SHOP Q2 Deep Dive: International Expansion and AI Drive Growth Momentum

E-commerce software platform Shopify (NYSE:SHOP) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 31.1% year on year to $2.68 billion. On top of that, next quarter’s revenue guidance ($2.76 billion at the midpoint) was surprisingly good and 4.6% above what analysts were expecting. Its GAAP profit of $0.69 per share was significantly above analysts’ consensus estimates.

Is now the time to buy SHOP? Find out in our full research report (it’s free).

StockStory’s Take

Shopify’s second quarter saw a strong positive market reaction, with management attributing results to surging global adoption and recent investments in platform capabilities. President Harley Finkelstein highlighted that offline gross merchandise value (GMV) rose 29% and business-to-business GMV grew 101%, while international GMV, led by Europe, accelerated 42%. Management credited the broadened appeal to major global brands and seamless integration across physical and digital channels. Finkelstein remarked, “The strong results you see today come from seeds we planted years ago.”

Looking forward, Shopify’s management emphasized that continued product innovation—especially in artificial intelligence (AI) and omnichannel commerce—will drive future performance. Finkelstein pointed to new AI-powered offerings such as Sidekick and Universal Cart, as well as expanded payments and checkout capabilities, as critical to keeping merchants ahead of market trends. CFO Jeff Hoffmeister noted that marketing investments and international rollouts are expected to sustain growth. Finkelstein added, "We're building the right products consistently, we're growing in the right places consistently, and we're investing for the long term consistently."

Key Insights from Management’s Remarks

Management attributed the quarter’s momentum to broad-based GMV growth, major product launches, and deeper international penetration, with outperformance in both North America and Europe.

• Enterprise and iconic brands onboarding: Shopify continues to sign large, globally recognized brands such as Starbucks, Canada Goose, and Burton, reflecting the flexibility and scalability of its unified commerce platform. These wins were cited as evidence of Shopify’s appeal to both established and emerging verticals.

• AI-powered product innovation: The company launched several AI-driven features in Q2, including the Sidekick merchant assistant and an AI store builder. These tools help merchants automate data analysis, optimize inventory, and quickly set up online stores, making it easier for businesses to operate efficiently and adapt to shifting demand.

• Retail Point of Sale (POS) enhancements: Shopify rolled out a redesigned POS app, adding new features for in-store staff, granular permissions, and easier workflow customization. Offline GMV growth, fueled by larger retailers joining the platform, underscores Shopify’s progress in bridging physical and digital commerce.

• International expansion and localization: Management highlighted that Europe led international GMV growth, driven by both new and existing merchants. Shopify Payments expanded to 16 additional countries, and new features like multi-entity support and multicurrency payouts lowered barriers for cross-border commerce.

• Shop Pay and Shop App traction: Shop Pay GMV increased 65% year-over-year, as more merchants and consumers adopted the fast checkout solution. The Shop App’s native GMV grew 140%, driven by targeted shopping events and improved user experience, solidifying Shopify’s ecosystem as a direct-to-consumer destination.

Drivers of Future Performance

Shopify expects sustained double-digit growth, driven by AI product launches, international expansion, and increased marketing investment, while acknowledging potential macroeconomic and regulatory headwinds.

• AI and agentic commerce adoption: Management believes that new AI-enabled features like Universal Cart, Sidekick, and Checkout Kit will help merchants capture emerging opportunities in conversational commerce. These tools are designed to keep Shopify and its merchants central as shopping behavior shifts toward chat-based and agent-led experiences.

• International market scaling: Shopify plans to build on momentum in Europe and Asia-Pacific by further localizing products and expanding merchant solutions into new countries. Finkelstein highlighted ongoing localization efforts and partnerships as keys to unlocking additional growth outside North America.

• Marketing and merchant acquisition: Hoffmeister emphasized an increased focus on performance marketing, backed by improved data models and targeted campaigns. This investment aims to accelerate new merchant sign-ups and deepen engagement across all merchant sizes and segments, though it may modestly increase near-term operating expenses.

Catalysts in Upcoming Quarters

In the coming quarters, our team will watch (1) the adoption and monetization of new AI-driven commerce tools such as Universal Cart and Sidekick, (2) the continued pace of international expansion and localized product rollouts, particularly in Europe and Asia-Pacific, and (3) the impact of increased performance marketing on new merchant acquisition and engagement. Progress in integrating large enterprise clients will also be a critical marker of Shopify’s strategic execution.

Shopify currently trades at $150.00, up from $127.11 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

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