Shopify lifts operating income 66% to $568 million in third quarter
Key Facts
Shopify reported a 66% year-over-year increase in operating income to $568 million in the third quarter ended September 30, 2026, compared with $343 million in the same period a year earlier. Revenue grew 32% to $3.742 billion from $2.844 billion, according to the company statement. Its data also showed gross merchandise volume on the platform rising to $119.145 billion from $92.013 billion. The expansion in commercial activity reflects growth in the transaction base served by the platform, alongside higher revenue. But the stock moved lower in premarket trading after some activity and subscription metrics fell short of market expectations.
Merchant solutions were the largest revenue component, bringing in $2.906 billion in the third quarter, compared with $2.145 billion in the same period of 2025. The category includes revenue from services that help merchants operate, while gross merchandise volume on the platform increased by more than $27 billion year over year, according to the reported figures. Monthly recurring revenue was $230 million as of September 30, compared with $193 million on the same date a year earlier. Despite the increases in both metrics, Investing.com reported that merchandise volume and subscription revenue came in below analysts' expectations. The company said annual revenue growth was 32%, matching the market consensus, according to the Associated Press as cited in the results coverage included in the evidence.
Gross profit rose to $1.781 billion from $1.391 billion a year earlier, an annual increase of 28%, a slower pace than revenue growth of 32%. Operating expenses, meanwhile, climbed to $1.213 billion from $1.048 billion. Operating income was $568 million, compared with $343 million, highlighting that higher revenue and gross profit came alongside rising expenses, while operating income grew more strongly. The company did not attribute the increase in operating income in the reported figures to spending cuts; operating expenses increased year over year. This comparison places the rise in profitability in the context of higher expenses rather than attributing it to a factor the company did not cite.
Free cash flow was $816 million in the third quarter, compared with $507 million in the same period of 2025. The free cash flow margin rose to 22% from 18% a year earlier, according to Shopify's statement. This follows the company's statement that an 18% margin in the third quarter of 2025 marked its ninth consecutive quarter with a double-digit free cash flow margin. The current period's figures show increases in both free cash flow and its margin from a year earlier, alongside growth in revenue and gross merchandise volume. Adjusted earnings per share were $0.49, beating the analyst average estimate of $0.47, according to Investing.com.
Financial indicators diverged from the market reaction on November 3, when Shopify shares fell more than 19% in premarket trading. Investing.com attributed the decline to merchandise volume and subscription revenue coming in below expectations, despite revenue growth matching consensus. The stock closed at $156.22 on November 2, according to EL7 data. That close provides a reference point before the premarket session in which the shares fell; the available data do not include a later closing price for the day results were announced. Adjusted earnings per share also beat analysts' expectations, but did not prevent the stock from falling in early trading.
Shopify forecast fourth-quarter 2026 revenue growth at an annual rate in the low thirties percent, and gross profit growth at a rate in the high twenties percent. It estimated operating expenses would represent 29% to 30% of revenue in the same quarter. The company also projected stock-based compensation of $155 million and said its free cash flow margin would remain consistent with the fourth quarter of 2025. The guidance follows a free cash flow margin of 22% in the third quarter, compared with 18% a year earlier. The expense and cash flow guidance, alongside the revenue and gross profit growth outlook, provides the company's indicators for the next period.