Shopify reported significant growth in key financial metrics for the fourth quarter of 2024, demonstrating an increase in both revenue and profitability.
Key Financial Achievements
In Q4 2024, Shopify's revenue surged to $2.812 billion, marking a 31% increase compared to the same quarter the previous year. Revenue from subscription solutions grew by 27%, while merchant solutions saw a 33% increase. Gross profit rose to $1.352 billion, reflecting a 27% year-over-year growth. Operating income was $465 million, a substantial increase from $289 million in the fourth quarter of 2023. Shopify also achieved a free cash flow of $611 million, with gross merchandise volume (GMV) of $94.460 billion, a 26% increase from the previous year. MRR grew to $178 million.
Exceeding Market Expectations
Shopify's performance in Q4 2024 exceeded market expectations, which projected an earnings per share (EPS) of $0.4274 and revenue of $2.73 billion. The company reported an EPS of $458 million when excluding the impact of equity investments and revenue of $2.812 billion. A combination of factors, including increased international and offline revenue, grew by 33%. B2B GMV saw a remarkable increase of over 140%, while Shop Pay GMV grew by 50%. The company's free cash flow margin reached 22%, expanding by 500 basis points year-over-year.
Future Forecasts
Looking ahead to the first quarter of 2025, Shopify expects revenue to grow at a mid-twenties percentage rate year-over-year. This guidance suggests sustained demand for its platform and services despite the typical seasonal dip in GMV. The company also projects gross profit dollars to grow at the low-twenties percentage rate year-over-year. Operating expenses as a percentage of revenue are anticipated to be between 41% and 42%. Stock-based compensation is expected to be $120 million, underscoring the company's commitment to attracting and retaining top talent. The company forecasts a free cash flow margin in the mid-teens for the first quarter of 2025.
Shopify continues to show growth in revenue and profitability, surpassing market expectations. The forecasts for 2025 provide optimism for the company's future prospects.
