Shopify (TSX: SHOP) has reported Q1 2025 results: revenue surged 27% YoY to $2.36 billion

Shopify (TSX: SHOP) has reported Q1 2025 results: revenue surged 27% YoY to $2.36 billion, led by merchant solutions

Shopify (TSX:SHOP) has reported its Q1 2025 earnings, exceeding revenue estimates with a 27% year-over-year increase to $2.36 billion. The e-commerce giant also reported a steeper-than-expected net loss, largely due to a $908 million in equity writedowns.

Here’s a summary of Shopify’s earnings report for the first quarter of 2025:

* Revenue: $2.36 billion versus $1.98 billion

* Gross profit: $1.17 billion versus $962 million

* Operating expenses: $966 million versus $868 million

* Operating income: $203 million versus $86 million

* Net loss: $682 million versus $273 million

* Adjusted net income: $226 million versus $144 million

The report highlights a strong performance in merchant solutions, which increased by 29% to $1.74 billion, compared to subscription solutions, which saw a 21% rise to $620 million.

The company's gross margin remained stable at approximately 49.5%, while operating expenses increased by 11%. Notably, sales and marketing expenses rose to $405 million from $361 million, and R&D investments climbed to $377 million from $335 million.

Despite the reported net loss, CFO Jeff Hoffmeister preferred to focus on adjusted net income, which excludes the impact of equity investments. He highlighted the volatility of third-party equity valuations, stating that they hold "little analytical or predictive value regarding our ability to drive operational results."

In terms of cash flow, Shopify generated $367 million in the quarter, an increase of 54%. Free cash flow reached $363 million, marking a 56% year-over-year growth and pushing the free cash flow margin to 15%, compared to 12% in Q1 2024.

However, Shopify's cash and cash equivalents dropped to $1.31 billion from $1.5 billion at year-end, mainly due to aggressive capital deployment—$805 million in loan originations and a $56 million business acquisition—despite $1.33 billion in maturing securities.

Moreover, the company's gross merchandise volume reached $74.75 billion, a 23% increase from $60.86 billion last year, and its monthly recurring revenue rose to $182 million from $151 million.

For the second quarter of 2025, Shopify anticipates mid-20s revenue growth and high-teens gross profit growth year-over-year. Operating expenses are expected to remain stable at 39–40% of revenue, and free cash flow margins are projected to stay in the mid-teens.

As of Friday's closing bell, Shopify (TSX:SHOP) traded at $131.29.