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SHOP's Subscription Growth Accelerates: A Stable Driver of Revenues?
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Key Takeaways
Shopify's Subscription Solutions rose 14.6% to $699M and delivered 24.6% of Q3 revenues.
Plus drove 35% of MRR, boosting ARPU and stickiness while margins held in the 80% range.
SHOP sees mid-to-high-20% Q4 revenue growth despite pricing laps and slightly lower subscription margins.
Shopify (SHOP - Free Report) continues to strengthen its long-term revenue base through its expanding Subscription Solutions segment, which contributed 24.6% of total revenues in the third quarter of 2025.
Subscription Solutions revenues climbed 14.6% year over year to $699 million, supported by strong demand for higher-priced plans and sustained merchant engagement. Monthly Recurring Revenues increased 10.3%, supported by the continued expansion of Shopify Plus, now 35% of MRR. The growing contribution from Plus is significant, as these higher-tier merchants deliver stronger ARPU, multi-store needs and long-term stickiness — creating a recurring revenue base.
Shopify benefits from steady subscription income, driven by reliable plans and loyal users, reducing revenue volatility. Subscription Solutions continues to deliver gross margins in the 80% range, providing solid operating leverage even as the company ramps up investments in AI capabilities, product enhancements and international expansion. This momentum is further supported by the broader subscription e-commerce market, which is projected to grow to $6.88 trillion by 2032, according to Fortune Business Insights, supporting Shopify’s long-term growth opportunity.
However, subscription growth faces short-term headwinds. The company is lapping prior Plus pricing changes and extended trial periods, which affect year-over-year comparisons. Higher hosting costs, geographic expansion and increased AI usage also put mild pressure on subscription margins, which dipped slightly to 81.7% on a year-over-year basis.
Still, Shopify expects overall revenues to rise in the mid-to-high 20% range in the fourth quarter of 2025, reinforcing that its subscription business remains a stable, strategically important driver of long-term revenue visibility.
Shopify Confronts Rising Competition
The competitive intensity in e-commerce remains high for Shopify, with Commerce.com (CMRC - Free Report) and eBay Inc. (EBAY - Free Report) standing out as key challengers.
Commerce.com, the newly rebranded parent company behind BigCommerce, Feedonomics and Makeswift, is sharpening its competitive edge in the modern e-commerce landscape. A central part of Commerce.com’s strategy is its commitment to providing flexible, enterprise-grade subscription solutions, which drives recurring base revenues. In the third quarter of 2025, Subscription Solutions revenues reached $64.7 million, representing a 3% year-over-year increase and a sequential improvement.
eBay is a direct competitor to Shopify in the e-commerce space. Unlike Shopify’s merchant-owned storefront model, eBay operates a large third-party marketplace. Serving both individuals and businesses, eBay spans new, used and collectible goods, supported by a highly engaged buyer base. The company delivered another strong third quarter, with GMV rising 10% to $20.1 billion and active buyers reaching 134 million as of September 2025, highlighting eBay’s sustained strength and influence in the e-commerce market.
Shopify shares have jumped 39.4% year to date, outperforming the broader Zacks Computer and Technology sector’s return of 21.5%. However, the stock has trailed the Zacks Internet Services industry, which has rallied 47.2% over the same period.
SHOP’s YTD Price Performance
Image Source: Zacks Investment Research
Shopify stock is overvalued, with a forward 12-month price/sales of 13.91X compared with the broader sector’s 6.61X. SHOP has a Value Score of F.
SHOP’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings is pegged at $1.46 per share, up a penny over the past 30 days. This suggests 12.31% year-over-year growth.
Image: Shutterstock
SHOP's Subscription Growth Accelerates: A Stable Driver of Revenues?
Key Takeaways
Shopify (SHOP - Free Report) continues to strengthen its long-term revenue base through its expanding Subscription Solutions segment, which contributed 24.6% of total revenues in the third quarter of 2025.
Subscription Solutions revenues climbed 14.6% year over year to $699 million, supported by strong demand for higher-priced plans and sustained merchant engagement. Monthly Recurring Revenues increased 10.3%, supported by the continued expansion of Shopify Plus, now 35% of MRR. The growing contribution from Plus is significant, as these higher-tier merchants deliver stronger ARPU, multi-store needs and long-term stickiness — creating a recurring revenue base.
Shopify benefits from steady subscription income, driven by reliable plans and loyal users, reducing revenue volatility. Subscription Solutions continues to deliver gross margins in the 80% range, providing solid operating leverage even as the company ramps up investments in AI capabilities, product enhancements and international expansion. This momentum is further supported by the broader subscription e-commerce market, which is projected to grow to $6.88 trillion by 2032, according to Fortune Business Insights, supporting Shopify’s long-term growth opportunity.
However, subscription growth faces short-term headwinds. The company is lapping prior Plus pricing changes and extended trial periods, which affect year-over-year comparisons. Higher hosting costs, geographic expansion and increased AI usage also put mild pressure on subscription margins, which dipped slightly to 81.7% on a year-over-year basis.
Still, Shopify expects overall revenues to rise in the mid-to-high 20% range in the fourth quarter of 2025, reinforcing that its subscription business remains a stable, strategically important driver of long-term revenue visibility.
Shopify Confronts Rising Competition
The competitive intensity in e-commerce remains high for Shopify, with Commerce.com (CMRC - Free Report) and eBay Inc. (EBAY - Free Report) standing out as key challengers.
Commerce.com, the newly rebranded parent company behind BigCommerce, Feedonomics and Makeswift, is sharpening its competitive edge in the modern e-commerce landscape. A central part of Commerce.com’s strategy is its commitment to providing flexible, enterprise-grade subscription solutions, which drives recurring base revenues. In the third quarter of 2025, Subscription Solutions revenues reached $64.7 million, representing a 3% year-over-year increase and a sequential improvement.
eBay is a direct competitor to Shopify in the e-commerce space. Unlike Shopify’s merchant-owned storefront model, eBay operates a large third-party marketplace. Serving both individuals and businesses, eBay spans new, used and collectible goods, supported by a highly engaged buyer base. The company delivered another strong third quarter, with GMV rising 10% to $20.1 billion and active buyers reaching 134 million as of September 2025, highlighting eBay’s sustained strength and influence in the e-commerce market.
SHOP’s Share Price Performance, Valuation & Estimates
Shopify shares have jumped 39.4% year to date, outperforming the broader Zacks Computer and Technology sector’s return of 21.5%. However, the stock has trailed the Zacks Internet Services industry, which has rallied 47.2% over the same period.
SHOP’s YTD Price Performance
Image Source: Zacks Investment Research
Shopify stock is overvalued, with a forward 12-month price/sales of 13.91X compared with the broader sector’s 6.61X. SHOP has a Value Score of F.
SHOP’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings is pegged at $1.46 per share, up a penny over the past 30 days. This suggests 12.31% year-over-year growth.
Image Source: Zacks Investment Research
Shopify currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.