3%.
- GMV came in 0.8% and subscription revenue 1.7% below estimates, while fourth-quarter revenue guidance was in line.
- The stock fell as much as 13% intraday on the growth misses, and the decline narrowed to 5.2% as of 12:41 ET.
The Numbers
Gross Merchandise Volume (GMV)
$119.1B
▲ 29.5% 0.8% Below Estimate
Operating Income
$568M
▲ 66% · Estimate $524M · 8.4% Beat
Free Cash Flow
$816M
22% Margin · 18% a Year Ago
Stock Reaction
▼ 5.2%
Intraday, 12:41 ET; Update This Evening
Quarterly Revenue ($ Billion)
2.84
Q3 25 · $2.84 B
3.67
Q4 25 · $3.67 B · QoQ + 29.1%
3.17
Q1 26 · $3.17 B · QoQ − 13.7%
3.58
Q2 26 · $3.58 B · QoQ + 13.0%
3.74
Q3 26 · $3.74 B · QoQ + 4.4% · YoY + 31.6%
4.77–4.88
Q4 26E · 4.77–4.88 · QoQ + 29.1% · YoY + 31.5%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
- Q4 26E
Q4 2026 Company Guidance
- Revenue Growth (Q4)30% – 33%30%33%
Company: Low Thirties · Market Expectation 32.1% (LSEG)In Line ✓
- Gross Profit Growth (Q4)27% – 29%27%29%
Company: High Twenties · 25.2% in Q4 25 · 28% in Q3 262.8 Point Annual Acceleration ▲
- Operating Expenses / Revenue (Q4)29% – 30%29%30%
Midpoint 29.5% · 28.9% in Q4 25 · 32.4% in Q3 260.6 Point Annual Increase ▼
- Free Cash Flow Margin (Q4)19%
Company: Same As Q4 25 (19%) · 22% in Q3 26Flat
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±5.5% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Merchant Solutions$2.91 BShare 77.7%▲ 35.5% YoY
Includes Shopify Payments and payment services
- Subscription Solutions$836 MShare 22.3%▲ 19.6% YoY
Key Metrics
Monthly Recurring Revenue (MRR)
$230 M
▲ 19.2% YoYPress Release
Shopify Payments Penetration
68.0%
10-Q
Shopify Payments Volume
$81.4 B
▲ 35.0% YoY10-Q
Transaction and Loan Losses
$120 M
▼ 18.9% YoYPress Release
Share Repurchases
$562 M
Press Release
Shares are computed over the segment total: $3.74 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Shopify is uncommonly good at operating in two realities at the same time: the world our merchants exist in today, and the one they are moving towards. Q3 is the perfect example. We powered $119 billion in GMV, while continuing to build commerce into every surface, every agent, and increasingly, everywhere.”
- Agentic Commerce and Shop Pay
- Sidekick Cost Efficiency
- Offline and B2B Growth
Summary and Review
Summary
Revenue was $3.74B, up 31.6% year over year. The market expected $3.75B, so the 0.2% gap leaves the revenue gate in line. Adjusted earnings per share were $0.49 against an estimate of $0.47. The profit gate is open by 4.3%. For the fourth quarter, the company guided revenue growth at a low-thirties rate. That matches the 32.1% the market expected. Operating income rose 66% to $568M.
The stock fell as much as 16% in premarket trading and touched $135.65 during the session. Two growth metrics drove the selling. Gross merchandise volume (GMV) was $119.1B, 0.8% below the estimate. Subscription revenue of $836M missed its estimate by 1.7%. The market did not read this report as a profit story, but as a slowdown story. Buyers returned toward midday. The decline narrowed to 5.2% as of 12:41 ET.
Score 58, verdict hold. One of three gates is open and two are in line; the decision table gives this mix a 50-64 band. Profitability is strong, with operating margin rising from 12.1% to 15.2% in a year. But Shopify's valuation rests on growth, and growth is easing slightly. GMV growth slowed from 31.6% in the second quarter to 29.5%. Subscription growth slipped from 22% to 20%. Those two caveats keep the score just below the middle of the band.
Full Review
Revenue is fast, but the mix is shifting.
Merchant solutions revenue was $2.91B. Annual growth was 35.5%. This line now makes up 77.7% of total revenue. Payments are the engine: according to the 10-Q, Shopify Payments penetration rose to 68% from 65% a year ago. Volume processed through payments rose 35% to $81.4B. Subscription solutions grew 19.6% to $836M. Monthly recurring revenue (MRR) was $230M, up 19.2%. Payment revenue carries its own costs. That is why gross profit grew 28% and trailed revenue. Gross margin was 47.6%, down 1.3 points from 48.9% a year ago. Against the prior quarter, the margin was flat at 47.7%. Our earnings day guide explains which lines to read first.
Operating leverage continues on the profit side.
Operating expenses were 32.4% of revenue. A year ago, the ratio was 36.9%. Last quarter we said we would watch the company's 33-34% guidance band; the actual ratio came in below it. Operating income rose 66% to $568M and beat the $524M estimate by 8.4%. Operating margin was 15.2%. Transaction and loan losses fell from $148M to $120M. GAAP earnings per share were $0.36, compared with $0.20 a year ago. Part of the gap comes from a $117M loss on equity investments. Free cash flow was $816M, a 22% margin. That landed at the top of the company's high-teens to low-twenties guidance for the quarter. Our cash flow guide explains where the cash comes from.
A small GMV miss with a large meaning.
GMV was $119.1B, up 29.5% year over year. The market expected $120.1B. The gap was only 0.8%. Still, this is Shopify's most important line. Payment revenue grows with the volume merchants sell. A slowdown in GMV is an early signal for merchant solutions revenue in coming quarters. Growth was 31.6% in the second quarter and eased to 29.5% this quarter. Subscription revenue also came in 1.7% below the $850M estimate. When both metrics point the same way, the market magnified small gaps. Revenue also fell $8M short of the estimate. The stock trades at a multiple far above its earnings. In a stock priced for high expectations, a small miss has a large effect. The intraday low of $135.65 was 13.2% below the prior close.
Guidance is in line; cash margin steps back.
The company expects fourth-quarter revenue to grow at a low-thirties rate. On last year's $3.67B base, that means roughly $4.77B to $4.88B. The LSEG consensus calls for 32.1% growth. Gross profit growth is guided at a high-twenties rate. In the same quarter last year, that rate was 25%. Operating expenses are expected at 29-30% of revenue. A year ago, they were 28.9%, so holiday-quarter spending will rise slightly faster than revenue. Free cash flow margin is guided in line with last year's fourth quarter, around 19%. That is below the 22% of the third quarter. The company bought back $562M of stock in the quarter. Its total buyback authorization is $5B. The lower share price means the remaining authorization buys more shares. Our share buyback guide explains what that means for holders.
Next quarter, watch one line: GMV.
The fourth quarter includes Black Friday and Cyber Monday. It is Shopify's largest quarter. In the same quarter last year, GMV was $123.8B. If this quarter's 29.5% growth rate holds, the figure passes $160B. If GMV growth climbs back above 30%, this quarter was a pause. If it drops below 28%, the slowdown has become a trend. In that case, the low-thirties revenue guidance comes under pressure too. That is because merchant solutions revenue feeds directly off this volume. The second metric is subscription revenue. If that line drops below 20% growth, merchant additions to the platform are cooling as well. On profitability, the company's record is strong; operating margin widened 3.1 points in a year. From here, volume rather than profit will set the stock's direction.
Looking Ahead
Strengths and Risks
6 Strengths · 5 RisksStrengths
6- Operating income rose 66% year over year to $568M and beat the estimate by 8.4%.
- Free cash flow reached $816M, or 22% of revenue, up from 18% a year ago.
- Shopify Payments penetration rose to 68% from 65% a year ago.
- Operating expenses fell from 36.9% to 32.4% of revenue, below the company's 33-34% guidance.
- Transaction and loan losses fell 19% year over year to $120M.
- The company repurchased $562M of stock in the quarter under a total authorization of $5B.
Risks
5- GMV of $119.1B came in 0.8% below the estimate, and growth slowed from 31.6% to 29.5%.
- Subscription revenue grew 19.6% but missed the $850M estimate by 1.7%.
- Gross profit grew 28%, trailing revenueGross margin narrowed 1.3 points year over year to 47.6%.
- Fourth-quarter free cash flow margin is guided around 19%, below the third quarter's 22%.
- The company lists tariffs and US consumer spending among its risk factorsBoth could affect the holiday season.
What to Watch
4- Black Friday and Cyber Monday run November 27-30, 2026, Shopify's busiest days of the year.
- Fourth-quarter results are due ~February 2027; the company guides low-thirties revenue growth.
- The company guides fourth-quarter operating expenses at 29-30% of revenue.
- Free cash flow margin is expected to stay near last year's fourth-quarter level of 19%.
Upcoming Earnings
To Understand This