Shopify Inc. (NASDAQ:SHOP) saw its stock take a dive in Tuesday's premarket session after the e-commerce software company delivered a mixed third-quarter report. Earnings beat Wall Street estimates, but revenue came in slightly light. Investors also had to chew on narrowing gross margins and a fourth-quarter outlook that raised eyebrows.

Earnings Beat, Revenue Miss

Shopify reported adjusted earnings of 49 cents per share, topping the analyst estimate of 46 cents. Revenue rose 32% year over year to $3.742 billion, just below the $3.747 billion consensus. A miss is a miss, even if it's small.

Gross merchandise volume (GMV), the total value of goods sold through Shopify's platform, increased 29% to $119.15 billion from $92.01 billion a year earlier. On a constant-currency basis, growth reached 30%.

Merchant solutions revenue climbed 35% to $2.91 billion, while subscription solutions revenue increased 20% to $836 million. Monthly recurring revenue rose 19% to $230 million from $193 million.

Gross profit increased 28% to $1.78 billion. However, gross margin narrowed to 47.6% from 48.9% a year earlier. That's the kind of detail that can spook a market used to Shopify's premium multiples.

Operating income jumped 66% to $568 million from $343 million. Net income rose to $462 million from $264 million. Adjusted net income, excluding the impact of equity investments, increased to $584 million from $367 million.

Operating cash flow reached $818 million, while free cash flow totaled $816 million. Free cash flow margin improved by 400 basis points to 22%.

Q4 Outlook: Strong, But Not Strong Enough

Shopify expects fourth-quarter revenue of $4.810 billion to $4.884 billion, above the $4.758 billion analyst estimate. That sounds great, right? But the outlook also raised concerns about slowing growth during the key holiday shopping season.

The company expects revenue growth in the low-30% range, compared with growth of about 34% earlier in 2026. Gross profit is projected to grow in the high-20% range. The combination of margin pressure, a slight revenue miss, and a stock that isn't cheap may have investors wondering if Shopify can keep up its growth momentum.

Shopify projected operating expenses to account for 29% to 30% of revenue. It also expects stock-based compensation of $155 million and a free cash flow margin consistent with the fourth quarter of 2025.

President Harley Finkelstein highlighted the company's growing commerce platform and efforts to integrate shopping across AI-powered channels. Chief Financial Officer Jeff Hoffmeister attributed the company's performance to multiple growth drivers and an expanding addressable market.

SHOP Price Action: Shopify shares were down 15.09% at $132.63 during premarket trading on Tuesday, according to market data.