SHOP -18%: Not a good print - GMV missed Street and the bogeys at $119.1B (+29.5%), a second straight decel (from 34.8% in 1Q and 31.6% in 2Q) and the slowest growth since 1Q25, for a long built on GMV re-accelerating to ~33%. Revenue of $3.742B (+31.6%) was in line with Street, ending at least 12 straight quarters of revenue beats, and GP of $1.781B (+28.0%) was in line too, both well short of the ~+34-35% / +31-32% bogeys. The 4Q guide looks ok with the revenue bogey (low-thirties) but missed on GP (high-twenties vs. the ~+30-31% bogeys), with FCF margin guided flat y/y. Opex and FCF the two bright spots.
Positioning was LO-heavy (HFs lighter) but the GMV miss and decel (bulls wanted to see and accel) along with the GP miss will have faster money HFs staying away into the holiday season as consumer agentic buzz has slowed. Never want to see decel on a stock at 50x+. . Call at 9:30am
Bulls will point to revenue still growing ~2pts faster than GMV (3.14% of GMV vs. 3.09% a year ago), merchant solutions +35.5%, an MRR beat, a GMV 2-yr stack only ~0.7pt lower (61.5 vs. 62.2) on a 1.4pt tougher comp, opex at 32.4% of revenue vs. the 33-34% guide, a 22% FCF margin with $562M of buybacks, and a low-thirties 4Q revenue guide above Street’s +29.8% on a ~1pt easier comp.
Bears will lean on GMV slowing for a second straight quarter to +29.5% and missing Street for the first time since 1Q25, the end of at least 12 straight revenue beats, GP +28.0% vs. the +31-32% bogeys with a high-twenties 4Q GP guide vs. the ~+30-31% bogeys, subscription GM down ~262bps y/y, and FCF margin guided flat y/y.
GMV missed Street and the bogeys at $119.1B, +29.5% y/y (FX negligible; the release rounds it to 29% reported / 30% cc), vs. Street $120.0B (+30.4%) and ~$121.9-122.8B bogeys (+32.5-33.5%).
A second straight decel: 34.8% in 1Q, 31.6% in 2Q, 29.5% in 3Q. That’s the slowest growth since 1Q25 (+22.8%).
The comp was 1.4pt tougher than 2Q’s (3Q25 grew 32.0% vs. 30.6% for 2Q25), so the 2-yr stack is 61.5 vs. 62.2 in 2Q.
In dollars, GMV added $3.58B q/q ($115.57B in 2Q to $119.15B) vs. $4.17B in the same quarter last year ($87.84B to $92.01B).
First GMV miss vs. Street since 1Q25, and at 0.7% short the biggest in the 13 quarters we have (3Q23 on). 2Q beat Street by 3.2%.
No GMV mix in the release: international, offline, B2B and the de minimis hit to cross-border all come on the call.
Revenue was in line with Street but missed the bogeys at $3.742B, +31.6% (the release rounds to 32%), vs. Street $3.746B (+31.7%), ~$3.81-3.84B bogeys (+34-35%) and the low-thirties guide.
$4M short of Street ends a run of at least 12 straight revenue beats (every quarter since 3Q23). The bogeys only assumed a normal beat (~1.7-2.5% over Street): the 12-quarter average beat was 2.6%, and 2Q beat by 3.6%.
A second straight decel too: 34.3% in 1Q, 33.7% in 2Q, 31.6% in 3Q, on a 0.5pt tougher comp (3Q25 +31.5% vs. 2Q25 +31.0%). 2-yr stack 63.1 vs. 64.7 in 2Q.
Merchant solutions $2.906B, +35.5% (+36% cc); subscription solutions $836M, +19.6%.
Revenue still grew ~2pts faster than GMV (31.6% vs. 29.5%), the same gap as 2Q (33.7% vs. 31.6%). Take rate (revenue as a % of GMV) was 3.14% vs. 3.09% a year ago; merchant solutions alone were 2.44% of GMV vs. 2.33%.
MRR beat at $230M (+19.2%) vs. Street $228.8M (+18.6%).
GP was in line with Street but missed the bogeys at $1.781B, +28.0%, vs. Street $1.785B (+28.2%) and ~$1.82-1.84B bogeys (+31-32%), at the top of the mid-to-high-20s guide.
Also a second straight decel: 32.3% in 1Q, 31.2% in 2Q, 28.0% in 3Q, on about the same comp (3Q25 +24.4% vs. 2Q25 +24.6%).
GM 47.6%, ~6bps under Street and ~132bps lower y/y (48.9%).
Subscription GM fell ~262bps y/y to 79.1%: subscription cost of revenue grew 37% ($128M to $175M) vs. subscription revenue +20%. Merchant solutions GM rose ~31bps to 38.5%.
Opex beat the guide at 32.4% of revenue ($1.213B) vs. the 33-34% guide, 34.0% in 2Q and 36.8% a year ago.
R&D +32.5% y/y, S&M +13.7%, G&A +13.0%. Transaction and loan losses fell 19% to $120M ($148M a year ago) while loan and MCA originations rose 71% to $1.70B.
GAAP op income $568M (+66%), a 15.2% margin vs. 12.1% a year ago.
Adj. op income of ~$717M (19.2% margin) by our math: GAAP op income of $568M plus $149M of SBC and amortization. That’s vs. Street $675.5M (18.0%), ~113bps above on margin.
Non-GAAP EPS of $0.49 vs. Street $0.46 and $0.34 a year ago. GAAP net income $462M, after a $122M after-tax loss on equity stakes.
FCF beat at $816M, a 21.8% margin, vs. Street 19.9%, the high-teens to low-20s guide and 17.8% a year ago.
Since April, MCA cash flows sit in investing, not operating. In 3Q that moved $30M of net cash use out of FCF, ~0.8pt of margin, so FCF margin is ~21.0% on the old basis (the guide had flagged a <1pt MCA tailwind). Still above Street.
Bought back $562M of stock in 3Q (none a year ago). Diluted shares 1.291B vs. 1.313B a year ago; cash and marketable securities $4.73B vs. $5.78B at YE25.
4Q guide, verbatim: “Revenue to grow at a low-thirties percentage rate on a year-over-year basis; Gross profit dollars to grow at a high-twenties percentage rate on a year-over-year basis; Operating expenses as a percentage of revenue to be 29% to 30%; Stock-based compensation to be $155 million; and Free cash flow margin to be consistent with the fourth quarter of 2025.”
Revenue: low-thirties on 4Q25’s $3.672B is ~$4.77B at +30% to ~$4.88B at +33%, vs. Street $4.766B (+29.8%) and ~$4.81-4.85B bogeys (+31-32%): beat Street, in line with the bogeys. It’s the same “low-thirties” wording as the 3Q guide, which delivered 31.6%. The 4Q comp is ~1pt easier (4Q25 +30.6% vs. 3Q25 +31.5%).
GP: high-twenties on 4Q25’s $1.693B is ~$2.15B at +27% to ~$2.18B at +29%, vs. Street $2.175B (+28.5%) and ~$2.20-2.22B bogeys (+30-31%): in line with Street, missed the bogeys. The 3Q guide said mid-to-high-20s and delivered 28.0%.
Opex at 29-30% of revenue vs. 28.9% in 4Q25, so opex rises as a share of revenue y/y in 4Q, after falling ~440bps y/y in 3Q (36.8% to 32.4%).
Put together with the GP guide, that’s a ~15-16% GAAP op margin in 4Q by our math (~45% GM at the guide midpoints less 29-30% opex) vs. 17.2% in 4Q25 (46.1% GM less 28.9%), so op margin falls y/y after rising ~310bps in 3Q (12.1% to 15.2%).
FCF margin “consistent with” 4Q25’s 19.5%, so flat y/y, after +4.0pts y/y in 3Q (17.8% to 21.8%).
SBC $155M vs. $140M in 3Q.
The guide set is in line with the revenue bogey and above Street, but GP missed the bogeys, opex rises as a share of revenue and FCF margin is guided flat y/y.
DT -16.6%: Beat on subs revenue, margins and EPS, but the FY27 ARR guide raise is just Arize. The new 17.5-18.5% cc beat Street (16.9%) but missed the ~18.5-19% bogeys, so the organic guide stays at 15.5-16.5% with no mid-year raise (DT raised it 100bp at this point last year). Net new ARR looks short of the ~$80-85M bogeys (cc ARR growth slowed to 16% from 17% in F1Q), and the EPS guides missed (FY $1.88-1.90 vs $1.96 Street, F3Q $0.44-0.45 vs $0.50) on Arize dilution and ~11M more shares.