Summary
Shopify reported $3.583 billion of revenue for FY2026 Q2, up 33.7% from the prior-year quarter. Gross profit rose 31.2% to $1.708 billion. Operating income increased 67.7% to $488 million, and net income climbed 65.8% to $1.502 billion. Diluted EPS was $1.16, up 68.1%. Net income included a gain on equity and equity method investments. Excluding the impact of equity investments, a non-GAAP measure, net income was $439 million, compared with $338 million in the prior-year quarter. On a non-GAAP basis, net income was $549 million and diluted EPS was $0.42, compared with $455 million and $0.35 in the prior-year quarter. Revenue growth was 33% in constant currency. Management described the quarter as a monster quarter with more than 30% growth in GMV, revenue, gross profit and free cash flow.
Merchant activity accelerated. GMV reached $115.6 billion, up 32% year over year and 30% in constant currency. The company said GMV growth accelerated on top of last year's already strong second quarter with solid results across all merchant sizes, channels and geographies. MRR was $221 million, up 19%. MRR growth was driven by a higher number of merchants using the platform and a larger percentage of subscriptions coming from higher priced plans such as Plus. Shopify Payments handled $78.1 billion of GMV, up 38%, and its penetration rate was 68%, compared with 64% in the prior-year quarter. For the six months, Shopify Payments penetration was 67%, compared with 64%. Gross margin slipped 0.9 percentage points to 47.7%. Operating margin expanded 2.8 percentage points to 13.6%. The company pointed to operating leverage as a driver of the margin improvement. Shopify also noted that merchant solutions carry lower gross margins than subscription solutions, which has caused and may continue to cause a decline in the overall gross margin percentage.
Operating cash flow was $658 million, up 53.7% from the prior-year quarter. Capital expenditures fell 33.3% to $4 million. Free cash flow, a non-GAAP measure, was $654 million, and free cash flow margin was 18%, compared with 16% in the prior-year quarter. Deferred revenue stood at $414 million, down 1.7% from the prior-year quarter. For the first six months of FY2026, revenue was $6.753 billion, up 34.0%, and operating cash flow was $1.139 billion, up 43.3%. Net income for the six months was $921 million, up 311.2%, and diluted EPS was $0.71, up 317.6%. The six-month gross profit was $3.254 billion, up 31.7%, and six-month operating income was $870 million, up 76.1%. The six-month gross margin was 48.2%, down 0.8 percentage points, while the six-month operating margin was 12.9%, up 3.1 percentage points.
Guidance for the third quarter of 2026 calls for revenue to grow at a low-thirties percentage rate year over year. Gross profit dollars are expected to grow at a mid-to-high twenties percentage rate. Operating expenses as a percentage of revenue are projected at 33% to 34%, and stock-based compensation is expected to be $150 million. Free cash flow margin is guided to a high-teens to low-twenties range. The outlook supersedes all prior financial outlook statements. Shopify faces risks around its ability to maintain growth and manage expenses, economic conditions and consumer spending in the United States, Europe and globally, international trade measures including tariffs, the adoption and impact of AI, reliance on third-party providers, a cyberattack or security breach, and serious errors or defects in software or hardware. The mix shift toward merchant solutions and foreign currency fluctuations may also pressure results. The company also flagged seasonality, noting that merchant solutions revenue is directionally correlated with GMV and typically higher in the fourth quarter. Shopify believes its liquidity is sufficient to meet its current and planned financial obligations over the next 12 months and into the foreseeable future.
Shopify said its future cash requirements will depend on many factors, including its growth rate, subscription renewal activity, the timing and extent of spending to support development of its platform, the expansion of sales and marketing activities, the macroeconomic conditions and overall levels of consumer spending on goods, and potential strategic investments and acquisitions. The company also noted that additional funds may not be available on terms favorable to it or at all. Shopify repurchased shares under its buyback program during the quarter, and it maintains a shelf prospectus that allows it to offer securities from time to time.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $3.58B | $3.17B | +13.0% | $2.68B | +33.7% |
| Gross profit | $1.71B | $1.55B | +10.5% | $1.30B | +31.2% |
| Gross margin | 47.7% | 48.8% | -1.1 pp | 48.6% | -0.9 pp |
| Research & development | $445.0M | $437.0M | +1.8% | $394.0M | +12.9% |
| Sales & marketing | $498.0M | $496.0M | +0.4% | $415.0M | +20.0% |
| General & administrative | $136.0M | $115.0M | +18.3% | $122.0M | +11.5% |
| Total operating expenses | $1.22B | $1.16B | +4.8% | $1.01B | +20.7% |
| Operating income (loss) | $488.0M | $382.0M | +27.7% | $291.0M | +67.7% |
| Operating margin | 13.6% | 12.1% | +1.6 pp | 10.9% | +2.8 pp |
| Net income (loss) | $1.50B | -$581.0M | +358.5% | $906.0M | +65.8% |
| Net margin | 41.9% | -18.3% | +60.3 pp | 33.8% | +8.1 pp |
| Diluted EPS | $1.16 | -$0.45 | +$1.61 | $0.69 | +$0.47 |
Risks
Continued shift in revenue mix toward lower-margin merchant solutions, which grew 38% year to date versus 22% for subscription solutions, has driven gross margin down 0.9 percentage points in the quarter and 0.8 percentage points year to date. Management states the growth of merchant solutions has caused and may continue to cause a decline in overall gross margin percentage.
Transaction and loan losses rose 76% in the quarter to $141 million and 66% year to date to $257 million, driven by a $41 million quarterly increase in lending services losses from expansion of offerings and a $19 million increase in Shopify Payments losses from higher processed GMV. The shift of the Canadian Shopify Capital product from merchant cash advances to ASC 310 loans starting April 2026 expands credit exposure.
Net income in the quarter was heavily supported by a $1.2 billion net gain on equity and equity method investments, including a $731 million unrealized gain on investments with readily determinable fair values and a $522 million gross unrealized gain from an observable price change on a private investment. Management notes these fair value changes may cause volatility to earnings and impair comparability period to period, with the year-to-date figure including a $278 million unrealized loss on marketable equity investments.
Cost of subscription solutions rose on a $37 million quarterly and $59 million year-to-date increase in cloud and infrastructure costs that include AI-related usage, and research and development rose on a $34 million quarterly and $59 million year-to-date increase in computer hardware and software costs also including AI-related usage. These AI-driven cost increases pressure operating expense and gross margin trends.
Merchant solutions revenue is directionally correlated with merchant GMV, which peaks in the fourth-quarter holiday season, and management states the business may become more seasonal in the future as merchant solutions offerings grow. Historical patterns in the business may not be a reliable indicator of future performance, complicating period-over-period forecasting.
Other income, net fell 55% in the quarter to $59 million and 38% year to date to $125 million, as interest income on marketable securities declined to $66 million in the quarter from $106 million in the prior-year period, and the company recorded a $7 million net foreign exchange loss versus a $24 million gain a year earlier.
SaaS KPIs
All quarters →Free Cash Flow
Free Cash Flow Margin
Gross Merchandise Volume (GMV)
Monthly Recurring Revenue (MRR)
Summary, forecast, risks and KPIs are extracted from SHOPIFY INC.'s SEC filings for Q2 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.