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Shopify's Subscription Growth Accelerates: More Upside Ahead?
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Key Takeaways
Shopify's Subscription Solutions revenues rose 21% to $750 million in first-quarter 2026.
Plus merchants grew faster than the overall base, while large merchants nearly doubled in two years.
Sidekick usage nearly quadrupled, supporting retention, upgrades and an 80% segment gross margin.
Shopify’s (SHOP - Free Report) Subscription Solutions business is strengthening the company’s growth prospects by expanding its recurring revenue base across Standard and Plus plans. In the first quarter of 2026, Subscription Solutions revenues increased 21% year over year to $750 million. Monthly recurring revenues rose 16% to $212 million, with Shopify Plus accounting for 35% of total MRR, up from 34% in the prior-year quarter. This reflects healthy additions of new merchants as well as existing merchants upgrading to higher-tier plans as their businesses scale.
Growth is also being supported by stronger adoption among larger merchants. Shopify noted that Plus merchants expanded faster than its overall merchant base, boosting monthly subscription revenues and variable platform fees. The number of large merchants generating more than $100 million in annual GMV on Shopify has nearly doubled over the past two years. Enterprise wins involving brands such as Orvis, Mulberry and LVMH highlight Shopify’s growing appeal as companies replace costly legacy systems with its unified commerce, POS, B2B and payments platform.
The company’s ecosystem of apps, themes and domains represents another important Subscription Solutions growth driver. Thousands of third-party applications extend Shopify’s platform capabilities, improving merchant engagement and increasing the value of remaining within the ecosystem. Shopify is also broadening access to B2B functionality across standard subscription plans, enabling merchants to manage wholesale and direct-to-consumer operations through one platform. This could attract more merchants while creating opportunities for future upgrades and additional service adoption.
AI-powered tools such as Sidekick are further enhancing the long-term prospects of the segment by making the platform more productive and deeply embedded in merchants’ daily operations. Weekly active shops using Sidekick increased nearly fourfold year over year, while merchants created more than 12,000 custom apps through the tool during the quarter. As merchants rely on Shopify for store design, automation, analytics and business recommendations, retention and plan-upgrade opportunities are likely to improve. Subscription Solutions also carries an attractive gross margin of approximately 80%, making its continued expansion supportive of Shopify’s gross profit and operating leverage.
Shopify Faces Tough Competition
The competitive intensity in e-commerce remains high for Shopify, with Commerce.com (CMRC - Free Report) and eBay (EBAY - Free Report) standing out as key challengers.
Commerce.com positions itself as an open, AI-native commerce platform rather than a traditional storefront provider. CMRC’s Feedonomics product enables merchants to optimize product listings across marketplaces, AI search engines and agentic commerce platforms, while its BigCommerce platform integrates with Google Universal Commerce Protocol, OpenAI, Perplexity, Microsoft Copilot and Meta. Commerce.com is also strengthening its competitive position through rapid AI innovation and payments capabilities. During the first quarter of 2026, CMRC launched BigCommerce Payments with PayPal, expanded AI-powered Commerce Companion, introduced agentic checkout across multiple AI platforms and enhanced B2B automation with purchase-order agents and complex pricing capabilities.
eBay remains another formidable competitor by differentiating itself through a marketplace model built around collectibles, recommerce, consumer-to-consumer (C2C) selling and trusted transactions. The company reported 14% GMV growth in the first quarter of 2026, driven by accelerating demand across collectibles, motors, electronics and fashion. Investments in AI-powered listing tools, agentic search, live shopping, authenticity guarantees, international shipping and social commerce integrations are strengthening buyer engagement and seller productivity. These initiatives enhance eBay’s appeal for merchants and individual sellers that may otherwise build independent storefronts on Shopify, particularly in resale and specialty categories.
Shopify shares have lost 29.3% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 9.7%.
SHOP’s YTD Price Performance
Image Source: Zacks Investment Research
Shopify stock is overvalued, with a forward 12-month price/sales of 8.88X compared with the broader sector’s 6.18X. SHOP has a Value Score of F.
SHOP’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $1.84 per share, up a couple of cents over the past 30 days. This suggests 57.26% year-over-year growth.
View the Zacks #1 Rank List
Image: Bigstock
Shopify's Subscription Growth Accelerates: More Upside Ahead?
Key Takeaways
Shopify’s (SHOP - Free Report) Subscription Solutions business is strengthening the company’s growth prospects by expanding its recurring revenue base across Standard and Plus plans. In the first quarter of 2026, Subscription Solutions revenues increased 21% year over year to $750 million. Monthly recurring revenues rose 16% to $212 million, with Shopify Plus accounting for 35% of total MRR, up from 34% in the prior-year quarter. This reflects healthy additions of new merchants as well as existing merchants upgrading to higher-tier plans as their businesses scale.
Growth is also being supported by stronger adoption among larger merchants. Shopify noted that Plus merchants expanded faster than its overall merchant base, boosting monthly subscription revenues and variable platform fees. The number of large merchants generating more than $100 million in annual GMV on Shopify has nearly doubled over the past two years. Enterprise wins involving brands such as Orvis, Mulberry and LVMH highlight Shopify’s growing appeal as companies replace costly legacy systems with its unified commerce, POS, B2B and payments platform.
The company’s ecosystem of apps, themes and domains represents another important Subscription Solutions growth driver. Thousands of third-party applications extend Shopify’s platform capabilities, improving merchant engagement and increasing the value of remaining within the ecosystem. Shopify is also broadening access to B2B functionality across standard subscription plans, enabling merchants to manage wholesale and direct-to-consumer operations through one platform. This could attract more merchants while creating opportunities for future upgrades and additional service adoption.
AI-powered tools such as Sidekick are further enhancing the long-term prospects of the segment by making the platform more productive and deeply embedded in merchants’ daily operations. Weekly active shops using Sidekick increased nearly fourfold year over year, while merchants created more than 12,000 custom apps through the tool during the quarter. As merchants rely on Shopify for store design, automation, analytics and business recommendations, retention and plan-upgrade opportunities are likely to improve. Subscription Solutions also carries an attractive gross margin of approximately 80%, making its continued expansion supportive of Shopify’s gross profit and operating leverage.
Shopify Faces Tough Competition
The competitive intensity in e-commerce remains high for Shopify, with Commerce.com (CMRC - Free Report) and eBay (EBAY - Free Report) standing out as key challengers.
Commerce.com positions itself as an open, AI-native commerce platform rather than a traditional storefront provider. CMRC’s Feedonomics product enables merchants to optimize product listings across marketplaces, AI search engines and agentic commerce platforms, while its BigCommerce platform integrates with Google Universal Commerce Protocol, OpenAI, Perplexity, Microsoft Copilot and Meta. Commerce.com is also strengthening its competitive position through rapid AI innovation and payments capabilities. During the first quarter of 2026, CMRC launched BigCommerce Payments with PayPal, expanded AI-powered Commerce Companion, introduced agentic checkout across multiple AI platforms and enhanced B2B automation with purchase-order agents and complex pricing capabilities.
eBay remains another formidable competitor by differentiating itself through a marketplace model built around collectibles, recommerce, consumer-to-consumer (C2C) selling and trusted transactions. The company reported 14% GMV growth in the first quarter of 2026, driven by accelerating demand across collectibles, motors, electronics and fashion. Investments in AI-powered listing tools, agentic search, live shopping, authenticity guarantees, international shipping and social commerce integrations are strengthening buyer engagement and seller productivity. These initiatives enhance eBay’s appeal for merchants and individual sellers that may otherwise build independent storefronts on Shopify, particularly in resale and specialty categories.
SHOP’s Share Price Performance, Valuation & Estimates
Shopify shares have lost 29.3% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 9.7%.
SHOP’s YTD Price Performance
Image Source: Zacks Investment Research
Shopify stock is overvalued, with a forward 12-month price/sales of 8.88X compared with the broader sector’s 6.18X. SHOP has a Value Score of F.
SHOP’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $1.84 per share, up a couple of cents over the past 30 days. This suggests 57.26% year-over-year growth.
Shopify Inc. Price and Consensus
Shopify Inc. price-consensus-chart | Shopify Inc. Quote
Shopify currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.