Key Stats
- Current Price: ~$108 (May 5, 2026)
- Q1 2026 Revenue: $3.2B, up 34% YoY
- Q1 2026 Free Cash Flow: $476M, 15% FCF margin
- Q1 GMV: $101B, up 35% YoY
- Shop Pay GMV: $35B, up 59% YoY
- B2B GMV Growth: 80% YoY
- Q2 2026 Revenue Guidance: High-20s% growth YoY
- Q2 2026 FCF Margin Guidance: Mid-teens
- TIKR Model Price Target: ~$345
- Implied Upside: ~221%
Shopify Q1 2026 Earnings Breakdown
Shopify stock (SHOP) dropped 16% after the company reported Q1 2026 revenue of $3.2B, up 34% year-over-year, its fastest quarterly growth rate in over four years.
GMV reached $101B in the quarter, up 35%, marking the second consecutive quarter above $100B.
Merchant Solutions revenue grew 39%, driven by Shopify Payments processing $67B of GMV at 67% penetration, three percentage points higher than Q1 2025.
Subscription Solutions revenue grew 21%, with incremental growth balanced across Plus subscriptions, standard subscriptions, variable platform fees, and app and domain revenue.
B2B GMV grew 80% year-over-year, the standout channel result of the quarter.
Shop Pay processed $35B of GMV in Q1, up 59% year-over-year, with international Shop Pay GMV growing over 70% as the product expanded to new markets.
The Shop app also delivered strong results: GMV was up 70% year-over-year, monthly active users grew over 40%, and unique buyers grew over 50% compared to Q1 2025.
Free cash flow came in at $476M, representing a 15% FCF margin, consistent with management’s outlook.
For Q2 2026, CFO Jeff Hoffmeister guided for revenue growth in the high-20s percent year-over-year, gross profit dollar growth in the mid-20s, and FCF margins in the mid-teens.
The Q2 revenue guide implies a meaningful deceleration from Q1’s 34% growth, a gap the company attributes in part to FX tailwinds narrowing from over two points in Q1 to approximately half a point in Q2, according to Hoffmeister on the Q1 2026 earnings call.
Shopify Stock Financials: Operating Leverage Accelerating
Shopify stock’s income statement tells a clear story of accelerating operating leverage alongside durable top-line growth.
Gross margin contracted from 51% in Q1 2024 to 49% in Q1 2025, reflecting mix shift toward the faster-growing Merchant Solutions segment, which carries a lower margin profile than Subscription Solutions.
Merchant Solutions gross margin came in at 39%, essentially flat year-over-year, while Subscription Solutions gross margin held at 80%, both consistent with Q1 2025, according to Hoffmeister on the Q1 earnings call.
The more striking move is at the operating line: operating income expanded from $278M in Q1 2025 to $278M, $381M, $494M, and $745M in the four most recent quarters respectively, a trajectory that has been consistent and steep.
Operating margin reached 20% in Q4 2025, up from 12% in Q1 2025 and 7% in Q1 2024.
Operating expenses as a percentage of revenue fell to 37% in Q1 2026, a four-point improvement from Q1 2025, driven by headcount discipline and AI-enabled productivity gains, according to Hoffmeister.
What Does the Valuation Model Say?
The TIKR model prices Shopify stock at ~$345, representing approximately 221% upside from the current ~$108 price, with an annualized return of 28% over a roughly five-year horizon to December 2030.
The mid-case model assumes a revenue CAGR of ~21% and a net income margin of ~21% over the forecast period.
Q1’s 34% revenue growth and four-point operating leverage improvement both run ahead of the model’s mid-case trajectory, which means this quarter adds incremental support to the assumptions rather than stress-testing them.
At current prices, the risk/reward on Shopify stock is materially asymmetric in favor of buyers who believe in the platform’s multi-year compounding thesis.
The investment case for Shopify stock is stronger after this report than before it.
Shopify stock posted its fastest quarterly revenue growth in over four years while expanding operating margins and sustaining mid-teens FCF margins: the question the stock now poses is whether that pace can hold as the Q2 guide implies a step-down, or whether the deceleration is mechanical and temporary.
Growth Case
- Q1 GMV of $101B growing at 35% reflects acceleration in North America, which posted its strongest quarterly growth rate in over four years, alongside European GMV growth of 48%, or 35% in constant currency
- B2B GMV grew 80% in Q1, a channel still in early penetration that Shopify has extended to standard subscription plan merchants this quarter
- AI-driven traffic to Shopify stores grew 8x year-over-year in Q1, while orders from AI-powered searches increased nearly 13x, with new buyer order rates running at nearly twice the rate of traditional organic search
- Sidekick weekly active shops were up 385% year-over-year in Q1, with nearly half of all Shopify Flows now built using Sidekick, embedding AI utility deeper into the merchant base each quarter
Deceleration Case
The Q2 guide arriving below Q1’s momentum, coupled with a 16% single-day stock decline, reflects real market uncertainty about whether Q1’s growth rate was a structural inflection or a high watermark before normalization
Q2 revenue guidance of high-20s% growth implies a roughly five-to-six point deceleration from Q1’s 34%, with management citing FX as only a partial explanation
Gross profit is guided to grow in the mid-20s in Q2, a wider gap versus revenue growth than investors saw in Q1, pointing to continued mix shift pressure from faster-growing, lower-margin Merchant Solutions
Transaction and loan loss rates rose to 3.7% of revenue in Q1, up from 3.2% in Q1 2025, driven primarily by credit, a line that scales with volume and will continue to draw scrutiny as financial services deepen
Should You Invest in Shopify Inc.?
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