Shopify Inc. (NASDAQ/TSX: SHOP) — research brief (BMC #060 on gallery, queue id 59)

Prepared 2026-10-10 (America/Chicago). Labels: FACT = stated by Shopify (Form 10-K FY2025, Form 10-Q for the quarter ended 30 Jun 2026, Q4 2025 and Q2 2026 earnings releases (8-K Ex. 99.1), shopify.com pricing/help/news pages); SECONDARY = third-party reporting (none relied on for figures); INFERENCE = arithmetic or reasoning by this project from company-stated numbers. No invented figures. Fiscal year = calendar year. Shopify reports in USD and files 10-K/10-Q/8-K voluntarily although it is a foreign private issuer (10-K says so). Non-GAAP measures (free cash flow, constant currency) are company-defined.

Sources (accessed 2026-10-10)

Form 10-K FY2025 (filed 11 Feb 2026): https://www.sec.gov/Archives/edgar/data/1594805/000159480526000007/shop-20251231.htm
Form 10-Q for the quarter ended 30 Jun 2026 (filed 5 Aug 2026): https://www.sec.gov/Archives/edgar/data/1594805/000159480526000047/shop-20260630.htm
Q2 2026 earnings release (8-K Ex. 99.1, 5 Aug 2026): https://www.sec.gov/Archives/edgar/data/1594805/000159480526000046/exhibit991pressreleaseq220.htm
Q4/FY2025 earnings release (8-K Ex. 99.1, 11 Feb 2026): https://www.sec.gov/Archives/edgar/data/1594805/000159480526000006/exhibit991pressreleaseq420.htm
Pricing page (accessed 2026-10-10; page footnote "accurate as of October 8, 2026"): https://www.shopify.com/pricing
Agentic Storefronts / Agentic plan announcement: https://www.shopify.com/news/agentic-commerce-momentum
Agentic commerce platform + UCP announcement: https://www.shopify.com/news/ai-commerce-at-scale
Agentic storefronts help centre: https://help.shopify.com/en/manual/online-sales-channels/agentic-storefronts/requirements
Universal Commerce Protocol engineering post: https://shopify.engineering/UCP
Logo: Simple Icons "Shopify" glyph (CC0) in a green rounded tile.
Raw text in /workspace/shopify-src/ (10k.txt, 10q.txt, ex99.txt, q4.txt).

Teaching arc

Shopify rents merchants the store, then earns most of its money on the checkout. The subscription ($29–$299/mo self-serve; Plus from $2,300/mo) is the on-ramp: FY25 $2.75B, 24% of revenue at ~81% gross margin (INFERENCE: $2,752M − $520M cost = $2,232M). The merchant-solutions layer — above all Shopify Payments (card rates 2.9% + 30¢ on Basic down to 2.25% + 30¢ on Plus), plus lending (Capital), shipping labels, POS hardware, app-store ads, referral fees — was $8.80B, 76% of revenue, but at only ~38% gross margin because card-network and processing fees pass through (INFERENCE: $8,804M − $5,481M = $3,323M). So merchant solutions is ~76% of revenue but ~60% of gross profit (INFERENCE: 3,323 ÷ 5,555). It scales with GMV ($378.4B FY25, +29%): Payments penetration rose 61.9% → 65.6% (68% in Q2 2026), i.e. $248.1B (+37%) ran through Shopify Payments. That lifts revenue faster than gross profit (revenue +30% vs gross profit +24% in FY25; gross margin 50% → 48%) while opex discipline turns it into $1.47B operating income (12.7%) and $2.0B free cash flow (17%). The cost of becoming the finance layer: transaction and loan losses $417M (+84%) as Payments risk and Capital lending grow. The new surface: Agentic Storefronts and the open Universal Commerce Protocol (co-developed with Google) let merchants' catalogs sell inside ChatGPT, Copilot, Google AI Mode/Gemini and Meta, and the Agentic plan opens Shopify Catalog to non-Shopify brands. Q2 2026: GMV $115.6B (+32%), revenue $3.58B (+34%), gross profit $1.71B (+31%), operating income $488M, FCF $654M (18%).

Key numbers

FY2025 (10-K / Q4 release, FACT unless noted)

GMV $378,441M (+29%; FY24 $292,275M). Revenue $11,556M (+30%; FY24 $8,880M; FY23 $7,060M). Subscription solutions $2,752M (+17%; 24%); merchant solutions $8,804M (+35%; 76%).
Cost of revenues $6,001M: subscription $520M, merchant solutions $5,481M. Gross profit $5,555M (+24%; 48% margin vs 50%).
Opex $4,087M: S&M $1,663M (14%), R&D $1,536M (13%), G&A $471M (4%), transaction and loan losses $417M (+84%). Operating income $1,468M (FY24 $1,075M). Net income $1,231M (incl. net loss on equity and equity-method investments of $316M). Free cash flow $2,007M (17% margin; non-GAAP).
INFERENCE: subscription gross margin 81.1%; merchant solutions 37.7%; merchant share of gross profit 59.8%; total revenue ÷ GMV 3.05%; merchant solutions revenue ÷ GMV 2.33%; operating margin 12.7%.
Shopify Payments: penetration 65.6% (FY24 61.9%); GMV through Payments $248.1B (+37%). Payments adoption among eligible merchants: North America 88%, APAC 89%, EMEA 83%.
MRR $205M at 31 Dec 2025 (+15%). Press-release highlights (company-stated): >14% US ecommerce share; international revenue +36%; offline revenue +27%; B2B GMV +96%; Shop Pay GMV +62%; Gross Payments Volume +37%.
Revenue by merchant location FY25: US $7,331M (63%), Canada $567M (5%), EMEA $2,426M (21%), APAC $1,128M (10%), Latin America $104M (1%).
Merchant base: "millions" of merchants in 175+ countries — 44% US, 31% EMEA, 16% APAC/Australia/China, 5% Canada, 5% LatAm; no merchant has ever been >5% of revenue; most merchants on Basic/Grow plans but the majority of GMV from Plus and enterprise. 21,000+ apps in the App Store. ~7,600 employees.
Payment service providers: Stripe and PayPal agreements (auto-renew every 12 months); platform on Google Cloud.
Equity investments with readily determinable value at 31 Dec 2025: Affirm $1,511M, Global-E $868M, Klaviyo $599M; Flexport (equity method + $326M convertible notes).
Litigation: no material pending litigation (10-K); an Express Mobile patent verdict was vacated and the appeal dismissed in 2025.

Q2 2026 / 30 Jun 2026 (10-Q, release, FACT unless noted)

GMV $115,567M (+32%; +30% constant currency). Revenue $3,583M (+34%): subscription $802M (+22%), merchant solutions $2,781M (+37%). H1 revenue $6.8B (+34%); merchant solutions 77% of H1 revenue.
Cost of revenues $1,875M (subscription $163M, merchant $1,712M); gross profit $1,708M (+31%; INFERENCE 47.7% margin). Opex $1,220M: S&M $498M, R&D $445M, G&A $136M, transaction and loan losses $141M (vs $80M). Operating income $488M (vs $291M; INFERENCE 13.6% margin). Free cash flow $654M (18% margin).
MRR $221M (+19%). Shopify Payments penetration 68% ($78.1B).
INFERENCE: merchant solutions gross profit $1,069M (38.4% margin); subscription gross profit $639M (79.7%); merchant solutions revenue ÷ GMV 2.41%.
Loans and merchant cash advances (net, current) $2,184M vs $1,784M at 31 Dec 2025 (INFERENCE +22%).
Cash $1,656M + marketable securities $3,291M; equity and other investments $4,854M. Share repurchases $1.42B in Q2; $5B total authorization, $3.1B remaining.
Q3 2026 outlook (company, forward-looking): revenue growth low-thirties %, gross profit growth mid-to-high twenties %, opex 33–34% of revenue, SBC $150M, FCF margin high-teens to low-twenties.

Pricing (shopify.com/pricing, accessed 2026-10-10)

Basic $29/mo billed yearly ($39 monthly); Grow $79 ($105); Advanced $299 ($399); Plus starts at $2,300/mo. Trial: 3 days free then $1/mo for 3 months. POS Pro +$89/mo per location.
Online card rates 2.9% + 30¢ (Basic), 2.7% (Grow), 2.5% (Advanced), 2.25% (Plus); premium cards 3.5%/3.3%/3.1%/2.95% + 30¢; international +1%. In-person 2.6%/2.5%/2.4%/2.3% + 10¢. USDC rates same as online cards. Third-party gateway fee 2%/1%/0.6%/0.2%.
Agentic plan: add products to Shopify Catalog, choose AI channels, "only pay when you make a sale", online card rates from 2.9% + 30¢.
Balance earnings 2.52% (3.54% Plus) (a reward, not interest); Shopify Credit up to 3% cashback; Capital repaid as a share of daily sales, max 18 months; US Capital funded by WebBank; Balance partners Stripe/Fifth Third/Celtic Bank.

Agentic commerce (company announcements, FACT as company claims)

Agentic Storefronts connect merchants to ChatGPT, Microsoft Copilot, Google AI Mode/Gemini (UCP-powered) and Meta from the Shopify admin; "no transaction fees beyond standard processing rates". ChatGPT purchases complete on the merchant's own checkout in an in-app browser; direct checkout available in Copilot, Google and Meta where enabled. Merchants keep the customer relationship. UCP is an open standard co-developed with Google, endorsed by Walmart, Target, Etsy, Mastercard, Visa, Stripe, American Express and others.

# Shopify Inc. (NASDAQ/TSX: SHOP) — research brief (BMC #060 on gallery, queue id 59) Prepared 2026-10-10 (America/Chicago). Labels: **FACT** = stated by Shopify (Form 10-K FY2025, Form 10-Q for the quarter ended 30 Jun 2026, Q4 2025 and Q2 2026 earnings releases (8-K Ex. 99.1), shopify.com pricing/help/news pages); **SECONDARY** = third-party reporting (none relied on for figures); **INFERENCE** = arithmetic or reasoning by this project from company-stated numbers. No invented figures. Fiscal year = calendar year. Shopify reports in USD and files 10-K/10-Q/8-K voluntarily although it is a foreign private issuer (10-K says so). Non-GAAP measures (free cash flow, constant currency) are company-defined. ## Sources (accessed 2026-10-10) - Form 10-K FY2025 (filed 11 Feb 2026): https://www.sec.gov/Archives/edgar/data/1594805/000159480526000007/shop-20251231.htm - Form 10-Q for the quarter ended 30 Jun 2026 (filed 5 Aug 2026): https://www.sec.gov/Archives/edgar/data/1594805/000159480526000047/shop-20260630.htm - Q2 2026 earnings release (8-K Ex. 99.1, 5 Aug 2026): https://www.sec.gov/Archives/edgar/data/1594805/000159480526000046/exhibit991pressreleaseq220.htm - Q4/FY2025 earnings release (8-K Ex. 99.1, 11 Feb 2026): https://www.sec.gov/Archives/edgar/data/1594805/000159480526000006/exhibit991pressreleaseq420.htm - Pricing page (accessed 2026-10-10; page footnote "accurate as of October 8, 2026"): https://www.shopify.com/pricing - Agentic Storefronts / Agentic plan announcement: https://www.shopify.com/news/agentic-commerce-momentum - Agentic commerce platform + UCP announcement: https://www.shopify.com/news/ai-commerce-at-scale - Agentic storefronts help centre: https://help.shopify.com/en/manual/online-sales-channels/agentic-storefronts/requirements - Universal Commerce Protocol engineering post: https://shopify.engineering/UCP - Logo: Simple Icons "Shopify" glyph (CC0) in a green rounded tile. - Raw text in /workspace/shopify-src/ (10k.txt, 10q.txt, ex99.txt, q4.txt). ## Teaching arc Shopify rents merchants the store, then earns most of its money on the checkout. The **subscription** ($29–$299/mo self-serve; Plus from $2,300/mo) is the on-ramp: FY25 $2.75B, 24% of revenue at ~81% gross margin (INFERENCE: $2,752M − $520M cost = $2,232M). The **merchant-solutions** layer — above all Shopify Payments (card rates 2.9% + 30¢ on Basic down to 2.25% + 30¢ on Plus), plus lending (Capital), shipping labels, POS hardware, app-store ads, referral fees — was **$8.80B, 76% of revenue**, but at only ~38% gross margin because card-network and processing fees pass through (INFERENCE: $8,804M − $5,481M = $3,323M). So merchant solutions is ~76% of revenue but ~60% of gross profit (INFERENCE: 3,323 ÷ 5,555). It scales with **GMV** ($378.4B FY25, +29%): Payments penetration rose 61.9% → 65.6% (68% in Q2 2026), i.e. $248.1B (+37%) ran through Shopify Payments. That lifts revenue faster than gross profit (revenue +30% vs gross profit +24% in FY25; gross margin 50% → 48%) while opex discipline turns it into $1.47B operating income (12.7%) and $2.0B free cash flow (17%). The cost of becoming the finance layer: transaction and loan losses $417M (+84%) as Payments risk and Capital lending grow. The new surface: **Agentic Storefronts** and the open **Universal Commerce Protocol** (co-developed with Google) let merchants' catalogs sell inside ChatGPT, Copilot, Google AI Mode/Gemini and Meta, and the Agentic plan opens Shopify Catalog to non-Shopify brands. Q2 2026: GMV $115.6B (+32%), revenue $3.58B (+34%), gross profit $1.71B (+31%), operating income $488M, FCF $654M (18%). ## Key numbers **FY2025 (10-K / Q4 release, FACT unless noted)** - GMV $378,441M (+29%; FY24 $292,275M). Revenue $11,556M (+30%; FY24 $8,880M; FY23 $7,060M). Subscription solutions $2,752M (+17%; 24%); merchant solutions $8,804M (+35%; 76%). - Cost of revenues $6,001M: subscription $520M, merchant solutions $5,481M. Gross profit $5,555M (+24%; 48% margin vs 50%). - Opex $4,087M: S&M $1,663M (14%), R&D $1,536M (13%), G&A $471M (4%), transaction and loan losses $417M (+84%). Operating income $1,468M (FY24 $1,075M). Net income $1,231M (incl. net loss on equity and equity-method investments of $316M). Free cash flow $2,007M (17% margin; non-GAAP). - INFERENCE: subscription gross margin 81.1%; merchant solutions 37.7%; merchant share of gross profit 59.8%; total revenue ÷ GMV 3.05%; merchant solutions revenue ÷ GMV 2.33%; operating margin 12.7%. - Shopify Payments: penetration 65.6% (FY24 61.9%); GMV through Payments $248.1B (+37%). Payments adoption among eligible merchants: North America 88%, APAC 89%, EMEA 83%. - MRR $205M at 31 Dec 2025 (+15%). Press-release highlights (company-stated): >14% US ecommerce share; international revenue +36%; offline revenue +27%; B2B GMV +96%; Shop Pay GMV +62%; Gross Payments Volume +37%. - Revenue by merchant location FY25: US $7,331M (63%), Canada $567M (5%), EMEA $2,426M (21%), APAC $1,128M (10%), Latin America $104M (1%). - Merchant base: "millions" of merchants in 175+ countries — 44% US, 31% EMEA, 16% APAC/Australia/China, 5% Canada, 5% LatAm; no merchant has ever been >5% of revenue; most merchants on Basic/Grow plans but the majority of GMV from Plus and enterprise. 21,000+ apps in the App Store. ~7,600 employees. - Payment service providers: Stripe and PayPal agreements (auto-renew every 12 months); platform on Google Cloud. - Equity investments with readily determinable value at 31 Dec 2025: Affirm $1,511M, Global-E $868M, Klaviyo $599M; Flexport (equity method + $326M convertible notes). - Litigation: no material pending litigation (10-K); an Express Mobile patent verdict was vacated and the appeal dismissed in 2025. **Q2 2026 / 30 Jun 2026 (10-Q, release, FACT unless noted)** - GMV $115,567M (+32%; +30% constant currency). Revenue $3,583M (+34%): subscription $802M (+22%), merchant solutions $2,781M (+37%). H1 revenue $6.8B (+34%); merchant solutions 77% of H1 revenue. - Cost of revenues $1,875M (subscription $163M, merchant $1,712M); gross profit $1,708M (+31%; INFERENCE 47.7% margin). Opex $1,220M: S&M $498M, R&D $445M, G&A $136M, transaction and loan losses $141M (vs $80M). Operating income $488M (vs $291M; INFERENCE 13.6% margin). Free cash flow $654M (18% margin). - MRR $221M (+19%). Shopify Payments penetration 68% ($78.1B). - INFERENCE: merchant solutions gross profit $1,069M (38.4% margin); subscription gross profit $639M (79.7%); merchant solutions revenue ÷ GMV 2.41%. - Loans and merchant cash advances (net, current) $2,184M vs $1,784M at 31 Dec 2025 (INFERENCE +22%). - Cash $1,656M + marketable securities $3,291M; equity and other investments $4,854M. Share repurchases $1.42B in Q2; $5B total authorization, $3.1B remaining. - Q3 2026 outlook (company, forward-looking): revenue growth low-thirties %, gross profit growth mid-to-high twenties %, opex 33–34% of revenue, SBC $150M, FCF margin high-teens to low-twenties. **Pricing (shopify.com/pricing, accessed 2026-10-10)** - Basic $29/mo billed yearly ($39 monthly); Grow $79 ($105); Advanced $299 ($399); Plus starts at $2,300/mo. Trial: 3 days free then $1/mo for 3 months. POS Pro +$89/mo per location. - Online card rates 2.9% + 30¢ (Basic), 2.7% (Grow), 2.5% (Advanced), 2.25% (Plus); premium cards 3.5%/3.3%/3.1%/2.95% + 30¢; international +1%. In-person 2.6%/2.5%/2.4%/2.3% + 10¢. USDC rates same as online cards. Third-party gateway fee 2%/1%/0.6%/0.2%. - Agentic plan: add products to Shopify Catalog, choose AI channels, "only pay when you make a sale", online card rates from 2.9% + 30¢. - Balance earnings 2.52% (3.54% Plus) (a reward, not interest); Shopify Credit up to 3% cashback; Capital repaid as a share of daily sales, max 18 months; US Capital funded by WebBank; Balance partners Stripe/Fifth Third/Celtic Bank. **Agentic commerce (company announcements, FACT as company claims)** - Agentic Storefronts connect merchants to ChatGPT, Microsoft Copilot, Google AI Mode/Gemini (UCP-powered) and Meta from the Shopify admin; "no transaction fees beyond standard processing rates". ChatGPT purchases complete on the merchant's own checkout in an in-app browser; direct checkout available in Copilot, Google and Meta where enabled. Merchants keep the customer relationship. UCP is an open standard co-developed with Google, endorsed by Walmart, Target, Etsy, Mastercard, Visa, Stripe, American Express and others.