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Research Alert: Shop Q1: Growth Continues To Outpace Expectations; Outlook Signals Deceleration

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

SHOP posted Q1 revenue growth of 34% to $3.17B, beating our 31% forecast and exceeding the company's guided low-30% growth rate, as merchant solutions revenue surged 39% to $2.42B. GMV surpassed $100B for the first time, reaching $100.7B (+35%), marking a significant milestone that underscores ongoing platform adoption and merchant engagement. SHOP demonstrated strong operational leverage with operating income growing 88% to $382M despite continued investments in AI and platform expansion, reflecting disciplined expense management. For Q2, SHOP guided revenue growth to a high-twenties percentage rate, representing a deceleration from Q1's 34% pace but near consensus expectations of 27%. FCF margins are expected to remain in the mid-teens as the company continues investing in platform capabilities and AI infrastructure. SHOP ended Q1 with $5.7B in cash and no debt, providing flexibility for growth initiatives. We note that tougher comparisons make the decelerating growth unsurprising.

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