💰 Market Cap: $226B | 🏢 8.1K Employees | 🌍 Global E-Commerce Platform

👨‍💼 CEO Tobias Lütke | 🎯 AI-Powered Commerce | 🇨🇦 Ottawa, Canada

$169.92

📉 -$3.02 (-1.7%) Post-Earnings

+143% YTD | Near All-Time High $182.19

🚀 Needs:

GMV accelerates to 35%+ driven by AI commerce tools (Sidekick processing 50-100 turn conversations reflexively) reaching 2M+ shops • Agent commerce (ChatGPT, Perplexity, Copilot) drives 5-10% incremental GMV within 18 months • International expansion reaches 45%+ of GMV with Europe maintaining 40%+ growth, Asia-Pacific accelerating • Shopify Payments penetration increases to 70%+ globally as European adoption catches North America • Enterprise Plus merchants grow 50%+ YoY with land-and-expand from checkout to full-stack averaging 12-18 months • B2B maintains 80%+ growth expanding beyond home/garden into manufacturing, automotive • Operating margins expand to 15%+ as OpEx drops to 28% of revenue through AI-driven productivity • Shop Campaigns advertising becomes material revenue stream (current 9x budget growth sustains)

⚖️ Needs:

Maintains mid-to-high twenties revenue growth through Q4 2025 and Q1 2026 before normalizing to low-twenties • GMV growth sustains at 28-32% through 2026 driven by cohort durability (2-3 year cohorts still growing strong) • International GMV continues 35-40% trajectory with Europe at 21%+ of revenue • FCF margins stabilize at 17-19% range balancing growth investment with profitability • Enterprise adoption proceeds steadily adding 10-15 major brands per quarter with 18-24 month full-stack conversions • Shopify Payments penetration increases to 66-68% as PayPal partnership headwinds fully lap • Operating expenses remain disciplined at 30-32% of revenue through headcount management • Transaction/loan losses return to historical 3-4% of revenue levels • Successfully navigates modest macro headwinds, tariffs remain 15% of GMV with manageable pricing pressure

⚠️ Risk:

Consumer spending weakens materially driving e-commerce slowdown, SMB churn accelerates • Revenue growth decelerates sharply to mid-teens by Q2 2026 as Q4'24 comps (highest 2024 quarter) prove difficult • Competitive pressure intensifies: Amazon Buy with Prime gains share, enterprises build proprietary solutions • Agent commerce fails to drive incremental GMV, becomes margin-dilutive channel requiring subsidies • Gross margins compress to 45% from merchant solution mix, subscription GM falls below 80% from AI/hosting costs • Transaction/loan losses remain elevated at 5%+ of revenue from aggressive merchant onboarding mistakes • Cross-border GMV (15% of total) contracts from tariff escalation, merchant pricing power exhausted • Enterprise land-and-expand slows as complex migrations take 36+ months vs expected 12-18 • FCF margins deteriorate to 12-14% from increased marketing spend to defend market share and higher working capital needs • Valuation multiple compresses violently as growth premium evaporates (96x P/E untenable below 20% growth)

💰

What Happened

Revenue: $2.84B (+32% YoY) beat est. $2.75B, accelerating from 27% Q1→31% Q2→32% Q3

Adjusted EPS: $0.34 met consensus, GAAP EPS $0.20

GMV: $92.0B (+32% or +30% constant currency), highest growth since COVID-era 2021

FCF: $507M with 18% margin vs 15% Q1, 16% Q2—nine consecutive double-digit quarters

Payments Penetration: 65% of GMV, Shop Pay $29B (+67% YoY), processed $280B cumulative

📈

Why It Matters

AI Revolution: Sidekick hit 100M conversations (8M in Oct alone), 750K shops used it in Q3—reflexive daily habit

Enterprise Validation: Estée Lauder (80-year legacy, 20+ brands) plus Elf, Welch's, Formlabs, Stoka choosing Shopify

Cohort Durability: 2-3+ year old cohorts still growing strong, 2025 cohort outpacing prior years at same age

Operating Leverage: OpEx improved from 45% (2023)→39% (2024)→37% (2025) through headcount discipline

Checkout Dominance: "If one company could own checkout, it's Shopify"—handling taxes, shipping, currency globally

🎯

What's Next

Q4 Guidance: Mid-high 20s revenue growth, gross profit low-mid 20s, OpEx 30-31%, FCF margin above 18%

BFCM Ready: 16th holiday season, AI tools that didn't exist year ago, global infrastructure at peak scale

Agent Commerce: ChatGPT partnership live, catalog powering product discovery across Perplexity, Microsoft Copilot

Advertising Push: Shop Campaigns saw 9x YoY budget increase, 4x merchant adoption growth Q3'24→Q3'25

Balance Sheet: $6B cash post-convert settlement (Nov 2), zero debt, maintaining investment flexibility

💡

Bottom Line for Retail Investors

Shopify is executing a playbook years in the making—built AI agents before the hype, won enterprise deals from half-decade investments, and is now balancing three things few companies can: aggressive growth investment, profitable margins, and durable quarterly results. Every 26 seconds a new entrepreneur makes their first sale on Shopify, expanding TAM while legacy brands like 80-year-old Estée Lauder trust them for their "final migration." The 32% revenue growth with 18% FCF margins isn't luck—it's "compound execution" as Harley called it. The question for investors: does the 96x P/E reflect this execution moat, or is the market pricing in perfection when growth could normalize to low-20s by 2026?

🌍

International Rocket Ship

Growth: International GMV +41% Q3 (+42% constant currency), Europe +49% YoY (+42% constant currency)

Expansion: Europe revenue now 21% of total (up from <18% two years ago), gains accelerating

Products: POS payments in 3 new countries, tap-to-pay in 7 markets, Shop app in 6 new languages

Penetration: Europe Shopify Payments gains 50%+ higher than year-ago period, massive runway ahead

🏢

Enterprise Breakthrough

Major Brands: Estée Lauder (20+ brands), Elf Cosmetics, Welch's, Formlabs, Stoka (16M highchairs sold), Twinset

Live Now: Michael Kors, David's Bridal, Goop, Mejuri, Dooney & Bourke fully launched on platform

B2B Explosion: +98% YoY growth (Q3), Canada B2B +155%, home/garden vertical +150%

Land & Expand: Enterprises start with checkout/Shop Pay, within weeks want "all of Shopify"—full stack adoption

🤖

AI-Powered Commerce

Sidekick Adoption: 100M total conversations, 8M in October, 750K shops used it first time in Q3

Deep Engagement: Conversations go 50-100 turns deep covering analytics, segments, SEO automation

Agent Commerce: Catalog powers ChatGPT, Perplexity, Microsoft Copilot—Universal Cart enables instant checkout

Internal AI (Scout): Indexes 100Ms of merchant feedback items, answers that took weeks now in seconds

💵

Cash Flow Machine

FCF Progression: 15% Q1→16% Q2→18% Q3, on track to match 2024's full-year margin

OpEx Discipline: 45% of revenue (2023)→39% (2024)→37% (Q3 2025), Q4 target 30-31%

Headcount Flat: Consistent flat-to-down sequentially & YoY for 2+ years, redeploying to highest impact

Margin Philosophy: "Right balance between profitability discipline and investment in future growth"

💸

Extreme Valuation

P/E Ratio: 96x earnings vs. S&P 500 average of ~20x

P/S Ratio: 22x revenue, indicating high growth expectations priced in

Near ATH: Trading at $170 vs. all-time high of $182, limited upside room

Deceleration Risk: Analysts project slowdown to 22% growth in 2026

🎯

Amazon Competition

Buy with Prime: Amazon aggressively targeting independent merchant checkout

Fulfillment: Amazon's logistics network far superior to Shopify's offerings

Multi-Channel: WooCommerce (WordPress) still commands 43% market vs. Shopify's 10%

Price Pressure: Intensifying competition could compress take rates & margins

📉

Margin Compression Risks

Gross Margin: 48.9% vs 51.7% prior year—mix shift to lower-margin merchant solutions

PayPal Impact: Expanded partnership net-to-gross recognition pressuring margins (lapping in Q4)

Subscription Costs: 81.7% GM vs prior 82%+, higher hosting for transaction volumes, AI usage costs

Merchant Solutions: 38.2% GM vs 39.7% last year, non-cash partnership revenues declining

🌐

Macro Headwinds

Tariff Update: Cross-border 15% of GMV (flat), merchants raised prices less in Q3 vs Q2, limited impact so far

Consumer Risk: Potential recession would immediately hit merchant GMV, SMBs most vulnerable

Transaction Losses: Q3 spike to 5% of revenue from payments testing/onboarding, capital loss rate uptick

Q4 Headwinds: Elevated payment losses continuing, tax receivable timing impacting working capital by 200bps