Shopify Grew Revenue 32%, and Wall Street Still Knocked 15% Off the Stock

Shopify reported third-quarter revenue of $3.74 billion, up roughly 32% from a year ago and just a hair below the $3.75 billion analysts expected, alongside gross merchandise volume of $119 billion, up 29.5% and the sixth straight quarter of roughly 30% GMV growth. Shares still fell more than 15% to $132.50 immediately after the release, with the company's own commentary conceding the quarter "offered few positives" even as most of the headline numbers moved in the right direction.

The growth is increasingly coming from places Shopify didn't have two years ago. AI-attributed orders rose 3.3 times year over year and AI-attributed traffic rose 2.6 times, with three-quarters of that AI-referred business landing outside the platform's top 100 product categories, meaning shoppers are discovering Shopify merchants through chatbots and AI search rather than storefronts built for Google. Merchant solutions revenue grew 35%, subscription revenue grew 20%, Shop Pay processed GMV up 50%, and B2B GMV jumped 74%. Free cash flow came in at $816 million, a 22% margin, though subscription gross margin held at 79%, still short of the company's own 80% target for a second straight quarter. For the fourth quarter, Shopify guided to revenue growth in the low 30s percent and gross profit dollar growth in the high 20s.

So why did the stock drop 15% on a quarter that beat on most metrics? Because GMV, the number that tells investors how much actual commerce is flowing through the platform, came in just under expectations, and in a stock priced for perpetual acceleration, "just under" is close enough to a miss to spook the room. Shopify is building a real case that it's becoming the default checkout layer for an AI-driven internet; the market's reaction says investors want proof that case is translating into dollars faster than it currently is.

Source: StockStory

Kyle Duford, Founder & Editor, BRNDWIRE. More from Kyle →