SHOP

Operationally, Shopify is executing at a high level. FY2025 revenue grew 30.1% to $11.6B on $378.4B of GMV (+29%), and income from operations rose 36.6% to $1.47B — growing faster than revenue, i.e. real operating leverage. The headline -39% drop in net income to $1.23B is largely an optical artifact: the MD&A shows the swing came from non-operating 'net (loss) gain on equity and equity method investments,' which went from +$853M in 2024 to -$316M in 2025, not from any deterioration in the core business. Cash generation underscores the quality — operating cash flow of $2.03B (+25.8%) against just $26.0M of capex makes this an exceptionally capital-light free-cash-flow machine.

The balance sheet is a fortress: $13.5B of equity against $15.2B of total assets (essentially debt-free), current assets of $8.30B versus only $1.39B of current liabilities (~6x current ratio), and retained earnings up 75.6%. The growth engine is the mix shift toward merchant solutions, now 76% of revenue and up 35%, driven by Shopify Payments penetration rising from 61.9% to 65.6% ($248.1B of GMV processed). The trade-off, per the cost breakdown, is margin: cost of merchant solutions is 47% of revenue, so as payments out-grows the higher-margin subscription business (+17%, now just 24% of revenue), blended gross margin is structurally pressured (48.1%).