Shopify (TSX: SHOP) reported Q2 2025 revenue of $2.68 billion, a 31% leap from $2.05 billion a year earlier. Breaking it down, the rise is driven by a 36.6% surge in Merchant Solutions sales to $2.02 billion and a 16.6% jump in Subscription Solutions to $656 million.
Yet the top-line acceleration came at the price of profitability: cost of revenue also climbed 37.8% to $1.38 billion, compressing gross margin to 48.6% from 51.1% in the comparable 2024 period.
Operating expenses rose even faster, up 25.9% to $1.01 billion. General and administrative spending more than doubled to $122 million, while provisions for transaction and loan losses soared 90.5% to $80 million. This still led to a 20.7% increase in operating income to $291 million, but the operating margin slid to 10.9% from 11.8% last year.
Net income came in at $906 million, a jump from $171 million in Q2 2024, thanks largely to $615 million in mark-to-market investment gains. Excluding those volatile equity movements, core net income was $338 million, up a modest 16.2%.
Operating cash flow improved 25.9% to $428 million, and free cash flow advanced 26.7% to $422 million. Even so, investing outflows of $252 million included nearly $1 billion in new merchant loan originations, raising exposure to credit-cycle swings.
The balance sheet showed cash and marketable securities of $5.82 billion, up 6.2% since December, but loans and merchant advances expanded 30.5% to $1.60 billion.
On operations, gross merchandise volume vaulted 30.6% to $87.84 billion, with Europe a standout at 42% constant-currency growth. Monthly recurring revenue edged up 9.5% to $185 million.
Looking ahead, Shopify guides for Q3 revenue growth in the mid-to-high-20% range and expects operating expenses to consume 38% to 39% of revenue.
Shopify last traded at $209.54 on the TSX.
Information for this briefing was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
