Shopify (SHOP) kicked off Q1 2025 with a strong performance, showcasing robust growth across key metrics and reinforcing its position as a leading commerce platform. Revenue rose 27% year-over-year to $2.36 billion, driven by thriving merchant activity and continued expansion of Shopify’s ecosystem. Gross profit climbed 22% to $1.17 billion, while operating income more than doubled to $203 million, up 136% from the prior year, highlighting effective cost management and improving operational leverage.

Despite reporting a net loss of $682 million, this was primarily attributable to a $1.04 billion non-cash loss on equity investments, which management emphasized as unrelated to the core business. On an adjusted basis, non-GAAP net income reached $226 million, up from $144 million a year ago. Free cash flow improved to $363 million, with a free cash flow margin of 15%, up from 12%, reflecting strong underlying profitability.

Segment-wise, Merchant Solutions revenue surged 29% to $1.74 billion, accounting for 74% of total revenue, fueled by broader adoption of Shopify Payments and continued growth in value-added services. Subscription Solutions revenue also grew 21% to $620 million, supported by steady increases in merchant subscriptions and upgrades.

The platform continues to gain traction with merchants, as evidenced by a 23% increase in Gross Merchandise Volume (GMV) to $74.8 billion, and Monthly Recurring Revenue (MRR) rising 21% to $182 million. Shopify Payments penetration grew to 64% of GMV, processing $47.5 billion, up from 60% a year ago, signaling deeper integration within merchant operations.

While the gross margin slightly declined to 50% due to the growing share of lower-margin Merchant Solutions, Shopify maintained strong expense discipline. Operating expenses totaled $966 million, with increases aligned to growth initiatives in marketing, R&D, and transaction support.

Looking ahead, Shopify expects Q2 2025 revenue to grow at a mid-twenties percentage rate, with gross profit up in the high-teens, and free cash flow margin remaining in the mid-teens. The company anticipates operating expenses to remain between 39–40% of revenue.

Management reiterated confidence in Shopify’s ability to deliver profitable growth at scale. President Harley Finkelstein underscored the platform’s resilience across economic cycles, while CFO Jeff Hoffmeister highlighted consistent execution with eight straight quarters of 25%+ revenue growth and seven quarters of 20%+ GMV growth.

Backed by a solid balance sheet with $1.3 billion in cash and $4.2 billion in marketable securities, Shopify continues to invest in international expansion, product innovation—particularly in AI—and broader ecosystem enhancements. Despite the headline net loss, Shopify’s core business remains highly profitable and well-positioned for sustained growth throughout 2025.