Shopify Delivers Another Exceptional Quarter in Q2

Rhea-AI Summary

Shopify (NASDAQ, TSX: SHOP) reported exceptional Q2 2025 financial results, achieving 31% revenue growth to $2.68 billion and maintaining a 16% free cash flow margin for the eighth consecutive quarter. The company's Gross Merchandise Value (GMV) reached $87.8 billion, with particularly strong performance in Europe showing 42% GMV growth on a constant currency basis.

For Q3 2025, Shopify projects mid-to-high twenties percentage revenue growth year-over-year, with gross profit dollars expected to grow in the low-twenties. The company anticipates operating expenses at 38-39% of revenue and targets a free cash flow margin in the mid-to-high teens.

Positive

• None.

Negative

• Operating expenses projected to be 38-39% of revenue in Q3 2025
• Expected slowdown in gross profit growth to low-twenties percentage in Q3
• Stock-based compensation expenses forecasted at $130 million for Q3

Insights

Financial Analyst

Shopify delivers accelerating growth with 31% revenue increase and maintained 16% free cash flow margin, showing particular strength in Europe.

Shopify's Q2 2025 results showcase remarkable acceleration across key metrics. Revenue grew $2.68 billion, a 31% year-over-year increase, significantly outpacing last year's 21% growth rate. Gross Merchandise Volume (GMV) jumped to $87.84 billion from $67.25 billion a year ago, while Monthly Recurring Revenue (MRR) reached $185 million, up from $169 million.

The geographic expansion story is particularly compelling. While growth accelerated across North America, Europe, and Asia Pacific, European operations stood out with GMV growth of 42% on a constant currency basis. This geographic diversification provides both revenue growth and operational resilience.

Profitability metrics remained strong with $1.30 billion in gross profit (versus $1.05 billion last year) and operating income of $291 million (up from $241 million). Most impressively, free cash flow reached $422 million with a 16% margin, marking eight consecutive quarters of double-digit free cash flow margins.

Looking ahead, management projects continued momentum with Q3 2025 revenue growth expected in the mid-to-high twenties percentage range year-over-year. They anticipate gross profit dollars growing at a low-twenties percentage rate, operating expenses at 38-39% of revenue, and free cash flow margin in the mid-to-high teens - demonstrating confidence in their ability to maintain this growth trajectory while preserving profitability.

Internet, Everywhere--(Newsfile Corp. - August 6, 2025) - Shopify Inc. (NASDAQ, TSX: SHOP) announced today financial results for the quarter ended June 30, 2025. Shopify achieved 31% revenue growth and 16% free cash flow margin, marking eight consecutive quarters of double-digit free cash flow margins.

"Today's results are the payoff from bold bets we made years ago," said Harley Finkelstein, President of Shopify. "The investments we're making now will fuel our next chapter. At Shopify, innovation never stops. No matter how good the numbers look, there's always a new frontier in commerce-and we'll continue to lead the way."

"Shopify delivered another outstanding quarter, with both GMV and revenue growth rates accelerating in North America, Europe, and Asia Pacific, quarter over quarter. Europe was a particular source of strength, where GMV grew 42% on a constant currency basis," said Jeff Hoffmeister, Chief Financial Officer of Shopify. "Merchants of every size-from first-time founders to global brands-are choosing Shopify to grow their businesses and their success is what is driving our success."

Selected Business Performance Information⁽¹⁾
(In US $ millions, except percentages)

		Three months ended
		June 30, 2025			June 30, 2024
GMV		87,837			67,245
MRR		185			169
Revenue		2,680			2,045
Gross profit		1,302			1,045
Operating income		291			241
Free cash flow		422			333
YoY revenue growth rate		31	%		21	%
Free cash flow margin		16	%		16	%

 

⁽¹⁾ See endnotes below for definitions of GMV and MRR and additional information on free cash flow and free cash flow margin, which are non-GAAP financial measures and are reconciled to the comparable GAAP measures in the non-GAAP reconciliation at the end of this press release.

2025 Outlook

The outlook that follows supersedes all prior financial outlook statements made by Shopify, constitutes forward-looking information within the meaning of applicable securities laws, is based on a number of assumptions, and subject to a number of risks. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond Shopify's control. Please see "Forward-looking Statements" below for more information.

For the third quarter of 2025, we expect:

• Revenue to grow at a mid-to-high twenties percentage rate on a year-over-year basis;
• Gross profit dollars to grow at a low-twenties percentage rate on a year-over-year basis;
• Operating expense as a percentage of revenue to be 38% to 39%;
• Stock-based compensation to be $130 million; and
• Free cash flow margin to be in the mid-to-high teens.

Quarterly Conference Call

Shopify's management team will hold a conference call to discuss our second-quarter results today, August 6, 2025, at 8:30 a.m. ET. The conference call will be webcast on the investor relations section of Shopify's website at www.shopifyinvestors.com/news-and-events. An archived replay of the webcast will be available following the conclusion of the call.

Shopify's Form 10-Q for the quarter ended June 30, 2025, including the unaudited Condensed Consolidated Financial Statements and accompanying Notes, and Management's Discussion and Analysis, will be available on Shopify's website at www.shopify.com and will be filed on EDGAR at www.sec.gov and on SEDAR+ at www.sedarplus.ca.

About Shopify

Shopify is a leading global commerce company that provides essential internet infrastructure for commerce, offering trusted tools to start, scale, market, and run a retail business of any size. Shopify makes commerce better for everyone with a platform and services that are engineered for speed, customization, reliability, and security, while delivering a better shopping experience for consumers online, in store, and everywhere in between. Shopify powers millions of businesses in more than 175 countries and is trusted by brands such as BarkBox, BevMo, ButcherBox, Carrier, JB Hi-Fi, Meta, SKIMS, Supreme, Vuori, and many more.

For more information visit www.shopify.com

CONTACT INVESTORS:		CONTACT MEDIA:
Carrie Gillard		Jackie Warren
Director, Investor Relations		Senior Lead, Communications
IR@shopify.com		press@shopify.com

 

Shopify Inc. Condensed Consolidated Statement of Operations
(In US $ millions)

		Three months ended
		June 30, 2025			June 30, 2024
Revenues
Subscription solutions		656			563
Merchant solutions		2,024			1,482
		2,680			2,045
Cost of revenues
Subscription solutions		121			97
Merchant solutions		1,257			903
		1,378			1,000
Gross profit		1,302			1,045
Operating expenses
Sales and marketing		415			353
Research and development		394			349
General and administrative		122			60
Transaction and loan losses		80			42
Total operating expenses		1,011			804
Operating income		291			241
Net other income (expense), including taxes(2)		615			(70	)
Net income		906			171
less: equity investments, marked to market, net of taxes		568			(120	)
Net income excluding the impact of equity investments(3)		338			291

 

⁽²⁾ Net other income (expense), including taxes includes interest income, gains and losses on equity and other investments, foreign exchange gains and losses, and our provision for income taxes.

⁽³⁾ Net income excluding the impact of equity investments is a non-GAAP financial measure which is reconciled at the end of this press release. The impact of any gains or losses on our equity investments in third parties are not relevant to the fundamentals of our business. Valuations of third parties in public and private markets are outside of our control, and therefore, fluctuations in those valuations have little analytical or predictive value regarding our ability to drive operational results.

Note: More detailed Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) are available in the Quarterly Report on Form 10-Q filed concurrently with this press release with US and Canadian regulators and available at www.sec.gov and www.sedarplus.ca.

Shopify Inc. Condensed Consolidated Balance Sheets
(In US $ millions)

		June 30, 2025	December 31, 2024
Assets
Current assets
Cash and cash equivalents		1,542			1,498
Marketable securities		4,278			3,981
Trade and other receivables, net		350			342
Loans and merchant cash advances, net		1,597			1,224
Other current assets		234			209
		8,001			7,254
Long-term assets
Property and equipment, net		46			47
Operating lease right-of-use assets, net		97			93
Intangible assets, net		36			22
Deferred tax assets		31			37
Other long-term assets		28			21
Long-term investments		831			709
Equity and other investments ($3,417 and $3,930, carried at fair value)		4,405			4,647
Equity method investment		595			642
Goodwill		491			452
		6,560			6,670
Total assets		14,561			13,924
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued liabilities		841			737
Deferred revenue		298			283
Operating lease liabilities		20			18
Convertible senior notes		919			918
		2,078			1,956
Long-term liabilities
Deferred revenue		123			147
Operating lease liabilities		200			190
Deferred tax liabilities		36			73
		359			410
Shareholders' equity
Common stock		9,985			9,634
Additional paid-in capital		281			305
Accumulated other comprehensive income (loss)		5			(10	)
Accumulated surplus		1,853			1,629
Total shareholders' equity		12,124			11,558
Total liabilities and shareholders' equity		14,561			13,924

 

Shopify Inc. Condensed Consolidated Statements of Cash Flows

(In US $ millions)

		Three months ended
		June 30, 2025			June 30, 2024
Cash flows from operating activities
Net income for the period		906			171
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation		8			10
Stock-based compensation		113			106
Impairment of right-of-use assets and leasehold improvements		10			-
Provision for transaction and loan losses		44			26
Deferred income tax expense		98			2
Revenue related to non-cash consideration		(12	)		(21	)
Net (gain) loss on equity and other investments		(682	)		76
Net loss on equity method investment		24			44
Unrealized foreign exchange gain		(46	)		(2	)
Changes in operating assets and liabilities		(35	)		(72	)
Net cash provided by operating activities		428			340
Cash flows from investing activities
Purchases of property and equipment		(6	)		(7	)
Purchases of marketable securities		(1,464	)		(1,834	)
Maturities of marketable securities		1,464			1,663
Purchases and originations of loans		(944	)		(710	)
Repayments and sales of loans		767			594
Purchases of equity and other investments		(71	)		(106	)
Acquisition of business, net of cash acquired		-			(26	)
Other		2			2
Net cash used in investing activities		(252	)		(424	)
Cash flows from financing activities
Proceeds from the exercise of stock options		44			3
Net cash provided by financing activities		44			3
Effect of foreign exchange on cash, cash equivalents and restricted cash		13			(1	)
Net increase (decrease) in cash, cash equivalents and restricted cash		233			(82	)
Cash, cash equivalents and restricted cash - beginning of period		1,309			1,623
Cash, cash equivalents and restricted cash - end of period		1,542			1,541

 

Reconciliation of Non-GAAP Financial Measures

Free Cash Flow Reconciliation
(In US $ millions, except percentages)

The following table illustrates how free cash flow is calculated in this press release:

		Three months ended
		June 30, 2025			June 30, 2024
Net cash provided by operating activities		428			340
less: capital expenditures(4)		(6	)		(7	)
Free cash flow		422			333
Revenue		2,680			2,045
Free cash flow margin		16	%		16	%

 

Net Income Excluding the Impact of Equity Investments Reconciliation
(In US $ millions)

The following table illustrates how Net income excluding the impact of equity investments is calculated in this press release:

		Three months ended
		June 30, 2025			June 30, 2024
Net income		906			171
less: equity investments, marked to market, net of taxes		568			(120	)
Net income excluding the impact of equity investments(3)		338			291

 

⁽⁴⁾ Capital expenditures is equivalent to the amount included in "Purchases of property and equipment" on our Condensed Consolidated Statements of Cash Flows for the reported period.

Financial Performance Constant Currency Analysis

(In US $ millions, except percentages)

The following table converts our GMV, revenues, gross profit, and operating income using the comparative period's monthly average exchange rates. We have provided the below disclosure as we believe it presents a clear comparison of our period-to-period operating results by removing the impact of fluctuations in foreign exchange rates and to assist investors in understanding our financial and operating performance. The table below and our Condensed Consolidated Statement of Operations disclosure are supplements to our condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP (excluding GMV).

		Three months ended June 30,
		GMV			Revenue			Subscription solutions revenue			Merchant solutions revenue			Gross profit			Operating income
2024 as reported		67,245			2,045			563			1,482			1,045			241
2025 as reported		87,837			2,680			656			2,024			1,302			291
Percentage change YoY		31	%		31	%		17	%		37	%		25	%		21	%
Constant currency impact		1,042			17			3			14			9			8
Percentage change YoY constant currency		29	%		30	%		16	%		36	%		24	%		17	%

 

Forward-looking Statements

This press release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements"), including statements related to Shopify's financial outlook, such as expected revenue and expenses for the next fiscal quarter. These statements can be identified by words such as "will" and "expect" and are based on Shopify's current projections and expectations about future events and financial results. Known and unknown risks may cause actual results to differ materially from those described in the forward-looking statements. These risks include, but are not limited to, the Company’s ability to maintain expected growth and manage expenses, the impact of changes in economic conditions and consumer spending in key markets such as the United States, and Europe, and globally, the impact of measures that affect international trade, including tariffs, our reliance on third party cloud providers to deliver services, a cyberattack or security breach, and serious errors or defects in software or hardware. Other factors and risks that may cause actual results to differ materially from those set out in the forward-looking statements are set out in Shopify's Annual Report on Form 10-K under the heading "Risk Factors" and other filings made with US and Canadian securities regulators, available at www.sec.gov and www.sedarplus.ca. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to management on the date hereof and represent management's beliefs regarding future events, projection and financial trends, which, by their nature, are inherently uncertain. The forward-looking statements are provided to give additional information about management's expectations and beliefs and may not be appropriate for other purposes. Shopify undertakes no duty to publicly update or revise any forward-looking statements, except as may be required by law.

Endnotes:

Gross Merchandise Volume, or GMV, represents the total dollar value of orders facilitated through the Shopify platform including certain apps and channels for which a revenue-sharing arrangement is in place in the period, net of refunds, and inclusive of shipping and handling, duty, and value-added taxes.

Monthly Recurring Revenue, or MRR, is the aggregate value of all subscription plans, excluding variable platform fees, in effect on the last day of the period, assuming merchants maintain their subscription the following month and is used by management as a directional indicator of subscription solutions revenue going forward.

Free cash flow and free cash flow margin are non-GAAP financial measures which are reconciled in the non-GAAP reconciliation at the end of this press release. Shopify believes free cash flow and free cash flow margin provide useful information to help investors and others understand our operating results and the performance of our business in the same manner as management. Shopify does not reconcile forward-looking non-GAAP free cash flow margin as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. Free cash flow is a non-GAAP financial measure calculated as cash flow from operations less capital expenditures.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/261416

FAQ

What were Shopify's (SHOP) Q2 2025 revenue and growth rate?

Shopify reported Q2 2025 revenue of $2.68 billion, representing a 31% growth compared to the same period last year.

How much was Shopify's GMV in Q2 2025?

Shopify's Gross Merchandise Value (GMV) reached $87.8 billion in Q2 2025, up from $67.2 billion in Q2 2024, with particularly strong growth in Europe at 42% on a constant currency basis.

What is Shopify's Q3 2025 revenue growth guidance?

Shopify expects revenue to grow at a mid-to-high twenties percentage rate year-over-year in Q3 2025.

What was Shopify's free cash flow and margin in Q2 2025?

Shopify generated $422 million in free cash flow with a 16% free cash flow margin in Q2 2025, marking eight consecutive quarters of double-digit free cash flow margins.

How much operating income did Shopify report for Q2 2025?

Shopify reported operating income of $291 million in Q2 2025, up from $241 million in the same quarter last year.