Shopify drops 7% as GMV and subscription gross profit miss targets

The numbers investors saw

Shopify posted results before the open, and the stock moved lower by roughly 7%. Adjusted earnings landed at 49 cents per share, topping LSEG's 46 cent estimate, while revenue was $3.74 billion versus the $3.75 billion consensus.

On the line items that mattered most for the selloff, subscription gross profit was $661 million, about $20 million shy of StreetAccount's $680.3 million view, and gross merchandise volume registered $119.15 billion against expectations of $120.03 billion. Subscription revenue was $836 million compared with FactSet's $848.1 million estimate. Merchant gross profit beat estimates, and merchant revenue came in ahead as well.

Looking ahead, the company guided to fourth quarter revenue growth in the low thirties percent year over year, which sits near LSEG's 32.1% estimate.

Market surprises are a reminder that smarter tools can help investors stay prepared. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.

What management said about GMV and AI agents

President Harley Finkelstein called GMV performance "consistent" and "durable" on CNBC's Squawk on the Street, adding this marked the thirteenth straight quarter with GMV growth above 20%. On the broader print he said, "We're really proud of the print, and we're going to keep building for the long term and ignore the noise day to day."

He also pushed back on the idea that AI shopping assistants are forcing discounts, saying, "We're not seeing that prices are being lowered." Instead, he said these tools are sending fresh traffic to the platform and helping shoppers uncover brands they would not otherwise find. His example: "Brands like the Tin Can phone, a screenless phone for kids, are seeing incredible success because of agentic-based commerce, where a consumer is being very specific and using very merit-based results and using Shopify catalog. It is presenting these great products to consumers that there's no way they would have found otherwise."

AI partnerships and the holiday outlook

Meta rolled out its consumer AI agent, Muse, in the third quarter, with Shopify on board early. The tie up lets Muse browse and buy from Shopify sellers inside the Muse app and complete checkout using Shop Pay.

Finkelstein noted some strain on household budgets into the holidays, but said merchants are upbeat and that agent driven shopping could hit the mainstream this season. In his words, "I do think this is the first holiday season where AI-assisted shopping capabilities will become mainstream, especially with the rise of personal agents."

Using new technologies thoughtfully can give individual investors a clearer perspective. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.