KEY POINTS
- Quarterly revenue climbed 31% to $3.67 billion, outpacing Wall Street expectations for the holiday period.
- The e-commerce giant projects first-quarter growth will rise at a low-thirties percentage rate.
- Management announced a new $2 billion share repurchase program following a year of “full throttle” expansion.
Shopify delivered a powerful fourth-quarter earnings report on Wednesday, signaling strong momentum for the commerce industry heading into 2026. The Ottawa-based company reported that revenue jumped 31% year-over-year to reach $3.67 billion. This performance comfortably exceeded the consensus analyst forecast of $3.59 billion. Investors reacted with enthusiasm, sending shares climbing over 10% in early trading to new yearly highs.
The company’s growth was driven by a significant increase in its Gross Merchandise Volume, which rose 31% to $123.8 billion. This metric reflects the total value of all products sold through the platform by Shopify merchants. President Harley Finkelstein characterized 2025 as a year where the company operated at “full throttle.” He noted that Shopify is successfully laying the foundation for a new era of AI-driven commerce.
For the first quarter of 2026, Shopify provided an optimistic forecast that surprised many market observers. The company expects revenue to continue growing at a low-thirties percentage rate. This guidance sits well above the 25.2% growth rate that analysts had previously estimated. Management believes consumer spending will remain resilient despite potential headwinds from shifting trade policies and rising prices.
Profitability metrics also showed marked improvement during the final months of 2025. Operating income for the fourth quarter reached $631 million, an increase from the $465 million recorded the previous year. Furthermore, the company generated $715 million in free cash flow. This resulted in a healthy 19% free cash flow margin, marking ten consecutive quarters of double-digit performance in this area.
The integration of artificial intelligence remains a core focus for the platform’s long-term strategy. Tools like the Sidekick AI assistant and the Universal Commerce Protocol are helping merchants streamline their operations. Chief Financial Officer Jeff Hoffmeister highlighted that these investments are paying off by attracting merchants of all sizes. The company ended the year with strong performance across all global regions and sales channels.
In a move to return value to shareholders, Shopify announced a substantial $2 billion share buyback program. This decision reflects management’s confidence in the company’s cash-generating capabilities and future growth trajectory. The buyback follows a year where the stock price increased significantly, driven by consistent execution and disciplined spending on headcount.
While the outlook remains positive, Shopify expects a slight dip in free cash flow margins for the next quarter. The company anticipates margins in the low-to-mid teens as it continues to invest in international expansion and new technologies. However, the overall narrative remains one of high-speed growth and increasing market share in the global retail infrastructure space.
As 2026 begins, Shopify positions itself as a primary builder for entrepreneurs and enterprise brands alike. The company now serves millions of businesses across 175 countries. With a robust balance sheet and a clear technological roadmap, Shopify appears ready to maintain its lead in the competitive e-commerce landscape.
