Harry Harrison @HarryH1993: "Shopify Q4 2025 Earnings: The..."

United Kingdom

Shopify Q4 2025 Earnings: The Commerce Machine Keeps Compounding Shopify, which we first bought in 2017 and has been our best ever investment, just dropped its Q4 and full-year 2025 numbers. To put it plainly: they were great. 📈 The Top Line The headline: 31% revenue growth in Q4, hitting $3.67 billion. For the full year, $SHOP (Shopify Inc.) crossed $11.5 billion in revenue — nearly 4x where they were in 2020. That’s durable, compounding growth at serious scale and means they've now strung together 11 consecutive quarters of 25%+ revenue growth (excluding their logistics divestiture). At this size, that consistency is remarkable. 🛒 GMV and Market Share GMV came in at $123.8 billion for Q4, up 31% year-over-year, bringing the full-year total to $378.4 billion. Shopify now commands over 14% of all US ecommerce. That's not a niche platform — that's core infrastructure for online retail. 🚀 Multiple Growth Engines What really stands out is where the growth is coming from. International revenue surged 36%. Offline revenue grew 27%, showing Shopify's point-of-sale push is landing with merchants. B2B GMV nearly doubled at 96% growth — still a small slice of the pie, but the trajectory is hard to ignore. Shop Pay GMV jumped 62%, cementing its role as a genuine checkout competitor. Shopify is firing on multiple cylinders simultaneously. 💰 Profitability They delivered $715 million in free cash flow for Q4 (19% margin) and $2 billion for the full year. Operating income hit $631 million in Q4, up 36% year-over-year. Full-year operating income of $1.47 billion represents a 13% GAAP operating margin. On a non-GAAP basis, operating margin was 21% in Q4 and 17% for the year. Ten consecutive quarters of double-digit free cash flow margins — they've clearly moved past the "growth at all costs" era. 🏦 Balance Sheet and Capital Returns The balance sheet is a fortress. Cash and marketable securities total $5.8 billion. Total assets sit at $15.2 billion against just $1.7 billion in liabilities. They retired $1.04 billion in convertible notes during Q4, cleaning up the capital structure. And the board just authorized a $2 billion share repurchase program — a clear signal that management sees value in its own stock and has the firepower to act on it. 🔄 Revenue Mix Merchant solutions revenue grew 35% to $2.9 billion in Q4, now representing 79% of total revenue. Subscription revenue grew a more modest 17% to $777 million, with MRR reaching $205 million. The take rate continues expanding as Shopify monetizes payments, capital, and fulfillment services layered on top of subscriptions. 🔮 Forward Guidance Management guided Q1 2026 revenue growth at low-thirties percent — essentially sustaining Q4's pace. They expect operating expenses at 37-38% of revenue and free cash flow margin in the low-to-mid teens. The slight margin compression reflects continued investment in AI tools like Sidekick, their catalog product, and the Universal Commerce Protocol (www.shopify.com/mx/ucp) but that’s easily a trade-off worth making if it widens the competitive moat. ⚠️ The Risk to Watch Transaction and loan losses jumped to $417 million for 2025, up from $227 million in 2024 — an 84% increase. Shopify Capital is scaling aggressively, and higher losses come with the territory, but this line item deserves monitoring as the lending book grows. 🔍 Earnings Quality Net income on a GAAP basis was $743 million in Q4, though that includes a $248 million gain on equity investments. Stripping those out, adjusted net income was $594 million, up 30% from Q4 2024. For the full year, GAAP net income was $1.23 billion, dragged down by a Q1 loss driven by equity investment markdowns. The non-GAAP full-year net income of $1.86 billion gives a cleaner picture of operational performance. ✅ Bottom Line Shopify is executing at a level that justifies premium valuation. They're growing 30%+ at $11.5 billion in revenue, generating $2 billion in free cash flow, expanding internationally, and investing in AI while maintaining discipline. The buyback adds a new capital return lever. This is what a best-in-class SaaS-meets-commerce platform looks like when it hits its stride. Disclosure: This is my personal analysis and not financial advice. Always do your own research. From 2018 - 2025, I had one of the highest returns of all Popular Investors - etoro.tw/4b3pl7o Check out my profile to learn more about my investment strategy and if you have any questions, feel free to leave a comment below. Thanks for taking the time to read this! 😀 Harry $AMZN (Amazon.com Inc) $MELI (MercadoLibre Inc) $NSDQ100 $SPX500

Not investment advice. The author may have financial interests in the mentioned instruments.