Summary
Shopify closed fiscal 2025 with fourth-quarter revenue of $3.67 billion, up 30.6% from $2.81 billion in the prior-year quarter. Full-year revenue reached $11.56 billion, up 30.1% from $8.88 billion in 2024. Gross merchandise volume followed the same arc: $123.8 billion in the fourth quarter, up 31% year over year, and $378.4 billion for the full year, up 29%. Monthly recurring revenue ended the year at $205 million, up from $178 million a year earlier. Management tied a slower MRR growth rate to the lengthening of paid trial periods, not to weaker merchant demand.
Margins were the interesting part of the release. Gross profit rose 25.2% to $1.69 billion, but gross margin slipped to 46.1% from 48.1%. The revenue mix explains most of it. Merchant solutions carry lower margins than subscription revenue because of third-party payment costs, that side keeps growing faster, and the shift is heaviest in the holiday quarter. Shopify said it expects the trend to continue. Operating income climbed 35.7% to $631 million, and operating margin improved to 17.2% from 16.5%. For the full year, operating income was $1.47 billion, up 36.6%, on an operating margin of 12.7% versus 12.1%.
Net income tells a very different story. Fourth-quarter net income was $743 million, down 42.5% from $1.29 billion in the prior-year quarter. The gap comes from swings in the value of equity and other investments and from a loss on the embedded derivative tied to the convertible notes, neither of which reflects the operating business. Net income excluding the impact of equity investments, a non-GAAP measure, was $594 million for the quarter, up from $458 million a year earlier. Full-year net income was $1.23 billion, down 39.0%, and full-year diluted EPS was $0.94, down from $1.55.
Cash generation held up. Fourth-quarter operating cash flow was $725 million, up 17.9% from $615 million, and full-year operating cash flow was $2.03 billion, up 25.8% from $1.62 billion. Capital expenditures were $10 million in the quarter versus $4 million a year earlier, and $26 million for the full year versus $19 million. Free cash flow, which the company defines as operating cash flow less capital expenditures, was $715 million in the quarter and $2.0 billion for the year, with a 19% free cash flow margin in the fourth quarter and 17% for the full year. That marks ten consecutive quarters of double-digit free cash flow margins. Deferred revenue of $398 million was down 7.4% from $430 million, a balance Shopify does not treat as a useful indicator of future revenue.
The outlook for the first quarter of fiscal 2026 has revenue growing at a low-thirties percentage rate, similar to the fourth quarter of 2025, with gross profit dollars growing at a high-twenties percentage rate. Operating expenses are expected to land at 37% to 38% of revenue, stock-based compensation at $140 million, and free cash flow margin in the low-to-mid teens, slightly below the first quarter of 2025. The board also authorized a share repurchase program of up to $2 billion, effective February 17, 2026, with no fixed expiration date and no set quarterly or annual minimums. Management described the buyback as a signal of financial and operating strength rather than a change in priorities, and capital allocation principles still prioritize growth.
The risk list is the usual one, and it matters. Shopify flags its ability to maintain expected growth and manage expenses, consumer spending conditions in the United States, Europe and globally, measures affecting international trade such as tariffs, the adoption and impact of emerging technologies including AI, reliance on third-party providers, and the possibility of a cyberattack or security breach. Transaction and loan losses keep rising faster than revenue, a natural consequence of growing payments and lending volumes. Seasonality may become more pronounced as merchant solutions grows, foreign exchange swings affect comparability, and the mix shift toward payments keeps pressure on gross margin. An appeals court affirmed no infringement in the long-running Express Mobile patent case, which removes one overhang.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $3.67B | $2.84B | +29.1% | — | — |
| Gross profit | $1.69B | $1.39B | +21.7% | — | — |
| Gross margin | 46.1% | 48.9% | -2.8 pp | — | — |
| Research & development | $390.0M | $375.0M | +4.0% | — | — |
| Sales & marketing | $433.0M | $410.0M | +5.6% | — | — |
| General & administrative | $125.0M | $115.0M | +8.7% | — | — |
| Total operating expenses | $1.06B | $1.05B | +1.3% | — | — |
| Operating income (loss) | $631.0M | $343.0M | +84.0% | — | — |
| Operating margin | 17.2% | 12.1% | +5.1 pp | — | — |
| Net income (loss) | $743.0M | $264.0M | +181.4% | — | — |
| Net margin | 20.2% | 9.3% | +11.0 pp | — | — |
| Diluted EPS | $0.57 | $0.20 | +$0.37 | — | — |
Risks
Shopify does not develop foundational AI models and relies on third-party models for AI features. If providers decline to partner or access is disrupted, it could cause significant re-engineering costs and prevent effective AI offerings, while failure to integrate AI tools could diminish platform utility relative to competitors.
The shift in revenue mix toward lower-margin merchant solutions (76% of FY2025 revenue vs 74% prior) contributed to gross margin decline. Gross margin was down 2.0 pp to 46.1% in Q4 and down 2.3 pp to 48.1% for FY2025, and continued mix shift may cause further declines.
Competition may intensify as larger competitors leverage broader customer bases, impose data access restrictions, and deploy AI tools. Merchants may also build their own solutions using advanced AI, which could reduce demand for Shopify's platform.
Shopify relies on two suppliers, Stripe and PayPal, for Shopify Payments. If either terminates or disrupts services before an alternative provider is fully integrated, the company could incur substantial delays and expense, adversely affecting results.
Transaction and loan losses increased 84% to $417 million for FY2025, driven by a $124 million increase in Shopify Payments losses and $61 million in lending services losses. Continued growth in these offerings may further increase losses.
Net loss on equity and equity method investments was $316 million in FY2025 compared to a $853 million gain in FY2024, contributing to net income declines of 42.5% in Q4 and 39.0% for FY2025. Fair value fluctuations in these investments may cause continued earnings volatility.
A portion of Shopify's merchants are small and medium-sized businesses that are more susceptible to economic conditions, tariffs, trade protection measures, and inflation. These pressures may increase merchant turnover and reduce spending on the platform.
Competition for technical and AI talent is high, and Shopify's remote-first work model may negatively impact its ability to attract, train, and retain qualified personnel. The loss of key employees could disrupt business execution.
Evolving laws and regulations related to AI, data privacy, financial services, and cross-border money transmission increase compliance costs and may constrain Shopify's ability to offer or expand certain products, particularly payments and lending solutions.
SaaS KPIs
All quarters →Free Cash Flow
Free Cash Flow Margin
Gross Merchandise Volume (GMV)
Monthly Recurring Revenue (MRR)
Summary, forecast, risks and KPIs are extracted from SHOPIFY INC.'s SEC filings for Q4 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.