Shopify (NYSE:SHOP) recently released its Q3 2023 earnings report, exceeding expectations and showcasing impressive year-over-year growth. The company reported adjusted earnings of 24 cents per share, significantly surpassing the Consensus Estimate of 15 cents, and marking a notable improvement from the 2 cent per share loss reported in the year-ago quarter.

Total revenues for the quarter surged by 25.5% year over year, reaching $1.71 billion, outpacing the Consensus Estimate by 2.94%.

Shopify’s strong performance is reflected in its year-to-date stock price gains of 79.9%, outperforming the Computer & Technology sector’s growth of 42.8%.

Breaking down the quarter, Subscription Solutions revenues experienced a substantial year-over-year increase of 28.9%, reaching $486 million. This growth can be attributed to an influx of new merchants joining the platform and pricing adjustments for existing merchants utilizing its Standard subscription plans.

Merchant Solutions revenues also saw strong growth, rising by 24.2% year over year to $1.23 billion. This increase was primarily driven by the robust Gross Merchandise Volume (GMV), which improved by 22% year over year, reaching $56.2 billion.

As of September 30, 2023, Monthly Recurring Revenues (MRR) amounted to $141 million, marking a 32% increase from the year-ago quarter. Shopify Plus revenues reached $44 million, representing 31% of MRR, compared to 33% in the year-ago quarter.

Gross Payments Volume also witnessed substantial growth, reaching $32.8 billion, constituting 58% of GMV processed in the third quarter, compared to $25 billion (54% of GMV) in the year-ago quarter.

In terms of operating details, non-GAAP gross profit increased by 32.9% year over year to $905 million, and the gross margin expanded by 290 basis points year over year, reaching 52.8%.

Adjusted sales and marketing expenses, as a percentage of revenues, declined by 370 basis points year over year, down to 16.2%. Adjusted general & administrative expenses decreased by 420 basis points, reaching 4.6%.

Additionally, adjusted research & development expenses, as a percentage of revenues, decreased by 750 basis points year over year, down to 14.2%.

Non-GAAP operating expenses decreased by 12.9% year over year, reaching $634 million, and operating expenses, as a percentage of revenues, were 37%, compared to the year-ago quarter’s figure of 53.3%.

Shopify reported adjusted operating income of $271 million, a significant improvement from the year-ago quarter’s operating loss of $47 million.

As of September 30, 2023, Shopify held a cash, cash equivalents, and marketable securities balance of $4.92 billion, compared to $4.8 billion as of June 30, 2023. Free Cash Flow also showed substantial growth, reaching $276 million, compared to $97 million in the year-ago quarter.

Looking ahead, for the fourth quarter of 2023, Shopify anticipates revenue growth in the high teens on a year-over-year basis. Adjusting for a 400-500 basis point headwind related to the divestiture of the logistics business, revenues are expected to grow in the low-to-mid-twenties on a year-over-year basis.

The gross margin is expected to be 46%, up by 300 to 400 basis points year over year, although it is also expected to decline sequentially.

Operating expenses are projected to decline low-single-digit sequentially.

For the full year 2023, Shopify expects revenues to grow at a mid-twenties percentage rate on a year-over-year basis, with capital expenditure expected to be approximately $45 million.