Shopify (SHOP) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 26% year-over-year to $2.2 billion, with GMV up 24% and operating income more than doubling from last year.

• Free cash flow margin expanded to 19%, with consistent improvement and confirmation of the long-term strategy.

• Shopify continues to expand its unified commerce platform, serving millions of merchants in over 175 countries and holding over 10% US ecommerce market share.

• Product innovation included enhanced automation, AI-driven features, expanded financial services, and partnerships with leading brands, supporting merchant efficiency and global reach.

• Net income reached $828 million, with adjusted net income (excluding equity investments) at $344 million.

Financial highlights

• Q3 revenue reached $2.2 billion, up 26% year-over-year, with gross profit at $1.1 billion and gross margin at 51.7%.

• GMV was $75.1 billion, up 24% year-over-year, with international GMV growing 33% and European GMV over 35%.

• Operating income was $283 million (13% of revenue), more than doubling from Q3 last year.

• Free cash flow was $421 million (19% of revenue), up from $276 million in Q3 2023.

• Subscription solutions and merchant solutions revenue both increased 26% year-over-year, with subscription solutions at $610 million.

• Monthly recurring revenue (MRR) was $175 million, up 28% year-over-year.

Outlook and guidance

• Q4 2024 revenue expected to grow at a mid- to high-twenties percentage rate year-over-year, with gross profit dollars growing at a similar rate.

• Q4 operating expenses projected at 32%-33% of revenues, a 300-400 bps improvement year-over-year.

• Free cash flow margin for Q4 expected to be similar to Q4 2023 (21%), with high teens margin for full year 2024.

• Product portfolio will keep evolving, targeting all merchant sizes and commerce channels.