Shopify stock posts biggest single-day gain in over one year

Shares of Shopify (NASDAQ: SHOP) surged more than 16% on Wednesday after the Ottawa-based company delivered stronger-than-expected second-quarter results and an upbeat Q3 outlook.

Shopify President Harley Finkelstein described the quarter as a “monster quarter,”. “This was a monster quarter: more than 30% growth in GMV and revenue and gross profit and free cash flow.” - Finkelstein said.

Q2 Earnings Overview

The e-commerce leader reported quarterly revenue of $3.58 billion, representing a 34% increase year-over-year and surpassing analysts’ consensus estimate of approximately $3.46 billion. Gross merchandise volume reached $115.6 billion, up 32%. The free cash flow margin expanded to 18%, and adjusted earnings per share were $0.42. Growth was broad-based across merchant sizes, geographic regions, and sales channels.

Shopify emphasized artificial intelligence (AI) as a key driver of growth. Management noted that traffic and orders generated through AI channels each tripled year-over-year. Additionally, 75% of orders attributed to AI originated outside the company’s 100 largest product categories, indicating widespread benefits across a diverse range of merchants. The company’s Sidekick assistant, designed to support small and medium-sized businesses in managing their online operations, continues to gain traction.

Q3 Guidance and Market Reaction

Alongside its Q2 results, Shopify issued guidance for the third quarter, projecting revenue growth in the low 30% range, above prior expectations of about 26% to 27%. This outlook reassured investors concerned about a potential mid-year slowdown and reinforced confidence in the company’s ability to sustain strong growth at scale. The guidance is supported by a $3.1 billion share buyback program.

Following the earnings release, Shopify shares rose approximately 17%, reaching around $144 in regular trading. Investor trust in Shopify's steady execution and momentum fuelled by AI projects is reflected in the favourable market reaction. Even though the stock has recovered from its 52-week low of about $94, it is still under pressure this year due to issues facing the software industry as a whole.

 

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