Categories Analysis, Retail

Three notable points from Shopify’s (SHOP) Q3 performance

For the full year of 2023, revenue is expected to grow at a mid-twenties percentage rate YoY

Shares of Shopify Inc. (NYSE: SHOP) dropped over 2% on Monday. The stock has gained 72% year-to-date and 12% over the past one month. The company saw double-digit revenue growth and better-than-expected profit for the third quarter of 2023. Here are three notable points from the ecommerce platform’s most recent quarterly performance:

Revenue growth and profitability

In Q3 2023, Shopify’s revenue grew 25% year-over-year to $1.7 billion. This growth was driven by an increase in gross merchandise volume (GMV), growth in the Merchant Solutions business, pricing, and growth in the number of active merchants across the Standard, Plus, and Point-of-Sale categories.

Revenue in the Merchant Solutions segment increased 24% YoY to $1.2 billion in the quarter, helped by a rise in GMV and the continued penetration of Shopify Payments. Subscription Solutions revenue grew 29% to $486 million, driven by more merchants joining the platform and pricing changes.

Shopify delivered adjusted EPS of $0.24 in the third quarter compared to a loss of $0.02 in the prior-year period. Gross profit grew 36% to $901 million while gross margin rose to 52.6% from 48.5% in the year-ago quarter.

GMV growth

Gross merchandise volume in the third quarter increased 22% to $56.2 billion, marking the highest quarterly growth rate since 2021. GMV growth was mainly driven by growth in the company’s merchant base globally. Cross-border GMV made up around 15% of total GMV in Q3.

On its conference call, Shopify said that GMV in Germany, France, and the UK, its three largest merchant bases in Europe, combined, grew greater than two times the GMV for all other geographies globally. The GMV growth in Europe was driven by new merchant acquisition as well as sales growth in the existing merchant base.


For the full year of 2023, revenue is expected to grow at a mid-twenties percentage rate YoY, driven by YoY revenue growth in the high-teens in Q4. This translates into a YoY growth rate in the low-to-mid-twenties, when excluding the impact from the sale of the logistics business.

Gross margin in Q4 is expected to be 300-400 basis points higher than the 46% reported in the prior-year period, but lower than the third quarter as payments revenue will make up a larger part of total revenue due to the seasonality of the holiday period.

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