SHOP earnings analysis
What we found in SHOP's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
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%, powered by Shopify Payments penetration of 68% and payment GMV of $78.1 billion, while subscription revenue rose 22%. Profitability improved at the operating level, although gross margin declined to 47.7% and GAAP EPS of $1.16 was materially boosted by a $1.249 billion unrealized investment gain. Liquidity remains substantial at $4.947 billion of cash, equivalents and marketable securities, but declined $831 million year to date as the company repurchased $1.911 billion of stock and expanded its lending portfolio.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue growth accelerated to 34% YoY
- Q2 revenue was $3.583 billion, up 34% from $2.680 billion a year earlier and 13% from $3.170 billion in Q1 2026. GMV rose 32% year over year to $115.567 billion.
- Payments drove merchant-solutions growth
- Merchant solutions grew 37% to $2.781 billion, led by a $624 million increase in Shopify Payments revenue. Shopify Payments penetration increased to 68% from 64%, with payment GMV rising to $78.1 billion from $56.6 billion.
- Operating leverage improved
- Income from operations increased 68% to $488 million from $291 million, lifting operating margin to 13.6% from 10.9% a year ago and about 12.1% in Q1 2026. Gross profit rose 31% to $1.708 billion.
- GAAP EPS rebounded, aided by investments
- Diluted GAAP EPS was $1.16, versus $0.69 in Q2 2025 and a $0.45 loss in Q1 2026. The result included $1.249 billion of net unrealized gains on equity and other investments.
- Cash generation strengthened
- Operating cash flow was $658 million, up from $428 million a year earlier; with $4 million of property-and-equipment purchases, implied free cash flow was $654 million. This equals an 18.3% free-cash-flow margin on $3.583 billion of revenue.
- Large buyback authorization remains
- The board increased aggregate repurchase authorization to $5.0 billion; Shopify repurchased $1.420 billion of shares in Q2 at an average $112.43 per share, leaving $3.067 billion authorized at June 30.
- Recurring subscription base continued to expand
- MRR increased 19% to $221 million, while subscription-solutions revenue grew 22% to $802 million. Management attributed subscription-fee growth primarily to more merchants and a greater mix of higher-priced plans such as Plus.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Mix shift pressured gross margin
- Gross margin was 47.7%, down from 48.6% a year earlier and about 48.8% in Q1 2026, as merchant solutions reached 78% of quarterly revenue. Management states Shopify Payments, the largest merchant-solutions driver, carries lower gross margins than subscription solutions.
- Expanding lending book raised credit losses
- Transaction and loan losses increased 76% to $141 million from $80 million, including a $41 million increase in lending-service losses. Net loans and merchant cash advances increased to $2.184 billion from $1.784 billion at year-end, while the allowance rose to $242 million from $195 million.
- Buybacks reduced liquid securities
- Cash, cash equivalents and marketable securities fell $831 million from $5.820 billion at December 31 to $4.947 billion at June 30, principally amid $1.911 billion of first-half share repurchases. Q2 repurchases alone consumed $1.420 billion.
- Earnings remain sensitive to investment values
- Net income of $1.502 billion included a $1.249 billion unrealized investment gain, whereas operating income was $488 million. Equity and other investments plus the equity-method investment totaled $5.413 billion at June 30, exposing earnings to valuation movements.
- No material risk-factor updates
- Item 1A reports 0 material changes to risk factors from the 2025 Form 10-K. Existing disclosures nonetheless quantify $777 million of foreign-exchange forward contracts and options and identify continued currency, credit, investment, inflation and geopolitical risks.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $1.16
- Gross margin
- 47.7%
- Operating margin
- 13.6%
- Segment
- Subscription solutions revenue: $802 million, up 22% year over year from $656 million.
- Segment
- Merchant solutions revenue: $2.781 billion, up 37% year over year from $2.024 billion.
What they said about what is next.
The 10-Q contains no quantitative forward revenue or EPS outlook; its MD&A discusses continued investment, seasonality, foreign-exchange exposure and liquidity expectations but defers explicit outlook to other company communications.
The filing reads better than the one before it.
What came before.
- 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…
- 10-Q · August 6, 2025
- Shopify reported Q2 2025 revenue of $2,680 million, up 31% year-over-year and up ~$320 million sequentially, driven by Merchant Solutions and higher Shopify Payments penetration. GAAP net income was $906 million…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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