Shopify Inc. (SHOP Quick QuoteSHOP - Free Report) used its third-quarter 2026 earnings call to emphasize its role in emerging AI shopping channels while maintaining growth across established commerce businesses.

Management also addressed the costs of AI investment, the sustainability of cash flow improvements and spending plans ahead of the holiday quarter.

SHOP's Q4 Outlook Balances Growth and Spending

Chief financial officer Jeff Hoffmeister forecast fourth-quarter revenue growth in the low 30s percentage range, with less than one percentage point of foreign-exchange headwind.

Gross profit dollars are expected to increase at a high-20s rate. Operating expenses should account for 29% to 30% of revenues, with stock-based compensation projected at $155 million.

Hoffmeister expects the free cash flow margin to match that of the year-earlier fourth quarter. In response to an Evercore ISI analyst, he cited increased marketing activity and infrastructure investments as factors affecting the sequential margin outlook.

Shopify Positions Itself Across AI Shopping Channels

President Harley Finkelstein described personal shopping agents as a new avenue for merchant discovery and purchasing while stressing that transaction volumes remain small.

AI-referred traffic increased 2.6 times year over year, while orders rose 3.3 times. Shopify Catalog-powered searches converted at twice the rate of general AI searches.

During the question-and-answer sessions with Jefferies and Citizens JMP, Finkelstein emphasized Shopify's channel-neutral approach. Hoffmeister separately told a Wolfe Research analyst that transactions directed to Shopify merchant websites through AI discovery retain the same underlying commerce economics.

SHOP's Sidekick Gains Usage as Costs Fall

Finkelstein said Sidekick's daily active merchants increased 3.7 times year over year, while daily sessions expanded 4.2 times. The assistant generated approximately two-thirds of Shopify Flow automations during the third quarter.

Hoffmeister reported a 28% sequential reduction in cost per Sidekick conversation despite a 14% increase in conversations. Total Sidekick costs declined 18%.

A MoffettNathanson analyst pressed management on Subscription Solutions margins, which stood at 79%. Hoffmeister maintained confidence in the business while explaining that Sidekick expenses sit in subscriptions even as its benefits extend to Merchant Solutions.

Shopify Expands Into Stores, B2B and International Markets

Hoffmeister said offline gross merchandise volume grew 30% year over year, while B2B GMV increased 74%. Shopify also surpassed $200 billion in cumulative offline GMV.

He highlighted that 55% of merchants that added point-of-sale capabilities in the third quarter were new to Shopify, underscoring adoption beyond existing online customers.

Finkelstein pointed to major retail deployments and localized payment options as expansion priorities. International GMV grew 32%, supported by efforts to simplify selling across markets.

SHOP's Payments Growth Supports Merchant Revenue

Hoffmeister attributed Merchant Solutions revenue growth of 35% primarily to GMV expansion and increased payments penetration, which exceeded 68%.

Subscription Solutions revenues rose 20%, while monthly recurring revenues increased 19%. He explained to a Wells Fargo analyst that larger merchants generate a disproportionate share of value through payments rather than subscription fees.

For the third quarter, revenues reached $3.74 billion, surpassing the Zacks Consensus Estimate of $3.73 billion. Adjusted earnings of 49 cents per share also beat the consensus estimate of 45 cents.

Shopify Inc. Price, Consensus and EPS Surprise

Shopify Inc. price-consensus-eps-surprise-chart | Shopify Inc. Quote

Shopify Clarifies Cash Flow Quality and Marketing Tests

Hoffmeister said free cash flow reached $816 million, representing a 22% margin. Approximately 150 basis points of year-over-year margin improvement reflected underlying operating discipline.

He attributed the remaining improvement to temporary effects involving marketing tests, tax receivables and the accounting treatment of merchant cash advances.

Answering a Piper Sandler analyst, Hoffmeister said the temporary marketing pauses had no revenue impact. The tests were designed to refine spending effectiveness, with some expenditure shifting into the fourth quarter.

SHOP Maintains a Broad-Based Commerce Strategy

Finkelstein characterized the company's approach as combining investment in future AI commerce with enhancements to the tools merchants use today.

Hoffmeister reinforced the emphasis on multiple growth drivers and cost discipline while acknowledging near-term spending demands tied to peak shopping activity.

Zacks Rank and Style Scores for SHOP

SHOP carries a Zacks Rank #2 (Buy), indicating a favorable earnings-revision position under the Zacks ranking framework. Its Growth and Momentum Scores of B indicate relatively attractive characteristics in those styles. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, the Value Score of F points to weak valuation appeal under the scoring methodology, while its VGM Score of C signals a mixed combined profile. The Zacks Rank can change as analysts revise estimates following the reported quarter.