Q1 2025 Shopify Earnings: BRING IT ON
Shopify channeled the Ghostbusters theme with a "we ain't afraid of no tariffs" in this earnings call. Growth double the average eCommerce, solid profitability, and bullish outlook.
A few points from Shopify's earnings that make sense to call out:
* 27% revenue growth y/y, marking 7 consecutive quarters with > 20% GMV growth. 20% MRR growth. (You don't want MRR growth going much below this)
Revenue growth accelerating. FCF margin up to 15% from 12%. (Investors wanted more). Gross profit dollars up 22% y/y. Op income up 136%.
* Offline GMV up 26%. Good merchant progress. Alo a highlight with recent same-day partnership. Although Alo only has 71 stores, it's a good reference.
* Enterprise:
Shop-Pay offplatform mentions
Vuori, Barkbox, Brilliant Earth (good marker for catalog and buying complexity, at least in D2C)... the wins are notable yet the names are not big enterprises. Toys R Us gets a mention, but it's more nostalgia than impact.
* Europe: EU GMV grew 36%. If there is any metric which points to the failure of other platforms this is the one I point to. A US/Canadian-based company should not be able to enter such a complex market where many countries have well-defended competitors. Instead, it looks to me that the competition is the one not prepared for Shopify.
* Q1 Shop Pay GMV up 57% y/y to $22B GMV, penetration highest ever
* Shop App growing from a smallish base: 94% y/y. Paypal and Amazon: you do not want to see this activity.
* Shop Pay off-platform a highlight. Tapestry, Lily Pulitzer, Birkenstock. Even if you have a custom platform, who wants to keep up with payments.
* Sidekick usage increasing (doubled MAU since start of year), rebuilt AI engine. Good to see a mention.
* Controlling expense / hiring on sales & marketing, R&D, and company overhead. Opex as a % of revenue down from
* Key point mentioned "we are a growth company". They seem to like where FCF is sitting at 15%.
* Tariffs. This was telling. Less than 1% of GMV exposed to deminimis ending.
Sounds like they expect this to stick. What was not mentioned was the large tariffs themselves and the impact of US merchants importing from China.
Reading between the lines, they do not seem to expect this to be permanent.
2Q Outlook:
* Revenue growth in the mid-twenties. Seems very achievable.
Missing in action?
* B2B did not get a strong mention, but we are still nascent here. I expect you will hear more over the next 12 months.
Competitive mentions. With Adobe and Salesforce accelerating their eCommerce platform investments, made a point to say that not only are Shopify's investments greater, other companies commitments/investments were "uneven". Which is smart doubt to put out there.
Overall, very bullish call. Analysts want more gross margin growth, but doesn't concern me too much. Despite my earlier post, Shopify seems pretty content with its lane as each component has a lot of upside.
