Shopify grows 34 percent and the share jumps 26 percent before the open

Shopify generated revenue of 3.58 billion dollars in the second quarter of 2026, up 34 percent on the year before. Analysts had expected 3.45 billion dollars on average. The share rose 26 percent in trading before the open.

Gross merchandise volume processed through the platform reached 115.57 billion dollars, an increase of 32 percent. Gross profit rose 31 percent to 1.71 billion dollars at a gross margin of 47.7 percent.

Net profit came in at 1.5 billion dollars after 906 million dollars in the year earlier quarter. Diluted earnings per share were 1.16 dollars.

Free cash flow reached 654 million dollars after 422 million dollars a year earlier. The corresponding margin rose to 18 percent, after 15 percent in the first quarter.

The short version

• Revenue rose 34 percent in the second quarter of 2026 to 3.58 billion dollars, against an expected 3.45 billion.
• Gross merchandise volume reached 115.57 billion dollars, an increase of 32 percent.
• For the third quarter the group signals revenue growth in the low thirties, where analysts had expected 26.3 percent.

The outlook beats expectations clearly

What triggered the jump was less the quarter than the guidance. For the third quarter Shopify expects revenue growth in the low thirties. Analysts had reckoned with 26.3 percent.

For gross profit an increase in the mid to high twenties is signalled, also above estimates. Operating expenses are to run at 33 to 34 percent of revenue, and the free cash flow margin in the high teens to low twenties.

The difference between the company statement and the market expectation therefore amounts to around six percentage points on revenue growth. That explains the reaction of the share price.

Payment processing as the earnings driver

The breakdown shows where the growth comes from. Revenue from merchant solutions rose 37 percent to 2.78 billion dollars and makes up 77 percent of total revenue. Subscription revenue gained 22 percent to 802 million dollars.

Through its own payment processing ran 78.1 billion dollars of merchandise volume, which corresponds to a share of 68 percent.

That shift matters for the valuation. Under a subscription a merchant pays a fixed fee regardless of how much is sold. In payment processing Shopify earns on every single sale. As that share grows, revenue is tied more closely to the success of the merchants.

Customer retention is particularly high among larger merchants. According to the company, 92 percent of merchants with one million dollars of merchandise volume stay, and 97 percent of those with ten million dollars.

Doubts because of Meta

The environment is not uncontested. In July Rothschild and Co Redburn cut its rating to neutral. It justified that with the move by Meta Platforms into tools for small businesses, which could erode the lead of Shopify.

The company itself presents artificial intelligence as an advantage. According to its own figures, traffic arriving through such systems and the orders arising from it have tripled year on year.

Finance chief Jeff Hoffmeister pointed to growth across all merchant sizes, channels and regions and to scale effects that contributed to the margin of 18 percent. President Harley Finkelstein called the quarter exceptional, with more than 30 percent growth in merchandise volume, revenue, gross profit and cash flow.

For comparison the first quarter had shown 34 percent growth and merchandise volume above 100 billion dollars. In the full year 2025 Shopify generated 11.6 billion dollars of revenue and two billion dollars of free cash flow and started a buyback programme worth two billion dollars.

Millions of merchants in more than 175 countries use the platform. The product catalogue covers more than one billion items according to the company.

Frequently asked questions

What triggered the jump in the share price

Less the quarter than the guidance. For the third quarter Shopify expects revenue growth in the low thirties, while analysts had reckoned with 26.3 percent. The difference therefore amounts to around six percentage points.

Why does payment processing matter so much

Under a subscription a merchant pays a fixed fee regardless of how much is sold. In payment processing Shopify earns on every single sale. Through its own processing ran 78.1 billion dollars of merchandise volume, a share of 68 percent.

What doubts are there about the business model

In July Rothschild and Co Redburn cut its rating to neutral and justified that with the move by Meta Platforms into tools for small businesses, which could erode the lead of Shopify.

This analysis is for information only and is not investment advice.