E-commerce platform share Shopify Shares fell 7% on Tuesday after the company missed expectations for subscription gross profit and gross product volume.
Shopify reported before the bell on Tuesday with adjusted earnings of 49 cents per share, beating LSEG’s estimate of 46 cents per share.
Overall, quarterly revenue was $3.74 billion, slightly below LSEG’s estimate of $3.75 billion. Shopify said it expects fourth-quarter sales to grow in the “low 30s range” year over year, compared to LSEG’s forecast of 32.1%.
According to Street Accounts, gross merchandise value for the quarter was $119.15 billion, lower than analysts’ expectations of $120.03 billion. Subscription gross profit was also nearly $20 million lower than expected, coming in at $661 million versus StreetAccount’s estimate of $680.3 million. Franchise store gross profits exceeded expectations.
In comments to CNBC’s “Squawk on the Streets” on Tuesday, Shopify President Harley Finkelstein called GMV results “consistent” and “sustainable,” noting the company’s 13th consecutive quarter of GMV growth of more than 20%.
“We’re really proud of this print product, and we’re going to ignore the day-to-day noise and keep building for the long term,” Finkelstein said.
Subscription revenue also came in at $836 million, below analysts’ expectations of $848.1 million, according to FactSet. Franchisee profits exceeded expectations.
meta released its consumer artificial intelligence agent Muse in the third quarter, and Shopify was an early partner. The partnership will allow Muse to browse and purchase products on the Shopify platform within the Muse app, and customers will be able to check out with Shop Pay, Shopify’s payment service.
Finkelstein mentioned concerns about potential price pressure when AI agents negotiate price and cost comparisons on behalf of users.
“I don’t see any signs that prices are coming down,” he said.
Instead, Finkelstein said, AI agents are driving new traffic to Shopify’s business and helping consumers discover new brands and products.
“Brands like the Tin Can phone, a screenless phone for kids, are incredibly successful because of agent-based commerce. With agent-based commerce, consumers are using very specific, very benefit-based outcomes, and they’re using the Shopify catalog. We’re presenting consumers with great products that they wouldn’t have found any other way.”
Finkelstein acknowledged the financial pressures on consumers heading into the holiday season, but said businesses are optimistic and there could be a breakthrough moment for agent shopping.
“I think this year will be the first holiday season where AI-assisted shopping capabilities go mainstream, especially with the rise of personal agents,” he said.
