Shopify (NASDAQ:SHOP): Strongest Q3 Results from the E-commerce Software Group

Wix’s third quarter saw higher-than-expected costs alongside strong revenue growth. Management attributed the results to robust user adoption in both the core website business and the newly acquired Base 44 AI-powered app builder. CEO Avishai Abrahami highlighted that “Base 44 is quickly proving to be a leader and the best solution on the market today,” while acknowledging that initial costs from rapid growth and marketing outlays for Base 44 weighed on margins. Cost pressures were driven by increased AI compute expenses and the predominance of monthly, rather than annual, subscriptions in Base 44’s user base, leading to a short-term misalignment between costs and revenue.

Is now the time to buy WIX? Find out in our full research report (it’s free for active Edge members).

Wix (WIX) Q3 CY2025 Highlights:

• Revenue: $505.2 million vs analyst estimates of $502.3 million (13.6% year-on-year growth, 0.6% beat)
• Adjusted EPS: $1.68 vs analyst estimates of $1.49 (12.6% beat)
• Adjusted Operating Income: $89.93 million vs analyst estimates of $95.97 million (17.8% margin, 6.3% miss)
• Revenue Guidance for Q4 CY2025 is $526 million at the midpoint, roughly in line with what analysts were expecting
• Operating Margin: -1.5%, down from 5.8% in the same quarter last year
• Billings: $514.5 million at quarter end, up 14.4% year on year
• Market Capitalization: $5.17 billion

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Wix’s Q3 Earnings Call

• Ygal Arounian (Citi): questioned the predominance of monthly subscriptions in Base 44 and the path to annual plans. CEO Avishai Abrahami explained it “takes time for people to trust the platform,” expecting annual adoption to grow over time as seen in Wix’s core business.

• Deepak Mathivanan (Cantor Fitzgerald): asked how Wix is preparing for the AI era and making websites more agent-friendly. Abrahami said every Wix website is now indexable by large language models (LLMs) and that new AI-driven standards are being integrated to ensure discoverability.

• Andrew Boone (Citizens Bank): inquired about the pathway for Base 44 to achieve margin parity with the core Wix platform. CFO Lior Shemesh said margins are currently pressured by upfront costs but should improve as recurring revenue rises and AI costs decline.

• Josh Beck (Raymond James): pressed on the duration of margin pressures from Base 44 hypergrowth. Shemesh replied that margin recovery depends on the balance between ongoing growth and cost efficiencies, with improvement expected as the user base matures.

• Trevor Young (Barclays): sought clarity on delays to the new Self Creator product. Abrahami cited the need to resolve technical challenges and stabilize new AI features, with launch now targeted for early 2026.

Catalysts in Upcoming Quarters

In the coming quarters, our team will closely monitor (1) the conversion of Base 44 users from monthly to annual subscriptions, (2) the pace of AI cost reductions and associated margin recovery, and (3) the rollout and adoption of new AI-driven features across both the core platform and Base 44. Execution on these fronts will be key in determining whether Wix can sustain growth while improving profitability.

Wix currently trades at $94.73, down from $126.92 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).

Our Favorite Stocks Right Now

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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Looking back on e-commerce software stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including VeriSign and its peers.

While e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.

The 5 e-commerce software stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was in line.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.9% since the latest earnings results.

VeriSign

As the silent guardian of the internet's roadmap, VeriSign operates the authoritative registry for .com and .net domain names, enabling websites to be found reliably when users type web addresses.

VeriSign reported revenues of $419.1 million, up 7.3% year on year. This print exceeded analysts’ expectations by 0.5%. Despite the top-line beat, it was still a mixed quarter for the company with a narrow beat of analysts’ revenue estimates.

Interestingly, the stock is up 2% since reporting and currently trades at $255.49.

Is now the time to buy VeriSign? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Shopify

Starting with just three people selling snowboards online in 2004, Shopify (NYSE:SHOP) provides a comprehensive platform that enables merchants of all sizes to create, manage and grow their businesses across multiple sales channels.

Shopify reported revenues of $2.84 billion, up 31.5% year on year, outperforming analysts’ expectations by 3.1%. The business had a very strong quarter with an impressive beat of analysts’ total payment volume estimates and a solid beat of analysts’ EBITDA estimates.

Shopify achieved the biggest analyst estimates beat and fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 7.9% since reporting. It currently trades at $157.69.

Is now the time to buy Shopify? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Wix

Powering over 263 million registered users worldwide with its AI-driven tools, Wix provides a cloud-based platform that helps individuals and businesses create and manage professional websites without requiring coding skills.

Wix reported revenues of $505.2 million, up 13.6% year on year, exceeding analysts’ expectations by 0.6%. Still, it was a slower quarter as it posted a significant miss of analysts’ EBITDA estimates and revenue guidance for next quarter meeting analysts’ expectations.

As expected, the stock is down 25.4% since the results and currently trades at $94.73.

Read our full analysis of Wix’s results here.

GoDaddy

Known for its memorable Super Bowl commercials that put it on the map, GoDaddy is a domain registrar and web services provider that helps entrepreneurs establish an online presence through domain registration, website building, hosting, and e-commerce tools.

GoDaddy reported revenues of $1.27 billion, up 10.3% year on year. This number topped analysts’ expectations by 2.7%. More broadly, it was a satisfactory quarter as it also logged a solid beat of analysts’ EBITDA estimates but revenue guidance for next quarter slightly missing analysts’ expectations.

GoDaddy had the weakest full-year guidance update among its peers. The company added 4,000 customers to reach a total of 20.41 million. The stock is flat since reporting and currently trades at $126.41.

Read our full, actionable report on GoDaddy here, it’s free for active Edge members.

Commerce

As a founding member of the MACH Alliance advocating for modern tech standards, Commerce provides a SaaS platform that enables businesses to build and manage online stores, connect with marketplaces, and integrate with point-of-sale systems.

Commerce reported revenues of $86.03 million, up 2.8% year on year. This result was in line with analysts’ expectations. Zooming out, it was a mixed quarter as it also produced an impressive beat of analysts’ EBITDA estimates but revenue guidance for next quarter meeting analysts’ expectations.

Commerce achieved the highest full-year guidance raise but had the weakest performance against analyst estimates and weakest performance against analyst estimates among its peers. The stock is down 3% since reporting and currently trades at $4.53.

Read our full, actionable report on Commerce here, it’s free for active Edge members.

What Happened?

A number of stocks jumped in the afternoon session after renewed enthusiasm for Alphabet reinvigorated the artificial intelligence trade, propelling a market rebound heading into the Thanksgiving holiday. 

The Nasdaq index jumped 2.6% and the S&P 500 gained 1.6%, driven by a 5% rally in Alphabet following the announcement of its upgraded Gemini 3 AI model. This optimism spilled over into the broader tech sector, lifting shares of Broadcom, Micron, and Palantir significantly.The rally built on momentum from the previous trading session, sparked by the New York Fed president keeping the door open for a December interest rate cut.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• E-commerce Software company Shopify jumped 5.7%. Is now the time to buy Shopify? Access our full analysis report here, it’s free for active Edge members.
• Data Analytics company Strategy jumped 4.2%. Is now the time to buy Strategy? Access our full analysis report here, it’s free for active Edge members.
• Content Delivery company Fastly jumped 4.7%. Is now the time to buy Fastly? Access our full analysis report here, it’s free for active Edge members.
• Content Delivery company Cloudflare jumped 3.5%. Is now the time to buy Cloudflare? Access our full analysis report here, it’s free for active Edge members.
• Data Storage company Snowflake jumped 3.5%. Is now the time to buy Snowflake? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Shopify (SHOP)

Shopify’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 3 days ago when the stock gained 2.9% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. 

The positive sentiment followed comments from New York Federal Reserve President John Williams, a voting member of the rate-setting Federal Open Market Committee (FOMC), who indicated he sees room for further policy easing. Following his remarks, the probability of a December rate cut surged from 39% to 71%, according to the CME FedWatch Tool, causing Treasury yields to fall. Lower interest rates can be particularly beneficial for growth-oriented sectors like software, as they increase the present value of future earnings. This renewed hope provided a boost to the sector, which had recently faced pressure from concerns over high valuations in artificial intelligence.

Shopify is up 44.5% since the beginning of the year, but at $155.38 per share, it is still trading 13.2% below its 52-week high of $179.01 from October 2025. Investors who bought $1,000 worth of Shopify’s shares 5 years ago would now be looking at an investment worth $1,600.