Shopify (SHOP) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $2.0 billion, up 21% year-over-year, or 25% excluding logistics, with gross profit outpacing revenue and free cash flow margin more than doubling to 16% from last year.

• GMV grew 22% year-over-year, reaching $75.1 billion, driven by strong same-store sales, new merchant growth, and robust performance in Europe and offline channels.

• Net income was $171 million, reversing a net loss of $1.3 billion in the prior year quarter.

• Strategic focus on unified commerce, international expansion, enterprise, and data-driven marketing continues to drive growth and market share gains.

• Over 100 new product updates and major enterprise wins, with continued innovation in payments, B2B, AI, and cross-border solutions.

Financial highlights

• Gross profit was $1.0 billion, up 25% year-over-year, with gross margin improving to 51.4%.

• Free cash flow was $333 million (16% of revenue), more than doubling from 6% a year ago.

• Subscription solutions revenue grew 27% to $563 million, driven by merchant growth and pricing changes.

• Merchant solutions revenue was $1.5 billion, up 19% year-over-year, with Shopify Payments processing $41.1 billion GMV (61% penetration).

• Monthly Recurring Revenue (MRR) reached $169 million, up 25% year-over-year.

Outlook and guidance

• Q3 2024 revenue expected to grow at a low- to mid-20s percentage rate year-over-year.

• Q3 gross margin anticipated to rise by ~50 basis points from Q2, driven by a higher mix of subscription solutions.

• GAAP Q3 operating expenses projected at 41%-42% of revenue, a 300-400 basis point improvement from last year.

• Free cash flow margin expected to remain in double digits for the rest of 2024.

• Shopify plans to continue evolving its product portfolio, targeting growth across merchant segments, geographies, and channels.