Shopify's Stock Falls Nearly 10% - GMV and Subscription Revenue Fail to Meet Expectations

Shares of e-commerce software company Shopify fell nearly 10% on Tuesday at the start of the US trading session. Although the company's third-quarter revenue matched analysts' forecasts, gross merchandise volume (GMV) and subscription revenue came in below expectations.

Shopify's adjusted earnings per share came to $0.49, exceeding the $0.47 analysts had projected. The company's revenue grew 32% year-over-year to reach $3.74 billion, matching market consensus.

Among the main revenue segments, Merchant Solutions revenue grew approximately 35% to $2.91 billion, slightly surpassing the $2.9 billion forecast. This segment includes services related to merchant activity, including payment processing.

Subscription revenue grew approximately 20% to $836 million, falling short of analysts' expectation of $850.2 million. Meanwhile, monthly recurring revenue (MRR) came to $230 million, close to the $229.9 million forecast.

The gross merchandise volume (GMV) sold through Shopify's platform grew approximately 30% to reach $119.15 billion. Despite the significant year-over-year growth, the figure fell short of analysts' forecast of $120.08 billion.

The company's operational results were stronger. Operating profit grew 66% year-over-year to $568 million, exceeding the expected $523.9 million. This result was supported by control over operating expenses: expenses came to $1.21 billion, whereas analysts had expected $1.26 billion.

Shopify's free cash flow came to $816 million, with a margin of 22%. In the same period last year, this figure stood at 18%.

For the fourth quarter, the company is forecasting annual revenue growth in the low-30% range, and gross profit growth in the high-20% range. Shopify expects operating expenses to account for 29-30% of revenue, down from approximately 32% in the third quarter. Stock-based compensation expense is expected to reach $155 million.

The company also expects fourth-quarter free cash flow margin to be in line with the fourth quarter of 2025.