Shopify Inc. (SHOP)

Shopify reported second-quarter 2026 revenue of $3.58 billion, up 34 percent from a year earlier, in its results release of 5 August 3. Income from operations, profit before interest, taxes and investment gains, was $488 million against $291 million a year before 3. Merchants processed $115.6 billion of orders on the platform in the quarter, up 32 percent 2.

The largest part of the rise in merchant solutions revenue came from Shopify Payments, the company's own card processing for its merchants 2. That line rose $624 million in the quarter, and 68 percent of orders went through it, up from 64 percent a year earlier 2.

Net income was $1.50 billion, but $1.06 billion of it came from marking up the company's stakes in other companies 3. Without that effect, net income was $439 million 3.

Losses on failed payments and unpaid loans rose to $141 million from $80 million, because lending offerings expanded 2. For the third quarter, the company expects revenue to grow at a low-thirties percentage rate 3.

Shopify listed its Class A shares in an initial public offering on 27 May 2015 1. Its founder, Tobias Lutke, was on the core team that built Ruby on Rails, the open source software that powers much of the platform 1.

The business earns money in two ways 1. Subscriptions are monthly plans merchants pay to run an online store, and merchant solutions are fees on what the stores do, mainly payments, shipping labels and loans 1.

In the second quarter of 2023 the company sold its logistics businesses, the warehouses and delivery services it had built 1. That year it booked a $1,340 million impairment, a write-down on the sale, and an operating loss of $1,418 million on revenue of $7,060 million 1.

The sale reset the cost base 1. In 2024 research and development spending fell to $1,367 million from $1,730 million, and revenue grew 26 percent to $8,880 million, which turned the operating result to a profit of $1,075 million 1.

In 2025 revenue rose 30 percent to $11,556 million and income from operations reached $1,468 million 1. Platform sales, which the company calls gross merchandise volume, were $378.4 billion, up 29 percent 1.

Payments drove most of it 1. Merchant solutions revenue rose 35 percent to $8,804 million, and subscriptions rose 17 percent to $2,752 million 1. The share of orders using Shopify Payments climbed to 65.6 percent from 61.9 percent 1.

Costs grew too 1. Transaction and loan losses rose 84 percent to $417 million in 2025, partly because of higher expected losses on payments and an expansion of lending 1. Net income was $1,231 million, down from $2,019 million, because investments lost value 1.

The first half of 2026 kept the pace 2. Revenue was $6.8 billion, up 34 percent, and merchant solutions made up 77 percent of it 2.

Subscriptions and Shopify Plus

Merchants pay monthly for a store builder, with Basic and Grow plans for most and Shopify Plus for large brands 1. Plus starts at several times the price of the standard Advanced plan and adds tools for wholesale selling and automated launches 1.

Subscription revenue was $802 million in the second quarter of 2026, up 22 percent, and monthly recurring revenue, the subscription fees in force on the last day, was $221 million 2. Notable merchants named by the company include Aldo, BarkBox, Carrier, Meta, SKIMS, Supreme and Vuori 2.

Payments, lending and other merchant services

Shopify Payments takes card payments for merchants and earns processing and currency conversion fees 2. Stripe and PayPal supply the underlying payment technology, so a problem at either could hurt Shopify 1.

Shopify Capital lends to merchants through sales-based repayment loans and cash advances, and Shopify Credit is a charge card 1. Loans and merchant cash advances, net, were $2,184 million at 30 June 2026 against $1,784 million at 31 December 2025 3.

Other merchant revenue comes from shipping labels, point of sale hardware, partner referral fees, and advertising in the App Store and in Shop Campaigns 1. More than 21,000 apps were in the App Store at the end of 2025 1.

AI tools

Sidekick is an AI commerce assistant for merchants, and Agentic Storefronts lets AI platforms help shoppers find products and check out 1. Cloud and infrastructure costs, which include AI-related usage, are the main cost of subscription solutions 2.

People, rivals and problems

Shopify had about 7,600 employees at the end of 2025 and works remote-first 1. Tobias Lutke is chief executive, and Harley Finkelstein is president 31.

The company names no rival by name 1. It lists the other places a merchant could go: software vendors, payment processors, point of sale providers, marketplaces, fulfillment services and alternative lenders 1.

A jury found in 2022 that Shopify infringed three patents owned by Express Mobile, but the court set the verdict aside and in 2025 the appeals court affirmed there was no infringement 1. On 16 June 2026 shareholders rejected a proposal on an AI policy, with 13.86 percent in favor 5.

On 2 July 2026 director Prashanth Mahendra-Rajah resigned from the board after accepting a full time position with the U.S. Department of Commerce 6. Joe Natale, the Chair, is expected to lead the Audit Committee 6.

The umbrella, in words

The annual report's subsidiary exhibit lists Shopify LLC in Delaware, Shopify International in Ireland, Shopify Commerce Singapore, and Shopify Holdings (USA) 2 in Delaware 7. The company owns no real property 1.

It owns Vantage Discovery Inc. of Austin, an AI search company, bought outright for $59 million in cash in March 2025 1. It owns shares in Affirm, Global-E and Klaviyo, and owns part of Flexport, Inc., which it reports as an equity method investment 1.

Control sits with the founder 1. His one Founder Share gives variable votes that, with his other shares, gave Tobias Lutke 40.09 percent of all votes at 31 December 2025, though it carries no economic rights 1. Class B shares carry 10 votes each 1.

For the third quarter of 2026 the company expects revenue to grow at a low-thirties percentage rate and gross profit dollars to grow at a mid-to-high twenties rate 3. It expects operating expenses of 33% to 34% of revenue and free cash flow of a high-teens to low-twenties margin 3.

It expects stock-based compensation of $150 million in that quarter 3.

On 2 June 2026 the board authorized another $3.0 billion of share repurchases, bringing the total authorization to $5.0 billion 4. The company repurchased $1.4 billion in the second quarter, and $3.1 billion remained available on 30 June 2.

The company says it expects to keep using data analytics, machine learning and AI in its products, and to keep investing in rapid growth 1. It says it has focused on rapidly growing the business and plans to continue making investments to drive future growth 1. It adds that it believes these investments will increase its revenue base and strengthen its ability to increase sales to merchants 1.