Shopify Inc (NASDAQ:SHOP) stock fell 3.23% (As on May 9, 11:25:07 AM UTC-4, Source: Google Finance) after the company misses the earning expectations for the first quarter of FY25. The company offered a softer-than-expected outlook for second-quarter gross profit. Subscription solutions revenue climbed 21% year over year to $620 million, while the merchant solutions segment advanced 29% to $1.74 billion. Gross merchandise volume, which represents the total dollar value of orders facilitated through the Shopify platform, rose 22.8% to $74.75 billion compared with $74.8 billion, or a 22.9% growth expected by analysts. Gross profit improved to $1.17 billion from $957 million. The e-commerce platform’s first-quarter loss widened to $682 million, from $273 million a year earlier, primarily due to net other expenses, including losses on equity investments. Monthly recurring revenue (MRR) rose to $182 million from $151 million, reflecting the company’s expanding merchant base.
Moreover, Shopify’s payments business continues to gain traction, with Shopify Payments penetration reaching 64% in Q1 2025, up from 60% in Q1 2024. This translated to $47.5 billion in payment volume, a significant increase from $36.2 billion in the prior year period. Operating income margin expanded to 9% in Q1 2025, up from 5% in Q1 2024, while free cash flow margin reached 15%, compared to 12% in the same period last year. Offline commerce represents another significant growth opportunity for Shopify, with offline GMV growing 23% and cumulative offline GMV exceeding $100 billion. The company continues to gain traction with brick-and-mortar retailers through its point-of-sale solutions.
SHOP in the first quarter of FY25 has reported the adjusted earnings per share of 26 cents, missing the analysts’ estimates for the adjusted earnings per share of 27 cents. The company had reported the adjusted revenue growth of 27 percent to $2.36 billion in the first quarter of FY25, beating the analysts’ estimates for revenue of $2.33 billion.
The Canada-based company anticipates gross profit dollars to increase by a high-teens percentage on an annual basis for the June quarter. The current consensus on FactSet calls for growth of nearly 22%. Revenue is forecast to grow at a mid-20% rate, compared with the Street’s estimate of $2.53 billion, which implies a 24% year-on-year increase. For operating expenses, this is expected to be between 39% and 40% of revenue, with stock-based compensation of about $120 million. Free cash flow margin is expected to be similar to the first quarter, in the mid-teens range.