Shopify Inc.

What they do

Shopify provides an all-in-one platform that lets merchants start, run and grow a business across online, in-store and other channels, serving millions of businesses in more than 175 countries. Revenue comes from two components: a recurring subscription component (subscription solutions) and a merchant success-based component (merchant solutions). Subscription solutions include platform subscriptions, variable platform fees, POS Pro, apps, themes and domain registration. Merchant solutions are principally payment processing and currency conversion fees, including Shopify Payments.

Revenue drivers

• Merchant solutions — Payment processing and currency conversion fees, mainly from Shopify Payments; generated $2,781 million in Q2 2026, or 77% of total revenue.
• Subscription solutions — Subscriptions to the platform including variable platform fees, POS Pro, apps, themes and domain registration; generated $802 million in Q2 2026, or 23% of total revenue.
• Shopify Plus — Higher-priced plan for larger merchants with added functionality and support such as Shopify Audiences, B2B features and Launchpad; starting rate is several times standard Shopify plans.
• Monthly Recurring Revenue (MRR) — Management states MRR is most closely correlated with long-term merchant value; it totaled $221 million as of June 30, 2026, up 19% year over year.

Recent performance

For the quarter ended June 30, 2026, Shopify reported revenue of $3,583 million, up 34% year over year, with GMV of $115,567 million, gross profit of $1,708 million, operating income of $488 million and free cash flow of $654 million. Free cash flow margin was 18%, and MRR was $221 million, up 19%. For the six months ended June 30, 2026, GMV was $216.3 billion, up 33%, and total revenue was $6.8 billion, up 34%, with subscription solutions at 23% of revenue and merchant solutions at 77%. Full-year 2025 revenue was $11.56 billion with net income of $1.23 billion and operating cash flow of $2.03 billion.

Strategy

Shopify's stated model has two components: recurring subscription revenue and merchant success-based revenue, with pricing plans designed to scale with merchants and provide more advanced features as their needs evolve. The company says it continues to drive operating leverage alongside growth, which produced an 18% free cash flow margin in Q2 2026. Management focuses on merchants of all sizes and verticals, from entrepreneurs to large direct-to-consumer and B2B operations, and cites AI as expanding what is possible for those businesses. Shopify Plus is aimed at larger merchants with added functionality and support.

Risks

• Concentration in merchant solutions — Merchant solutions, principally payment processing and currency conversion fees, was 77% of Q2 2026 revenue, so results depend heavily on that single revenue component.
• Growth rate deceleration — Management guided Q3 2026 revenue growth to a low-thirties percentage rate, below the 34% reported in Q2 2026, and gross profit dollars to grow at a mid-to-high twenties rate.
• Expense and stock-based compensation levels — For Q3 2026, management expects operating expenses at 33% to 34% of revenue and stock-based compensation of $150 million, which can pressure margins if revenue growth slows.
• Foreign private issuer reporting status — Shopify qualifies as a foreign private issuer and files 10-K, 10-Q and 8-K reports voluntarily instead of foreign private issuer forms, and its management information circular is not filed pursuant to Regulation 14A.

Outlook

For the third quarter of 2026, management expects revenue to grow at a low-thirties percentage rate year over year and gross profit dollars to grow at a mid-to-high twenties percentage rate. Operating expenses are expected to be 33% to 34% of revenue, stock-based compensation $150 million, and free cash flow margin in the high-teens to low-twenties. This outlook supersedes all prior financial outlook statements and is subject to risks that could cause actual results to vary materially.