Shopify misses volume targets

Shopify shares dropped by 7 percent on Tuesday following the release of third quarter results that showed the company missed key performance targets. The e-commerce platform reported that its gross merchandise volume landed at $119.15 billion, a figure that trailed the $120.03 billion estimated by analysts at StreetAccount. Subscription gross profit also underperformed expectations, coming in at $661 million against an estimate of $680.3 million, a difference of nearly $20 million.

The company’s financial performance has evolved over the past year despite these recent shortfalls. Shopify has recorded growth in gross merchandise volume above 20 percent for thirteen consecutive quarters. However, the latest figures showed that overall quarterly revenue stood at $3.74 billion, slightly below the $3.75 billion projected by LSEG. Subscription revenue of $836 million also missed the $848.1 million benchmark provided by FactSet, while merchant revenue and merchant gross profit both exceeded analyst forecasts.

Harley Finkelstein, the president of Shopify, addressed the market reaction during an appearance on CNBC’s Squawk on the Street. He described the merchandise volume results as consistent and durable. Finkelstein stated that the company is proud of the print and intends to continue building for the long term while ignoring daily market noise. He noted that the company remains focused on its strategic goals despite the stock decline.

Looking ahead, Shopify projects revenue growth in the low thirties range year over year for the fourth quarter. This outlook is slightly below the 32.1 percent growth rate estimated by LSEG. The company is also integrating new technologies into its ecosystem to support its merchant base and consumer experience during the upcoming holiday period.

Meta released its consumer-facing artificial intelligence agent, Muse, during the third quarter, with Shopify serving as an early partner. This collaboration allows users to browse and purchase items on the Shopify platform directly within the Muse app. Customers can also complete transactions using Shopify’s payment service, Shop Pay. The integration represents a shift in how consumers interact with digital storefronts.

Finkelstein discussed the impact of AI agents on pricing and consumer behavior. He stated that the company is not seeing prices being lowered as a result of AI negotiation. Instead, he argued that these agents are driving new traffic to the platform and helping consumers discover new brands. He cited the Tin Can phone, a screenless device for children, as an example of a product finding success through agentic-based commerce.

The company acknowledges economic pressures on consumers heading into the holiday season. Finkelstein believes this marks the first holiday season where AI-assisted shopping capabilities will become mainstream. He expects that the rise of personal agents will facilitate this shift, allowing for more specific and merit-based product recommendations.