Shopify Q3 2026: operating income up 66% to $568M, while gross profit grew slower than revenue

Shopify runs a commerce platform that, in the release’s words, powers merchants’ sales “online, in-store, and everywhere in between”. It reports revenue in two lines: subscription solutions, tracked by monthly recurring revenue (MRR) from subscription plans, and merchant solutions, which is larger and grows faster. By our arithmetic from the cost lines, merchant solutions earns a gross margin of under 40%, against nearly 80% for subscriptions.

That mix is why the quarter needs two readings. At the top, growth held in the low thirties (32%, after 34% in Q2) and landed inside the August outlook. At the gross profit line, each dollar of revenue brought in a little less than a year ago. The improvement came further down, in operating expenses and in loan losses, and it was large enough to lift operating margin by about 3 points (our arithmetic). The sections below follow that path from GMV to free cash flow, then look at the Q4 outlook.

Shopify Q3 2026 results at a glance

$ millions, except per share	Q3 2026	Q2 2026	Q3 2025
GMV	119,145	115,567	92,013
Revenue	3,742	3,583	2,844
Subscription solutions	836	802	699
Merchant solutions	2,906	2,781	2,145
Gross profit	1,781	1,708	1,391
Total operating expenses	1,213	1,220	1,048
Operating income	568	488	343
Net income	462	1,502	264
Diluted EPS	$0.36	—	$0.20
Free cash flow	816	654	507

The Q2 column is from the second-quarter release, which does not print diluted EPS (Shopify publishes it in a separate supplement). Q2 net income included gains on equity investments, which is why it is far above Q3’s.

Revenue up 32%, gross profit up 28%

Merchant solutions revenue grew 35% to $2,906 million and subscription solutions 20% to $836 million, as the constant-currency table in the release shows. Monthly recurring revenue (MRR) rose to $230 million from $193 million, about 19% (our arithmetic). Revenue was about 3.1% of GMV, the same as a year earlier (our arithmetic).

Gross profit rose 28% to $1,781 million, inside the “mid-to-high twenties” growth Shopify had guided to in August, but slower than revenue. Gross margin fell to about 47.6% from 48.9% a year earlier, and from 47.7% in Q2 (our arithmetic). Two things drove it, both visible in the cost lines:

• Mix. Merchant solutions, at a gross margin of about 38.5%, grew faster than subscriptions at about 79.1% (our arithmetic). Merchant solutions’ own margin was slightly higher than a year earlier (38.2%).
• Subscription margin. It slipped to about 79.1% from 81.7% (our arithmetic), as subscription cost of revenues rose to $175 million from $128 million. The release does not explain the increase; the Form 10-Q, filed the same day, may.

How operating income grew 66%

Total operating expenses were $1,213 million, up about 16% against 32% revenue growth (our arithmetic). That put them at 32.4% of revenue, below the 33% to 34% Shopify guided to in August and below 36.8% a year earlier (our arithmetic).

• Research and development rose about 33% to $497 million, the fastest-growing expense line (our arithmetic).
• Sales and marketing rose about 14% to $466 million, and general and administrative about 13% to $130 million (our arithmetic).
• Transaction and loan losses fell to $120 million from $148 million a year earlier and $141 million in Q2, even as loans and merchant cash advances on the balance sheet grew to $2,350 million from $2,184 million at June 30.

Operating income rose 66% to $568 million, a margin of about 15.2%, against 12.1% a year earlier and 13.6% in Q2 (our arithmetic). Stock-based compensation was $140 million, under the $150 million guided.

Net income was $462 million after $106 million of net other expense including taxes. That line includes a $117 million loss on equity and other investments; excluding marked-to-market equity investments, the release puts net income at $584 million. Diluted EPS was $0.36, against $0.20, and non-GAAP diluted EPS $0.49, against $0.34.

Free cash flow of $816M, and $562M of buybacks

Free cash flow was $816 million, a 22% margin against 18% a year earlier, within the “high-teens to low-twenties” range guided in August. One presentation change matters for comparisons: since April 2026, cash flows from merchant cash advances sit in investing rather than operating activities, consistent with loans; the release says that moved a net $30 million of cash use out of operating cash flow in Q3.

Shopify repurchased $562 million of stock in the quarter, after $1,420 million in Q2, about $2.0 billion over the two quarters (our arithmetic); a year earlier it bought back none. Diluted weighted shares were 1,291 million, about 1.7% fewer than a year earlier (our arithmetic). Cash, marketable securities and long-term investments were about $5.3 billion at September 30, against about $6.8 billion at December 31, 2025 (our arithmetic: the three balance-sheet lines). The condensed balance sheet lists no borrowings line.

What Shopify guided for Q4

For the fourth quarter Shopify expects revenue growth at a “low-thirties” percentage rate, gross profit dollars growing at a “high-twenties” rate, operating expenses of 29% to 30% of revenue, stock-based compensation of $155 million and a free cash flow margin consistent with Q4 2025. The release does not restate the Q4 2025 margin. Gross profit again growing slower than revenue implies another quarter of gross margin pressure (our reading of the outlook).

What to watch in Q4

• Gross margin. The outlook points to gross profit growth below revenue growth again.
• Subscription margin. About 79% against 82% a year earlier (our arithmetic); the 10-Q should explain the cost increase.
• Loan losses. Transaction and loan losses fell while the loan book grew.
• Opex at 29–30% of revenue. The Q4 guide is lower than Q3’s 32.4%.
• Buybacks. About $2.0 billion over Q2 and Q3, while cash, securities and long-term investments fell about $1.5 billion since December (our arithmetic).

Quick answers

What was Shopify’s revenue in Q3 2026?

Revenue was $3,742 million, up 32% from $2,844 million a year earlier, on GMV of $119,145 million, up 29%. Merchant solutions contributed $2,906 million and subscription solutions $836 million.

How much did Shopify earn in Q3 2026?

Operating income was $568 million, up 66%. Net income was $462 million and diluted EPS $0.36, against $264 million and $0.20 a year earlier. Non-GAAP diluted EPS was $0.49.

What is Shopify’s Q4 2026 outlook?

Shopify expects Q4 revenue to grow at a low-thirties percentage rate year over year, gross profit at a high-twenties rate, operating expenses at 29% to 30% of revenue, stock-based compensation of $155 million, and a free cash flow margin consistent with Q4 2025.

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Sources and method. Every company figure is Shopify’s own disclosure, read directly from SEC EDGAR and linked above. Third-quarter and year-ago GMV, MRR, revenue by type, cost of revenues, operating expenses, net income, EPS, the September 30 balance sheet, the quarterly cash flow statement, the free cash flow and net income reconciliations, the constant-currency table and the Q4 outlook come from Exhibit 99.1 to the Form 8-K filed 2026-11-03 (accession 0001594805-26-000067) for the quarter ended 2026-09-30. Second-quarter figures, the June 30 loan balance, Q2 repurchases and the Q3 outlook issued in August come from the second-quarter release (Form 8-K, Exhibit 99.1, filed 2026-08-05, accession 0001594805-26-000046). The results were filed with the SEC at 8:08 am ET on 2026-11-03 (Form 8-K acceptance time on the EDGAR filing index), before the US market opened; the release scheduled its call for 8:30 a.m. ET the same day.

No consensus estimate is included, so this piece makes no claim that the quarter beat or missed expectations. Outlook comparisons are against Shopify’s own published ranges only. This piece makes no claim about the share-price reaction.

Our arithmetic, labelled as such: gross margins (47.6%, 47.7% and 48.9%), subscription gross margins (79.1% and 81.7%) and merchant gross margins (38.5% and 38.2%); MRR growth of 19%; revenue at 3.1% of GMV; operating expense growth of 16% and opex at 32.4% and 36.8% of revenue; R&D, sales and marketing and G&A growth (33%, 14% and 13%); operating margins of 15.2%, 13.6% and 12.1% and the roughly 3-point rise from a year earlier; operating income growing about twice as fast as revenue (66% against 32%); merchant gross margin under 40% and subscription gross margin near 80%; two-quarter buybacks of about $2.0 billion; the 1.7% fall in diluted weighted shares; and cash, marketable securities and long-term investments of about $5.3 billion and $6.8 billion and the ~$1.5 billion fall between them. These are approximations, not reported numbers. The 32%, 29%, 35%, 20%, 28%, 66% and 22% figures are as printed in the release. The interpretation (that expense control and lower loan losses, rather than gross profit, drove the margin gain, and that the Q4 outlook implies further gross margin pressure) is our analysis, not a company statement or a forecast.

Related: Shopify Q2 2026, the prior quarter, and Sezzle Q2 2026, another lender to online shoppers and merchants; and Palantir Q3 2026, the other software company in this season.