Shopify stock dipped on Thursday after the e-commerce firm reported first-quarter revenue that edged by estimates while the company's June quarter outlook came in mixed amid higher investments.
Shopify aims to balance long-term growth and profitability, said Chief Financial Officer Jeff Hoffmeister on the earnings call with Wall Street analysts.
"We will continue to prioritize investing in key areas like our core platform, international, business-to-business, enterprise and offline, as opposed to driving for higher free cash flow margins in the near-term," he said. "It's simply the right thing to do with the immense opportunities we see ahead, but delivers a profitability level that we are proud of and believe we can maintain without compromising future growth."
Using generally accepted accounting principles, or GAAP, Shopify lost 53 cents per share, below estimates for 18-cent profit, due to losses from net unrealized income on equity and other investments.
Also, Shopify reported a net income loss of $682 million versus a $273 million loss a year earlier.
Also, revenue climbed 27% to $2.36 billion. Shopify stock analysts polled by FactSet predicted revenue of $2.334 billion.
Subscription Growth Slows
Further, Shopify said Q2 gross merchandise volume from merchant transactions rose 23% to $74.75 billion, missing FactSet estimates of $76.09 billion.
Merchant solutions revenue rose 29% to $1.74 billion vs. estimates of $1.736 billion. Subscription revenue climbed 21% to $620 million versus estimates of $629 million.
On the stock market today, Shopify stock was down nearly 1% to 93.70 in afternoon trading.
Going into the Shopify earnings report, shares had retreated 10% in 2025.
For the current June quarter, Shopify said it expects "revenue to grow at a mid-twenties percentage rate on a year-over-year basis and gross profit dollars to grow at a high-teens percentage rate."
Wall Street analysts had estimated Q2 revenue growth of 22%.
For Q2, management's outlook for gross profit growth of "high-teens" came in below estimates of 21% and the free cash flow margin outlook of "mid-teens" was below consensus at 17%, said Mark Mahaney, analyst at Evercore ISI, in a report.
"Shopify shares are trading down due to in-line results and a softer-than-expected guide for gross profit and FCF margin," Mahaney added.
Heading into the earnings report, some investors focused on the Trump administration's halt to "de minimis" tariff exemptions on cheap Chinese goods and the impact on Shopify's merchant customers. The de minimis tariff loophole has allowed Chinese online marketplaces Temu and Shein to ship products valued at less than $800 into the U.S. duty-free.
However, Shopify said de minimis-related merchandise accounts for only 1% of GMV.
Shopify Stock: Technical Ratings
Further, Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping.
From a technical view, Shopify stock has forged a double-bottom base, which looks sort of like the letter W. It features two distinct sell-offs. Having formed a double-bottom base, Shopify stock holds an entry point of 111, according to MarketSurge.
Meanwhile, Shopify stock holds a Composite Rating of 94 out of a best-possible 99, according to IBD Stock Check-up.
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