10-Q · August 5, 2026
Shopify delivered Q2 revenue of $3.583 billion, up 34% year over year and 13% sequentially, with operating income rising to $488 million and implied free cash flow reaching $654 million. Merchant solutions grew 37%,…
Earnings analysis · 10-Q
SHOP earnings analysis
Filed November 3, 2026 · Our reading of the company's report
The latest report
Shopify delivered strong Q3 growth, with revenue up 32% year over year to $3.742 billion, merchant solutions up 35% to $2.906 billion, and operating margin expanding to 15.2%. Operating cash flow improved to $818…
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Shopify delivered strong Q3 growth, with revenue up 32% year over year to $3.742 billion, merchant solutions up 35% to $2.906 billion, and operating margin expanding to 15.2%. Operating cash flow improved to $818 million, while payments penetration and GMV continued to scale. Offsetting concerns include lower gross margin from mix, increased lending exposure and credit-loss allowances, investment-related earnings volatility, and reduced cash and securities following $2.473 billion of year-to-date repurchases. The filing states that there were no material changes to the risk factors disclosed in the 2025 Form 10-K.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.36
What stood out
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Revenue growth remained strong
Revenue was $3.742 billion, up 4.4% from $3.583 billion in Q2 2026 and 31.6% from $2.844 billion in Q3 2025. Merchant solutions led growth at $2.906 billion, up 35% year over year.
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Gross profit rose despite mix pressure
Gross profit increased to $1.781 billion from $1.391 billion year over year, while gross margin was 47.6% versus 48.9% in Q3 2025 and 47.7% in Q2 2026, reflecting mix toward lower-margin merchant solutions.
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Operating leverage improved
Income from operations increased to $568 million from $343 million year over year, and operating margin expanded to 15.2% from 12.1%; sequentially, operating margin increased from 13.6%.
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EPS improved year over year
Diluted EPS was $0.36 versus $0.20 in Q3 2025, but declined from $1.16 in Q2 2026 because the prior quarter included substantial investment gains. Net income was $462 million versus $264 million year over year.
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Operating cash generation strengthened
Operating cash flow increased to $818 million from $513 million year over year. Property and equipment purchases were only $2 million in the quarter, although free cash flow is not explicitly reported in the filing.
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Payments adoption supported growth
GMV increased 29% to $119.145 billion, while Shopify Payments penetration rose to 68% from 65%; Shopify Payments GMV reached $81.4 billion versus $60.2 billion year over year.
What to watch
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Lending exposure and delinquencies increased
Loans and merchant cash advances, net, increased to $2.350 billion from $1.784 billion at December 31, 2025. The allowance for credit losses rose to $246 million from $195 million, and 6.0% of gross balances were 180-plus days delinquent as of September 30, 2026.
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Investment volatility pressured earnings
The company recorded a $127 million net unrealized loss on equity and other investments in Q3, including a $126 million loss on investments with readily determinable fair values. Equity and other investments totaled $4.911 billion on the balance sheet, creating earnings volatility.
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Liquidity mix shifted lower
Cash, cash equivalents and marketable securities declined to $4.727 billion from $5.798 billion at December 31, 2025, driven partly by $2.473 billion of share repurchases and net lending activity. The company still had a $100 million revolving facility, with no cash drawn at quarter-end.
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AI and infrastructure costs are rising
Research and development expense rose 33% year over year to $497 million, including $40 million of higher computer hardware and software costs tied partly to AI usage. Cost of subscription solutions also increased by $40 million due to infrastructure, cloud hosting, software, and LLM usage costs.
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Tax reassessment exposure expanded
The CRA notified Shopify of an intended reassessment for $24 million plus interest for 2020, and the filing states that applying the same basis to 2021 through 2026 could result in additional taxes that may be material.
Management's outlook
The 10-Q does not provide quantitative quarterly revenue or EPS guidance. The concurrent earnings release provided Q4 outlook commentary, but the filing does not quantify a prior outlook sufficiently to determine whether it was raised or lowered.
Earlier filings 4
10-Q · May 5, 2026
Shopify's Q1 2026 results demonstrated robust growth, with total revenue reaching $3.17 billion, up 34% from the previous year, alongside a decrease in net loss to $581 million from $682 million. The company's…
10-K · April 29, 2026
Shopify demonstrated robust growth in 2025 with total revenue reaching approximately $11.55 billion, an increase from $8.88 billion in 2024, driven by a significant 2025 Q4 revenue of $3.67 billion. The company's…
10-K · February 11, 2026
Shopify reported strong top-line and cash-flow growth in 2025 with total revenue of approximately $11.55 billion (sum of quarterly revenues) versus $8.88 billion in 2024, driven by a large Q4 (Q4 2025 revenue $3.67…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.