Shopify lifts outlook after strong Q2

Shopify (SHOP) posted second-quarter revenue of $3.58 billion, representing a 34% increase compared with the same period a year earlier and exceeding consensus estimates of roughly $3.45 billion. The results indicate robust demand across the company’s commerce platform during the quarter ended June 30.

Gross merchandise volume reached about $115.6 billion, up roughly 32% year-over-year. This expansion in underlying transaction activity underscores growing usage of Shopify (SHOP)’s tools by merchants and their customers.

Gross profit for the quarter was about $1.71 billion, an increase of approximately 31% from a year earlier. The growth in gross profit reflects both higher revenue and the company’s ability to scale its operations while maintaining profitability.

Shopify (SHOP) generated free cash flow of $654 million in the second quarter, translating to an approximately 18% free-cash-flow margin. This level of cash generation signals that the company is converting a meaningful share of its expanding revenue base into cash.

The combination of rising gross profit and solid free cash flow indicates improving operating leverage. As revenue and transaction volumes increase, the company is capturing more profit dollars while continuing to invest in its platform.

For the third quarter, Shopify forecast revenue growth at a “low-thirties” percentage rate year-over-year. This outlook is ahead of Wall Street expectations, which were for growth in the mid-to-high-20s percentage range.

The guidance, if achieved, would extend Shopify’s streak of revenue growth above 30% into another quarter. It also suggests that the drivers behind the second-quarter acceleration are expected to persist into the near term.

Company materials and investor coverage credited adoption of AI-driven commerce tools as a contributor to the stronger performance. These tools include capabilities such as Sidekick and integrations with AI search and chat channels.

The company reported that AI-driven traffic and orders increased materially year-over-year. This trend indicates that merchants are using AI features to attract more shoppers and convert visits into purchases more effectively on the platform.

Following the release of the second-quarter results and the higher third-quarter outlook, Shopify shares rose sharply in premarket trading. The market response reflected the combination of revenue outperformance, guidance above expectations, and improving profitability.

The results highlighted accelerating merchant activity, expanding profit pools, and growing contributions from AI-enabled features. Together, these elements shaped investor perception of Shopify’s near-term growth and earnings trajectory.