TLDR
- Shopify reported Q1 revenue of $2.36 billion but missed operating income expectations
- Stock fell 8.5% in premarket trading as quarterly net loss widened to $682 million
- Trump’s elimination of “de minimis” tariff exemptions on Chinese goods raises concerns for Shopify merchants
- Company forecasts mid-twenties revenue growth for Q2 2025
- Investors seek clarity on merchant exposure to Chinese imports subject to 145% tariff rate
Shopify released its first quarter earnings report for 2025 this Thursday, revealing mixed results that have investors concerned about the company’s future performance. The e-commerce platform reported revenue of $2.36 billion, which was in line with Wall Street forecasts, but its operating income of $203 million fell well short of the $437 million analysts had anticipated.
The company’s quarterly net loss widened significantly to $682 million from $273 million a year ago.
The stock responded negatively to the news, falling 8.5% to $86.48 in premarket trading.
For the second quarter of 2025, Shopify provided guidance indicating revenue growth at a mid-twenties percentage rate compared to the previous year. The company also projected gross profit growth at a high-teens percentage rate.
Operating expenses are expected to represent 39% to 40% of revenue in the coming quarter.
Trump Tariffs Cast Shadow
The earnings report comes against a backdrop of growing concern about the Trump administration’s trade policies. Analysts have been particularly focused on the elimination of the “de minimis” tariff exemption, which previously allowed Chinese online marketplaces like Temu and Shein to ship products valued under $800 into the U.S. duty-free.
Many of Shopify’s merchants may be affected by these policy changes.
Jefferies analyst Samad Samana commented on the situation: “We believe the momentum seen in 2024 carried into Q1 and we expect results to beat consensus on growth and margins. However, the unknown impact of tariffs and the elimination of the de minimis rule on both merchants and consumers make it difficult to have confidence that recent momentum is sustainable.”
Investors are particularly interested in understanding what percentage of merchandise sold on Shopify comes from China. This is because these products would be subject to the current 145% tariff rate.
According to Oppenheimer analyst Ken Wong, estimates of this exposure range widely “from the low double digits to more than 40%.”
While cross-border orders comprised just 14% of Shopify’s gross merchandise volume in the previous quarter, there are concerns that a larger portion of merchant inventory may be imported from China.
Evolution Beyond Small Business Roots
The current challenges come at a time when Shopify has been actively expanding its market reach. While the company built its reputation serving small businesses, it has recently been targeting larger companies with its e-commerce software and services.
The company has been evolving its business model in other ways as well.
In 2023, Shopify sold its delivery and logistics business to Flexport as part of its strategic realignment.
The company has also been expanding its point-of-sale business, which provides hardware for in-store checkouts, into new international markets.
Despite current concerns, many analysts remain optimistic about Shopify’s long-term prospects. About 61% of analysts covering the stock still rate shares as a Buy, according to FactSet.
Mark Zgutowicz, an analyst at Benchmark Equity Research, maintained a Buy rating on the stock ahead of earnings, though he lowered his price target to $125 from $150.
“We are cautiously optimistic that Shopify’s global share take position, and its generally higher income demo can partially offset macro/tariff-related weakness,” Zgutowicz noted.
The stock had already been struggling before this earnings report, having fallen 12% in 2025. This decline is more than double the S&P 500’s 4.3% loss during the same period.
Prior to the earnings announcement, Shopify stock had closed 0.7% higher at $94.50 on Wednesday, showing some optimism among traders.
Some positive news came from reports that U.S.-China trade talks are ongoing, which briefly helped Shopify stock gain more than 1% to 95.73 prior to the earnings release.
The company’s first quarter EPS came in at 26 cents, which represented 31% growth year over year.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
