Shopify (TSX: SHOP) reported Q3 2025 revenue of $2.84 billion, up 32% year over year from $2.16 billion, with the growth led by merchant solutions but margins are still mixed.
Merchant solutions revenue grew 38% to $2.15 billion from $1.55 billion while subscription solutions revenue rose 15% to $699 million from $610 million.
Cost of revenue also increased 39% to $1.45 billion from $1.04 billion, leading to gross profit jumping 24% to $1.39 billion from $1.12 billion. However, gross margin declined to 48.9% from 51.7%.
Operating expenses grew 26% to $1.05 billion from $835 million, with sales and marketing leading the rise, logging in $410 million this quarter from last year’s $331 million. Research and development rose to $375 million from $332 million, general and administrative was roughly flat at $115 million versus $114 million, and transaction and loan losses increased to $148 million from $58 million.
This lead to an operating income jump of 21% to $343 million from $283 million, with a drop in operating margin to 12.1% versus 13.1% a year ago.
Thanks to recording other expense of $79 million compared with other income of $545 million in the prior year, the firm reported a decline in net income to $264 million from $828 million last year.
Further, excluding equity investments marked to market, net income was $367 million versus $344 million, up 7%.
Cash from operating activities increased 21% to $513 million from $423 million. Cash, cash equivalents and restricted cash ended the quarter at $2.41 billion versus $1.51 billion a year ago. Free cash flow rose 20% to $507 million from $421 million.
On operations, GMV rose 32% to $92.01 billion from $69.72 billion, while monthly recurring revenue increased 10% to $193 million from $175 million.
For Q4 2025, Shopify expects revenue growth in the mid to high twenties year over year, gross profit dollars growth in the low to mid twenties, operating expenses at 30% to 31% of revenue (at 36.9% this quarter), stock-based compensation of $130 million (at $107 million this quarter), and free cash flow margin slightly above Q3 2025’s 18%.
Shopify last traded at $242.96 on the TSX.
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