Shopfellows report mixed Q3 results as Shopify stock slides 7%

Shopify shares dropped 7 percent on Tuesday after the e-commerce platform released third-quarter results that failed to meet analyst projections for key operational metrics. The stock decline followed an announcement made before the market opened, which detailed performance figures for the quarter ending in September.

The company reported total quarterly revenue of $3.74 billion, a figure slightly below the LSEG consensus estimate of $3.75 billion. Despite the top-line miss, Shopify delivered adjusted earnings of 49 cents per share, surpassing the LSEG consensus of 46 cents. Gross merchandise volume, which tracks total sales processed through the platform, reached $119.15 billion. This amount fell short of the $120.03 billion estimated by StreetAccount.

Subscription gross profit came in at $661 million, nearly $20 million below the $680.3 million expected by StreetAccount analysts. Subscription revenue totaled $836 million, missing the FactSet estimate of $848.1 million. However, merchant gross profit exceeded expectations, and the company noted that merchant revenue also beat analyst estimates.

Harley Finkelstein, president of Shopify, defended the performance in an interview on CNBC’s Squawk on the Street. He described the gross merchandise volume results as consistent and durable, noting this was the thirteenth consecutive quarter of growth exceeding 20 percent. Finkelstein said the company is proud of its results and intends to focus on long-term building while ignoring daily market noise.

During the same quarter, Shopify launched a collaboration with Meta’s consumer-facing artificial intelligence agent, Muse. As an early partner, Shopify allows users to browse and purchase items directly within the Muse app. Customers can complete these transactions using Shopify’s Shop Pay service. Finkelstein stated that the company has not observed a general lowering of prices due to AI comparison shopping. He argued that these agents generate new traffic and help consumers discover new brands.

Finkelstein cited the success of the Tin Can phone, a screenless device for children, as an example of agentic-based commerce working effectively. He explained that merit-based results from AI queries present high-quality products from the Shopify catalog. Looking ahead to the fourth quarter, Shopify expects year-over-year revenue growth to fall within the low thirties percentage range, slightly above the 32.1 percent growth rate projected by LSEG.

As the holiday season approaches, Finkelstein acknowledged economic pressure on consumers but expressed optimism about agentic shopping reaching a breakthrough. He believes this will be the first holiday season where AI-assisted shopping capabilities become mainstream, driven by the rise of personal agents.