Shopify Inc.
The company's third-quarter results beat expectations across nearly all key metrics, driven by strong global demand, record transaction volumes, and increasing payments adoption through partnerships with PayPal Holdings, Inc.
- DA Davidson analyst Gil Luria maintained a Buy rating on Shopify and raised the price forecast from $185 to $195.
- Scotiabank analyst Kevin Krishnaratne reiterated Shopify with a Sector Perform and raised the price forecast from $150 to $165.
- Benchmark analyst Mark Zgutowicz maintained a Buy rating on Shopify, with a price forecast of $195.
He emphasized that Shopify's third-quarter results exceeded expectations across nearly all key metrics, with constant-currency revenue growth of 30%-a standout in today's macro environment. Revenue reached $2.84 billion, surpassing both DA Davidson's $2.74 billion estimate and Wall Street's $2.76 billion forecast. Stronger gross merchandise volume (GMV) in North America and rising payments penetration fueled the beat.
Luria noted that payment adoption continued to climb globally, reaching 65% of GMV, driven by partnerships with PayPal and Klarna. While subscription growth slowed slightly due to tough comparisons, Shopify's operating margin of 16.4% topped expectations, reflecting solid execution and expense control.
Looking ahead, the analyst described Shopify's fourth-quarter guidance as conservative, pointing to momentum from holiday spending, enterprise customer wins, and expansion in Europe, the Middle East, and Africa. He expects full-year 2025 and 2026 revenue to rise 2% and 4%, respectively, to $11.46 billion and $14.25 billion.
With a clean balance sheet-no debt and about $6 billion in cash-Luria sees Shopify well positioned for strategic acquisitions, particularly in AI capabilities, and potentially for a future share buyback program given its strong free cash flow generation.
Scotiabank: Krishnaratne expressed optimism about Shopify's growth and expanding market opportunities, driven by its enterprise expansion, international markets, and AI-driven commerce initiatives.
The analyst described Shopify's fourth-quarter guidance-calling for mid- to high-twenties revenue growth-as conservative, given strong holiday-season dynamics, new enterprise customers, and continued European momentum. He modeled 26.9% year-over-year growth and projected gross profit to rise about 23%.
Benchmark: Zgutowicz said Shopify once again delivered a consistently strong performance. The analyst attributed the company's growth reacceleration to its still relatively low share of the e-commerce market across the U.S., Canada, and Europe, as well as its leadership in online, offline, enterprise, and B2B commerce as it transitions into the next phase of "agentic" AI-driven retail.
He noted that Shopify's partnership with OpenAI strengthens its position in the AI commerce space.
Shopify could emerge as the default platform for AI-commerce interactions, as per Zgutowicz.
The analyst emphasized that advertising represents a significant untapped opportunity for Shopify, estimating that if merchants spend about 20% of their GMV on marketing-roughly $350 billion to $400 billion between 2026 and 2028-and Shopify captures just 3% of that, it could generate over $10 billion in additional revenue.
He noted that Shopify's stock, which has risen nearly 50% year-to-date, may be taking a short-term pause after its 20% gain since the second-quarter earnings report, as free cash flow margin expectations reset slightly.
Zgutowicz viewed Shopify's fourth-quarter operating expense guidance of 30%-31% of revenue as conservative.
SHOP Price Action: Shopify shares were down 0.69% at $159.85 at the time of publication on Wednesday.
