Shopify (SHOP) Stock: Falls 5% Despite 32% Revenue Growth in Q3

TLDR

• Shopify shares drop 5.07% to $148.30 despite posting 32% revenue growth in Q3.
• Shopify reports $3.742 billion in revenue as third-quarter GMV climbs to $119.1 billion.
• Shopify’s free cash flow rises to $816 million as its quarterly margin improves to 22%.
• Shopify operating income jumps to $568 million despite higher operating expenses in Q3.
• Shopify forecasts low-thirties revenue growth for Q4 as shares retreat 5.07%.

Shopify Inc. (SHOP) shares declined 5.07% to $148.30, losing $7.92 during the trading session. The decline came despite strong third-quarter results, with revenue climbing 32% year over year. However, the company also reported higher operating income, stronger cash generation, and improved profitability.

Shopify Inc., SHOP

Shopify Reports 32% Revenue Growth and Higher GMV

Shopify generated $3.742 billion in revenue during the third quarter ended September 30, 2026. This represented a 32% increase from $2.844 billion in the same quarter last year. The company maintained 32% revenue growth after adjusting for currency movements.

Gross merchandise volume (GMV) reached $119.145 billion, compared with $92.013 billion a year earlier. This represented an increase of approximately 29.5% as merchants processed more sales through Shopify’s commerce platform. Meanwhile, monthly recurring revenue (MRR) increased to $230 million from $193 million.

Merchant solutions remained Shopify’s largest revenue contributor, generating $2.906 billion during the quarter. Subscription solutions added another $836 million, compared with $699 million in the previous year’s corresponding quarter. Consequently, both business segments recorded higher revenue and supported the company’s overall growth.

Operating Income and Free Cash Flow Improve

Shopify’s gross profit increased to $1.781 billion from $1.391 billion in the third quarter of 2025. However, the company also reported higher operating costs, with total operating expenses reaching $1.213 billion. Despite those expenses, operating income climbed to $568 million from $343 million.

Net income reached $462 million, compared with $264 million in the corresponding quarter last year. However, equity investment valuations affected the reported earnings through $122 million in net losses after taxes. Excluding those investment impacts, Shopify reported net income of $584 million, up from $367 million.

Free cash flow increased to $816 million from $507 million, reflecting stronger cash generation during the quarter. Additionally, the free cash flow margin improved to 22% from 18% a year earlier. These results showed higher cash generation alongside revenue growth and improved operating income.

Shopify Sets Fourth-Quarter Outlook as Shares Decline

Shopify expects fourth-quarter revenue growth to remain within the low-thirties percentage range year over year. Additionally, the company projects gross profit dollars will increase at a high-twenties percentage rate. Its operating expenses should represent between 29% and 30% of revenue.

The company also expects stock-based compensation to reach $155 million during the fourth quarter. Shopify projects its free cash flow margin will remain consistent with the fourth quarter of 2025. These forecasts outline its expected performance through the final quarter of 2026.

Shopify’s balance sheet showed $14.664 billion in total assets at September 30, down from $15.189 billion. Cash and cash equivalents increased to $1.868 billion from $1.545 billion at December 31, 2025. Despite its strong quarterly operating results,

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