Shopify Inc. posted fiscal fourth-quarter 2024 revenue of $2.81 billion, representing a 31% year-over-year growth and surpassing analyst expectations of $2.73 billion.
This marks Shopify’s seventh consecutive quarter of revenue growth exceeding 25%, excluding logistics operations.
Following the announcement, Shopify shares experienced volatility in premarket trading as investors digested the results.
At the time of writing, Shopify stock was up close to 3%.
Shopify shares have surged 37% over the past 12 months.
Wall Street sentiment remains positive, with at least two firms raising their price targets for the stock in 2025.
Shopify Q4 earnings
Net income came in at $1.29 billion, nearly doubling from $657 million in the prior year.
Gross merchandise volume (GMV) rose 25.7% year-over-year to $94.5 billion, while merchant solutions revenue grew 32.6% to $2.15 billion.
| Metric | Three months ended December 31, 2024 | Three months ended December 31, 2023 |
|---|---|---|
| GMV | 94,460 | 75,125 |
| MRR | 178 | 144 |
| Revenue | 2,812 | 2,144 |
| Gross profit | 1,352 | 1,062 |
| Operating income (loss) | 465 | 289 |
| Free cash flow | 611 | 446 |
| YoY revenue growth rate | 31% | 24% |
| Free cash flow margin | 22% | 21% |
However, the gross margin for the quarter dipped slightly to 48.1%, down from 49.5% a year ago. Gross profit rose 27% year-over-year to $1.35 billion.
Shopify generated $615 million in operating cash flow and $611 million in free cash flow, with its free cash flow margin improving to 22% from 21% a year ago.
The quarter results reflect the impact of the holiday shopping season, a critical period for e-commerce businesses.
Online spending during November and December surged nearly 9% to $241.1 billion, according to Adobe Analytics, which monitors sales on retailer websites.
This figure slightly exceeded analysts’ forecast of $240.8 billion, highlighting the robust consumer activity during the holiday season.
Shopify Q1 2025 guidance
Shopify anticipates mid-twenties percentage growth in revenue on a year-over-year basis for the first quarter of 2025, aligning with a consensus estimate of $2.32 billion.
Shopify expects strong merchant momentum from the fourth quarter to continue into the first quarter, despite Q1 typically being the company’s lowest gross merchandise volume (GMV) quarter due to seasonal trends.
“We expect the strong merchant momentum from Q4 to carry over into Q1, recognizing that Q1 is consistently our lowest GMV quarter seasonally,” the company said in a press release.
For the first quarter of 2025, Shopify has provided the following outlook:
- Gross profit: Anticipated to increase at a low-twenties percentage rate year-over-year.
- Operating Expenses: Projected to account for 41% to 42% of revenue.
- Stock-based compensation: Estimated at $120 million.
- Free Cash flow margin: Expected to be in the mid-teens.
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