Shopify Earnings: Positive Demand Trends Continue Across All Products and Geographies

Key Morningstar Metrics for Shopify

• Fair Value Estimate: $120.00
• Morningstar Rating: 3 stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Very High

What We Thought of Shopify’s Earnings

We are raising our fair value estimate of Shopify SHOP to $120 per share from $105 after the firm reported good results and provided first-quarter guidance that was once again better than our expectations. Management commented that it thought the company was the right size to increase revenue in 2025 without meaningfully adding to headcount, which drives our margin assumptions slightly higher throughout our forecast. We acknowledge our profitability estimates have been and remain slightly below consensus, given the firm’s historic volatility. We still believe Shopify is well-positioned as a leader in e-commerce, and that it has a variety of irons in the fire to sustain durable and profitable growth in the coming years.

Impressive fourth-quarter demand was driven by merchant additions, international expansion, success in offline sales, and overall GMV expansion. The sustained momentum is notable, especially with the growing momentum in enterprise customers. We think this reflects the success of dynamic marketing investments and the company’s growing leadership position. Fourth-quarter revenue accelerated to 31% year-over-year growth as reported to $2.812 billion, more than $100 million ahead of our above-consensus expectations. Relative to the prior-year period, subscription revenue grew 27% year over year, while merchant solutions increased 33%, and both lines were better than we anticipated.

In our view, Shopify should continue to build on success in attracting larger brands to the platform, especially given the rash of recently launched features and products, including Markets Pro, Shopify Magic, and Commerce Components. Gross merchandise volume, accelerated to 26% year-over-year growth to $94.5 billion, while gross payment volume processed through Shopify Payments was approximately $60.8 billion, or 64% of GMV.