It has been about a month since the last earnings report for Shopify (SHOP Quick QuoteSHOP - Free Report) . Shares have lost about 1.1% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Shopify due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Shopify Inc. before we dive into how investors and analysts have reacted as of late.

Shopify Q2 Earnings Beat Estimates, Revenues Rise on Strong GMV Growth

Shopify reported second-quarter 2026 adjusted earnings of 42 cents per share, beating the Zacks Consensus Estimate by 7.69%. The figure increased 20% year over year. 

Revenues jumped 33.7% year over year to $3.58 billion and surpassed the consensus mark by 4.36%.

The upside reflected broad-based Gross Merchandise Volume (GMV) growth and higher payments penetration. GMV increased 31.6% to $115.57 billion, while Shopify Payments penetration expanded three percentage points to 68% of global GMV.

SHOP’s Merchant Solutions Revenue Jumps

Merchant Solutions revenues increased 37.4% year over year to $2.78 billion. Growth was primarily driven by higher GMV, increased payments penetration and strength in partner revenue shares and financial services.

Shopify Payments expanded into the United Arab Emirates, bringing availability to 40 countries. Payments penetration in Europe rose more than 350 basis points (bps), supported by newer market launches and additional local payment methods.

Shop Pay GMV advanced 53% year over year. Shopify added more local payment options to Shop Pay and continued expanding installment adoption, giving buyers additional ways to complete purchases.

Shopify’s Subscription Business Maintains Momentum

Subscription Solutions revenues rose 22% year over year to $802 million. Standard-plan monthly subscriptions were the largest growth contributor, supported by strong merchant net additions.

Monthly recurring revenue increased 19% year over year to $221 million. Plus represented 34% of MRR and also grew 19%, reflecting continued demand from larger and more complex merchants.

SHOP’s Commerce Channels Deliver Broad Growth

International GMV advanced 37%, while North America GMV grew 28%. Europe posted 34% constant-currency GMV growth, highlighting continued geographic breadth.

Offline GMV climbed 32% and B2B GMV surged 76%. Shopify expanded native B2B capabilities beyond Plus, allowing more merchants to manage wholesale and direct-to-consumer operations from the same administration platform.

The company also added or expanded relationships with brands including Holt Renfrew, Guess, Avon, Arhaus and Canada Goose. These wins support Shopify’s unified-commerce push across online, physical retail and wholesale channels.

Shopify’s AI Tools Gain Merchant Adoption

AI-driven traffic and orders to Shopify stores tripled year over year. New-buyer orders from AI channels came in at nearly twice the rate of other channels, while 75% of AI-attributed orders originated outside the top 100 product categories.

Sidekick handled nearly 34 million conversations during the quarter. Daily active merchants using the tool increased 3.6-fold, daily sessions rose 4.8-fold, and merchants created more than 36,000 custom apps, up from 12,000 in the prior quarter.

Shopify’s Catalog contains more than 1 billion products. AI searches powered by Catalog converted at twice the rate of searches relying on scraped data, demonstrating the value of accurate and structured product information.

SHOP’s Profitability Benefits From Operating Leverage

Gross profit increased 31.2% year over year to $1.71 billion. 

Merchant Solutions gross profit rose 39%, with margin improving slightly as growth in higher-margin revenue streams offset pressure from increased payments volume. Subscription Solutions gross margin remained just below 80%, in line with the first quarter. Shopify maintained that level despite increased Sidekick usage, reflecting cost efficiencies as adoption of the AI assistant scaled.

Operating expenses were $1.22 billion, or 34% of revenues, compared with 37.7% a year earlier. Sales and marketing represented less than 14% of revenues, improving about 160 bps.

Operating income increased 47% to $623 million as gross profit dollars grew faster than expenses. Transaction and loan losses were 3.9% of revenues, with Shopify Capital serving as the largest driver during the quarter.

Shopify’s Cash Flow and Balance Sheet Stay Strong

Shopify ended the quarter with $1.66 billion in cash and cash equivalents and $3.29 billion in marketable securities. Loans and merchant cash advances totaled $2.18 billion, while the company repurchased $1.42 billion of common stock.

Net cash provided by operating activities increased to $658 million from $428 million. Free cash flow rose to $654 million from $422 million, while the free cash flow margin expanded to 18% from 16%.

SHOP’s Q3 Outlook Signals Continued Expansion

For the third quarter of 2026, Shopify expects revenue growth in the low-30% range. Gross profit dollars are projected to increase in the mid-to-high-20% range.

Operating expenses are expected to equal 33% to 34% of revenues. Free cash flow margin is projected in the high-teens to low-20% range, including less than one percentage point of benefit from the merchant cash advance accounting change.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

VGM Scores

At this time, Shopify has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock has a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Shopify has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.