Shopify Sustains Rapid Growth with Revenue Up 32% and Free Cash Flow Margin of 22%
Operating income grew faster than revenue, while Shopify returned $562 million through common-stock repurchases.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Summary
Shopify (SHOP) reported third-quarter 2026 revenue growth of 32% year over year, alongside higher earnings and free cash flow. Revenue reached $3.742 billion, gross profit rose 28% to $1.781 billion, and operating income increased 66% to $568 million. GAAP net income was $462 million, or $0.36 per diluted share, versus $264 million, or $0.20, a year earlier.
Gross merchandise volume, the value of orders facilitated through Shopify, reached $119.145 billion. Monthly recurring revenue rose to $230 million from $193 million. Non-GAAP free cash flow increased to $816 million from $507 million, with its margin rising to 22% from 18%. Shopify repurchased $562 million of common stock. For Q4, the company expects revenue growth in the low-thirties percentage range, gross profit growth in the high-twenties, and a free cash flow margin consistent with Q4 2025.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate pointQ3 revenue rose 32% year over year to $3.742 billion, also growing 32% in constant currency.
- Moderate pointOperating income increased 66% year over year to $568 million from $343 million.
- Moderate pointGAAP net income increased to $462 million from $264 million; diluted EPS rose to $0.36 from $0.20.
- Moderate pointGross profit rose 28% year over year to $1.781 billion from $1.391 billion.
- Moderate pointFree cash flow reached $816 million versus $507 million; margin increased to 22% from 18%.
- Moderate pointGross merchandise volume grew 29% year over year to $119.145 billion from $92.013 billion.
- Moderate point. Forward-looking: it has not happened yet and may not happen.Q4 revenue growth is expected in the low-thirties percentage range year over year.
- Moderate point. Forward-looking: it has not happened yet and may not happen.Q4 gross profit growth is expected in the high-twenties percentage range year over year.
7 minor points
- Minor pointMerchant solutions revenue rose 35% year over year to $2.906 billion from $2.145 billion.
- Minor pointSubscription solutions revenue rose 20% year over year to $836 million from $699 million.
- Minor pointMonthly recurring revenue increased to $230 million from $193 million a year earlier.
- Minor pointOperating cash flow increased to $818 million from $513 million a year earlier.
- Minor pointCommon-stock repurchases totaled $562 million in Q3 2026.
- Minor pointTransaction and loan losses decreased to $120 million from $148 million a year earlier.
- Minor point. Forward-looking: it has not happened yet and may not happen.Q4 free cash flow margin is expected to be consistent with Q4 2025.
Negative
- Moderate pointCost of revenue increased to $1.961 billion from $1.453 billion a year earlier.
- Moderate point. Forward-looking: it has not happened yet and may not happen.Q4 operating expenses are expected to equal 29% to 30% of revenue.
- Minor pointResearch and development expense increased to $497 million from $375 million a year earlier.
- Minor pointSales and marketing expense increased to $466 million from $410 million a year earlier.
- Minor pointGeneral and administrative expense increased to $130 million from $115 million a year earlier.
6 minor points
- Minor pointStock-based compensation increased to $140 million from $107 million a year earlier.
- Minor pointNet loss on equity and other investments increased to $117 million from $62 million a year earlier.
- Minor pointNet loss on equity method investment remained $21 million in Q3.
- Minor pointIntangible asset acquisitions used $99 million of cash in Q3 2026.
- Minor pointBusiness acquisition used $5 million of cash, net of cash acquired, in Q3 2026.
- Minor point. Forward-looking: it has not happened yet and may not happen.Q4 stock-based compensation is expected to be $155 million.
News Explained
For the quarter, Shopify reported GAAP net income after a net-of-tax loss on equity investments; its non-GAAP measure excluding equity-investment effects was higher.
Details
Market move: SHOP -15.82% vs previous close. Q3 2026 earnings report
On Nov 3, the day this news came out, the latest delayed price for SHOP is 15.82% below the previous close. Our momentum scanner has recorded 19 alerts for this stock so far that day. The latest delayed price is $131.50. Relative volume is exceptionally heavy at 25.7x what this stock usually trades by this time of day.
Data tracked by StockTitan Argus (15 min delayed). Upgrade to Gold for real-time data.
Key Figures
- Revenue
- $3,742 million
- Q3 2026
- Revenue growth
- 32%
- Q3 2026 year over year
- GMV
- $119,145 million
- Q3 2026
- Gross profit
- $1,781 million
- Q3 2026
- Operating income
- $568 million
- Q3 2026
- Free cash flow
- $816 million
- Q3 2026
- Free cash flow margin
- 22% (vs. 18%)
- Q3 2026 vs. Q3 2025
- Operating expenses outlook
- 29% to 30% of revenue
- Q4 2026
Historical Context
-
Q2 revenue grew 34% and free cash flow margin reached 18%, establishing a prior-quarter baseline.
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
gmv financial
non-gaap financial measures financial
convertible note financial
us gaap financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
Internet, Everywhere, Nov. 03, 2026 (GLOBE NEWSWIRE) -- Shopify announced today financial results for the quarter ended September 30, 2026. Shopify achieved
“Shopify is uncommonly good at operating in two realities at the same time: the world our merchants exist in today, and the one they are moving towards. Q3 is the perfect example. We powered
“We extended our track record of consistent execution, with
| Selected Business Performance Information(1) (In US $ millions, except percentages) | |||||
| Three months ended | |||||
| September 30, 2026 | September 30, 2025 | ||||
| GMV | 119,145 | 92,013 | |||
| MRR | 230 | 193 | |||
| Revenue | 3,742 | 2,844 | |||
| Gross profit | 1,781 | 1,391 | |||
| Operating income | 568 | 343 | |||
| Free cash flow | 816 | 507 | |||
| YoY revenue growth rate | 32 | % | 32 | % | |
| Free cash flow margin | 22 | % | 18 | % | |
(1) See endnotes below for definitions of GMV and MRR and additional information on constant currency, free cash flow, and free cash flow margin, which are non-GAAP financial measures and are reconciled to the comparable GAAP measures in the non-GAAP reconciliations at the end of this press release. Please refer to the Condensed Consolidated Statements of Cash Flows for additional information on the presentation of cash flows in 2026 and 2025.
2026 Outlook
The outlook that follows supersedes all prior financial outlook statements made by Shopify, constitutes forward-looking information within the meaning of applicable securities laws, is based on a number of assumptions, and is subject to a number of risks. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond Shopify’s control. Please see “Forward-looking Statements” at the end of this press release.
For the fourth quarter of 2026, we expect:
- Revenue to grow at a low-thirties percentage rate on a year-over-year basis;
- Gross profit dollars to grow at a high-twenties percentage rate on a year-over-year basis;
- Operating expenses as a percentage of revenue to be
29% to30% ; - Stock-based compensation to be
$155 million ; and - Free cash flow margin to be consistent with the fourth quarter of 2025.
Quarterly Conference Call
Shopify’s management team will hold a conference call to discuss its third-quarter results today, November 3, 2026, at 8:30 a.m. ET. The conference call will be webcast in the Investor Relations section of Shopify’s website at www.shopify.com/investors/events. An archived replay of the webcast will be available following the conclusion of the call.
Shopify’s Form 10-Q for the quarter ended September 30, 2026, including the unaudited Condensed Consolidated Financial Statements and accompanying Notes, and Management's Discussion and Analysis, will be available on Shopify’s website at www.shopify.com and will be filed on EDGAR at www.sec.gov and on SEDAR+ at www.sedarplus.ca.
About Shopify
Shopify provides essential internet infrastructure for commerce. Shopify’s all-in-one platform makes it easier to start, run, and grow a business, powering sales online, in-store, and everywhere in between. Millions of businesses in 175+ countries use Shopify—from entrepreneurs to brands like Aldo, BarkBox, Carrier, Meta, SKIMS, Supreme, and Vuori.
For more information, visit www.shopify.com.
| CONTACT INVESTORS: | Shane Kleinstein | CONTACT MEDIA: | Jackie Warren | |
| Director, Investor Relations | Senior Lead, Communications | |||
| IR@shopify.com | press@shopify.com |
| Shopify Inc. Condensed Consolidated Statements of Operations (In US $ millions) | |||||
| Three months ended | |||||
| September 30, 2026 | September 30, 2025 | ||||
| Revenues | |||||
| Subscription solutions | 836 | 699 | |||
| Merchant solutions | 2,906 | 2,145 | |||
| 3,742 | 2,844 | ||||
| Cost of revenues | |||||
| Subscription solutions | 175 | 128 | |||
| Merchant solutions | 1,786 | 1,325 | |||
| 1,961 | 1,453 | ||||
| Gross profit | 1,781 | 1,391 | |||
| Operating expenses | |||||
| Sales and marketing | 466 | 410 | |||
| Research and development | 497 | 375 | |||
| General and administrative | 130 | 115 | |||
| Transaction and loan losses | 120 | 148 | |||
| Total operating expenses | 1,213 | 1,048 | |||
| Operating income | 568 | 343 | |||
| Net other expense, including taxes(2) | (106 | ) | (79 | ) | |
| Net Income | 462 | 264 | |||
| less: equity investments, marked to market, net of taxes | (122 | ) | (103 | ) | |
| Net income excluding the impact of equity investments(3) | 584 | 367 | |||
| (2) Net other expense, including taxes includes interest income, gains and losses on equity and other investments, loss on embedded derivative related to convertible note, foreign exchange gains and losses, and our provision for income taxes. | |||||
| (3) Net income excluding the impact of equity investments is a non-GAAP financial measure which is reconciled at the end of this press release. This measure excludes the impact of any gains or losses on our equity investments in third parties and embedded derivative related to convertible note. Shopify believes this measure provides useful information to investors given that valuations of third parties in public and private markets are outside of our control, and therefore, fluctuations in those valuations are not relevant to the fundamentals of our business and have little analytical or predictive value regarding our ability to drive operational results. This measure does not have a standardized meaning under US GAAP and may not be comparable to similar measures presented by other companies. Note: More detailed Condensed Consolidated Statements of Operations and Comprehensive Income are available in the Quarterly Report on Form 10-Q filed concurrently with this press release with US and Canadian regulators and available on www.sec.gov and www.sedarplus.ca. | |||||
| Shopify Inc. Condensed Consolidated Balance Sheets (In US $ millions) | |||
| September 30, 2026 | December 31, 2025 | ||
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | 1,868 | 1,545 | |
| Marketable securities | 2,859 | 4,233 | |
| Trade and other receivables, net | 483 | 500 | |
| Loans and merchant cash advances, net | 2,350 | 1,784 | |
| Other current assets | 226 | 234 | |
| 7,786 | 8,296 | ||
| Long-term assets | |||
| Long-term assets(4) | 327 | 210 | |
| Deferred tax assets | 83 | 33 | |
| Long-term investments | 524 | 975 | |
| Equity and other investments | 4,911 | 4,582 | |
| Equity method investment | 538 | 602 | |
| Goodwill | 495 | 491 | |
| 6,878 | 6,893 | ||
| Total assets | 14,664 | 15,189 | |
| Liabilities and shareholders’ equity | |||
| Liabilities | |||
| Accounts payable | 630 | 570 | |
| Deferred tax liabilities | 63 | 55 | |
| Other liabilities(5) | 1,222 | 1,091 | |
| 1,915 | 1,716 | ||
| Shareholders’ equity | 12,749 | 13,473 | |
| Total liabilities and shareholders’ equity | 14,664 | 15,189 | |
| (4) Long-term assets includes Property and equipment, net, Operating lease right-of-use assets, net, Intangible assets, net, and Other long-term assets. | |||
| (5) Other liabilities includes Accrued liabilities, Current and Long-term Deferred revenue, and Operating lease liabilities. | |||
| Note: More detailed Condensed Consolidated Balance Sheet and Notes to the Condensed Consolidated Financial Statements are available in the Quarterly Report on Form 10-Q filed concurrently with this press release with US and Canadian regulators and available on www.sec.gov and www.sedarplus.ca. | |||
| Shopify Inc. Condensed Consolidated Statements of Cash Flows (In US $ millions) | |||||
| Three months ended | |||||
| September 30, 2026 | September 30, 2025 | ||||
| Cash flows from operating activities | |||||
| Net income for the period | 462 | 264 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||
| Amortization and depreciation | 7 | 8 | |||
| Stock-based compensation | 140 | 107 | |||
| Impairment of right-of-use assets and leasehold improvements | — | 3 | |||
| Provision for transaction and loan losses | 67 | 102 | |||
| Deferred income tax recovery | (68 | ) | (5 | ) | |
| Revenue related to non-cash consideration | (13 | ) | (12 | ) | |
| Unrealized loss on embedded derivative | — | 29 | |||
| Net loss on equity and other investments | 117 | 62 | |||
| Net loss on equity method investment | 21 | 21 | |||
| Unrealized foreign exchange loss | 1 | 4 | |||
| Changes in operating assets and liabilities | 84 | (70 | ) | ||
| Net cash provided by operating activities | 818 | 513 | |||
| Cash flows from investing activities | |||||
| Purchases of property and equipment | (2 | ) | (6 | ) | |
| Purchases of marketable securities | (866 | ) | (1,460 | ) | |
| Maturities of marketable securities | 1,302 | 1,956 | |||
| Purchases and originations of loans and merchant cash advances(6) | (1,700 | ) | (996 | ) | |
| Repayments and sales of loans and merchant cash advances(6) | 1,471 | 849 | |||
| Purchases of equity and other investments | (161 | ) | (8 | ) | |
| Acquisition of business, net of cash acquired | (5 | ) | — | ||
| Acquisition of intangible assets | (99 | ) | — | ||
| Net cash (used in) provided by investing activities | (60 | ) | 335 | ||
| Cash flows from financing activities | |||||
| Proceeds from the exercise of stock options | 15 | 24 | |||
| Repurchases of common stock | (562 | ) | — | ||
| Net cash (used in) provided by financing activities | (547 | ) | 24 | ||
| Effect of foreign exchange on cash, cash equivalents and restricted cash | 1 | — | |||
| Net increase in cash, cash equivalents and restricted cash | 212 | 872 | |||
| Cash, cash equivalents and restricted cash – beginning of period | 1,656 | 1,542 | |||
| Cash, cash equivalents and restricted cash – end of period | 1,868 | 2,414 | |||
| (6) Starting in April 2026, the cash flows associated with merchant cash advances are presented within investing cash flows rather than operating cash flows on a basis consistent with loans, given the similar nature of the underlying lending activities. For the three months ended September 30, 2026, the changes described above resulted in a net cash use of | |||||
| Reconciliation of Non-GAAP Financial Measures Free Cash Flow Reconciliation (In US $ millions, except percentages) The following table illustrates how free cash flow is calculated in this press release: | |||||
| Three months ended | |||||
| September 30, 2026 | September 30, 2025 | ||||
| Net cash provided by operating activities | 818 | 513 | |||
| less: capital expenditures(7) | (2 | ) | (6 | ) | |
| Free cash flow | 816 | 507 | |||
| Revenue | 3,742 | 2,844 | |||
| Free cash flow margin | 22 | % | 18 | % | |
| (7) Capital expenditures is equivalent to the amount included in “Purchases of property and equipment” on our Condensed Consolidated Statements of Cash Flows for the reported period. | |||||
| Net Income Excluding the Impact of Equity Investments Reconciliation (In US $ millions) The following table illustrates how Net income excluding the impact of equity investments is calculated in this press release: | |||||
| Three months ended | |||||
| September 30, 2026 | September 30, 2025 | ||||
| Net Income | 462 | 264 | |||
| less: equity investments, marked to market, net of taxes | (122 | ) | (103 | ) | |
| Net income excluding the impact of equity investments(3) | 584 | 367 | |||
| Reconciliation of GAAP Net Income to Non-GAAP Net Income (In US $ millions, except share and per share amounts) The following table reconciles GAAP net income to Non-GAAP net income and includes net income per share amounts: | |||||||
| Three months ended | |||||||
| September 30, 2026 | September 30, 2025 | ||||||
| GAAP net income | 462 | 264 | |||||
| Non-GAAP adjustments to net income: | |||||||
| Stock-based compensation expense and related taxes | 147 | 116 | |||||
| Amortization of acquired intangible assets | 2 | 3 | |||||
| Impairment of right-of-use assets and leaseholds | — | 3 | |||||
| Non-GAAP operating income adjustments | 149 | 122 | |||||
| Net loss on equity and other investments | 117 | 62 | |||||
| Net loss on equity method investment | 21 | 21 | |||||
| Loss on embedded derivative | — | 29 | |||||
| Income tax effects and tax adjustments | (111 | ) | (57 | ) | |||
| Non-GAAP net income | 638 | 441 | |||||
| Diluted net income per share attributable to shareholders(8): | |||||||
| GAAP | $ | 0.36 | $ | 0.20 | |||
| Non-GAAP | $ | 0.49 | $ | 0.34 | |||
| Weighted average shares used to compute net income per share attributable to shareholders: | |||||||
| Diluted | 1,290,726,742 | 1,312,872,709 | |||||
| (8) May include rounding | |||||||
Constant Currency Analysis
(In US $ millions, except percentages)
The following table converts our GMV, revenues, gross profit, and operating income using the comparative period's monthly average exchange rates. We have provided the below disclosure as we believe it presents a clear comparison of our period-to-period operating results by removing the impact of fluctuations in foreign exchange rates and to assist investors in understanding our financial and operating performance. The table below and our Condensed Consolidated Statements of Operations disclosure are supplements to our Condensed Consolidated Financial Statements, which are prepared and presented in accordance with US GAAP (excluding GMV).
| Three months ended September 30, | |||||||||||||||||
| GMV | Revenue | Subscription solutions revenue | Merchant solutions revenue | Gross profit | Operating income | ||||||||||||
| 2025 as reported | 92,013 | 2,844 | 699 | 2,145 | 1,391 | 343 | |||||||||||
| 2026 as reported | 119,145 | 3,742 | 836 | 2,906 | 1,781 | 568 | |||||||||||
| Percentage change YoY | 29 | % | 32 | % | 20 | % | 35 | % | 28 | % | 66 | % | |||||
| Constant currency impact | (25 | ) | (4 | ) | (1 | ) | (3 | ) | (1 | ) | 2 | ||||||
| Percentage change YoY constant currency | 30 | % | 32 | % | 20 | % | 36 | % | 28 | % | 65 | % | |||||
Regulatory Disclosures and Forward-looking Statements
Advisory Regarding Forward-looking Statements
This press release contains forward-looking statements and forward-looking information (collectively, “forward-looking statements”), including statements related to Shopify’s financial outlook, such as expected revenue and expenses for the next fiscal quarter, Shopify's expectations regarding future investments in the business, and Shopify's expectations regarding the development of emerging technologies, including AI. These statements can be identified by words such as “will” and “expect” and are based on Shopify's current projections and expectations about future events and financial results. Known and unknown risks may cause actual results to differ materially from those described in the forward-looking statements. These risks include, but are not limited to, the Company’s ability to maintain expected growth and manage expenses, the impact of changes in economic conditions and consumer spending in key markets such as the United States, Europe, and globally, the impact of measures that affect international trade, including tariffs, the adoption and impact of emerging technologies such as AI, our reliance on third-party providers to deliver services, a cyberattack or security breach, and serious errors or defects in software or hardware. Other factors and risks that may cause actual results to differ materially from those set out in the forward-looking statements are set out in Shopify's Form 10-Q under the heading “Risk Factors” and other filings made with US and Canadian securities regulators, available at www.sec.gov and www.sedarplus.ca. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to management on the date hereof and represent management’s beliefs regarding future events, projections, and financial trends, which, by their nature, are inherently uncertain. The forward-looking statements are provided to give additional information about management’s expectations and beliefs and may not be appropriate for other purposes. Shopify undertakes no duty to publicly update or revise any forward-looking statements, except as may be required by law.
Endnotes:
Gross Merchandise Volume, or GMV, represents the total dollar value of orders facilitated through the Shopify platform including certain apps and channels for which a revenue-sharing arrangement is in place in the period, net of refunds, and inclusive of shipping and handling, duty, and value-added taxes.
Monthly Recurring Revenue, or MRR, is the aggregate value of all subscription plans, excluding variable platform fees, in effect on the last day of the period, assuming merchants maintain their subscription the following month and is used by management as a directional indicator of subscription solutions revenue going forward.
Free cash flow and free cash flow margin are non-GAAP financial measures that are reconciled in the non-GAAP reconciliation within this press release. These non-GAAP financial measures do not have standardized meanings under US GAAP and may not be comparable to similar measures presented by other companies. Shopify believes free cash flow and free cash flow margin provide useful information to help investors and others understand our operating results and the performance of our business in the same manner as management. Shopify does not reconcile forward-looking non-GAAP free cash flow margin because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. Free cash flow is a non-GAAP financial measure calculated as cash flow from operations less capital expenditures.
Reconciliation of GAAP Net Income to Non-GAAP Net Income provides supplementary non-GAAP financial measures for non-GAAP net income and diluted net income per share to consider in evaluating operating performance. Non-GAAP adjustments to net income include stock-based compensation expense and related payroll taxes, amortization of acquired intangible assets, impairment of right-of-use assets and leaseholds, net loss on equity and other investments, net loss on equity method investment, loss on embedded derivative, and income tax effects and tax adjustments, including a release of valuation allowance as a discrete tax benefit. These non-GAAP measures should not be viewed as a substitute for reported results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were Shopify's Q3 2026 revenue and earnings?
Shopify generated $3.742 billion in revenue and $462 million in GAAP net income for the quarter ended September 30, 2026. Revenue grew 32% year over year. Diluted earnings per share increased to $0.36 from $0.20 a year earlier.
What is Shopify's Q4 2026 outlook?
Shopify expects low-thirties percentage revenue growth and high-twenties percentage gross profit growth year over year. The company also expects operating expenses of 29% to 30% of revenue, stock-based compensation of $155 million, and a free cash flow margin consistent with Q4 2025.
How did Shopify change its merchant cash advance cash-flow presentation in 2026?
Starting in April 2026, Shopify moved merchant cash advance cash flows from operating activities to investing activities, consistent with loans. The company gives the similar nature of the underlying lending activities as the reason. For Q3 2026, this change resulted in a $30 million net cash use presented in investing activities.
How does Shopify calculate free cash flow?
Shopify calculates free cash flow by subtracting capital expenditures from net cash provided by operating activities. For Q3 2026, operating cash flow was $818 million and capital expenditures were $2 million, producing $816 million in free cash flow. This is a non-GAAP measure.