Good morning, and thank you for joining Shopify's Second Quarter 2026 Conference Call. I'm Shane Kleinstein, Director of Investor Relations.

And joining us today are Harley Finkelstein, Shopify's President; and Jeff Hoffmeister, our CFO. After their prepared remarks, we will open it up for your questions.

Today's call will include certain forward-looking statements that are based on assumptions and therefore, subject to risks and uncertainties that could cause actual results to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements.

We undertake no obligation to update or revise these statements, except as required by law. You can read about these assumptions, risks and uncertainties in our press release this morning as well as in our filings with the U.S.

and Canadian regulators. We'll also speak to adjusted financial measures and other non-GAAP measures, which are not a substitute for GAAP financial measures.

Reconciliations between the two are provided in our press release. And finally, we report in U.S.

dollars, so all amounts discussed today are in U.S. dollars unless otherwise indicated.

With that, I'll turn the call over to Harley.

Good morning, and thanks, everyone, for joining us today. We've got another exceptional quarter to talk about here at Shopify.

Here's what that looks like in the numbers. GMV was up 32% to $116 billion with broad growth across our merchant sizes, geographies and sales channels.

Our revenue was up 34% to $3.6 billion, and our free cash flow margin was 18%. That's a growth rate of 30% or more across every metric.

And this marks our fifth straight quarter of GMV growth above 30%. Now, of all the numbers, our GMV is the one worth repeating.

Our merchants processed $116 billion this quarter. This is commerce at an extraordinary scale flowing through the platform, and it also tells us that our merchants are thriving.

Okay. Now for the story behind those numbers.

Since day 1, our operating principle has been simple and consistent. Shopify creates what most merchants need most of the time.

And for everything else, we empower our incredible ecosystem of partners. Now I know you've all heard that before, but here's why it matters now.

The principle that got us here also explains why we're able to deliver durable growth quarter-after-quarter. And it perfectly captures how we are building to win in this new era of commerce.

Let me explain. First, our addressable market of most merchants is now a very large pool.

Because we made it easier to start, there are now simply more merchants to serve, and the breadth of our capabilities has expanded so that merchants of all sizes now run on Shopify. Second, the range of those, most of the time merchant needs is expanding quickly.

They need access to new and emerging surface areas. They need best-in-class tools that will allow them to keep pace with the rate of change in commerce.

And they need it all in one place. Added complexity only reinforces the demand for a simple, unified platform that they can rely on, and that is Shopify.

And here's the third critical piece. Our open ecosystem model is uniquely well suited to this agenetic era.

We have always focused on most merchant needs while making the platform extensible for everything else. We build the primitives, we open them up, and we let the best developers and the best companies in the world build on top of us.

In the last year, we kicked that model into a whole new gear. Some of the largest technology companies in the world like OpenAI, Google, Meta, and Microsoft, have chosen to partner with us to open more front doors for commerce.

Every new surface area they build is another place our merchants can sell, all because they're on Shopify. And on top of this, the thousands of developers all over the world are embedding commerce into their own applications using the same primitives we built.

Thousands of new front doors, all built on one unified foundation, the Shopify platform. Now as commerce continues to fragment, Shopify becomes an even more critical partner because we provide consistent and reliable infrastructure that makes every shopping experience feel seamless.

Now whether commerce is handled by humans or agents, whether stores are built by people or AI, Shopify runs underneath it all. For 20 years, we've built a commerce operating system that takes merchants from first sale to full scale by using our partner ecosystem as an extension of our platform.

That is our muscle memory. And this model will continue to service even better in this new agentic era of commerce.

So let's talk more about Shopify's infrastructure, specifically what we've been building and why it matters so much. We have a very strong conviction that commerce experiences will soon be built into everywhere people are spending their time.

That is why our latest product drop was called the Everywhere Edition. We are building now so our merchants are ready for the future.

So let's talk about that infrastructure that unlocks commerce everywhere. First, our Catalog, which you can think of as the authoritative source of truth for AI product discovery of the world's best products and best brands.

For nearly 2 years, we've been investing in the search index, ensuring over 1 billion products and 20 years of commerce experience is distilled for agents. It structures merchants product data, so every and any AI partner can access it directly, giving agents the ability to discover, understand and recommend our merchants' products.

And let me say this, Catalog will be one of Shopify's most important assets for years to come. And here's why.

We're seeing that AI searches powered by Catalog converted twice the rate of those using scraped data. That is because with Catalog, merchants' products show up complete, accurate, and with the right context when someone is ready to buy.

Put simply, Catalog is the discovery engine for the future and Shopify built it and owns it. Next, let's talk about the Universal Commerce Protocol or UCP.

We introduced UCP at the start of 2026, and already industry players across the commerce stack and beyond are converging on this unified protocol with dozens of retailers and platforms adopting it to date. And because we co-built the protocol, partners look to us to make sure it evolves in ways that represent the full diversity of commerce.

So first, we built the infrastructure to unlock commerce everywhere. And then we opened it up for everyone.

Every Shopify merchant is UCP-ready. Agents and builders can access the product data, create carts, and even check out using the protocol.

Everything flows through Shopify. So their checkout logic and fulfilling rules are perfectly preserved.

Their products are also automatically listed in Catalog. And every builder can now access UCP and the Catalog API across millions of merchants so they can build commerce experiences with the same infrastructure as our major AI partners.

Plus, we built our catalog the way only Shopify could, integrated with shop sign-in so agents can recognize returning buyers and surface personalized recommendations based on their purchase history. No other Catalog API can do this.

And we're not just putting merchants in AI channels, we're also showing them how to win in them. In May of this year, we rolled out our new agentic section in the admin, the first cross-channel attribution for agentic selling.

Merchants can manage AI channels, they can track performance, and they can get specific recommendations on what to improve, all from a single interface. Now, while the volume from agentic commerce is still small relative to our massive GMV, the growth trends are impressive, both AI-driven traffic and also orders to Shopify stores tripled year-over-year in the second quarter.

New buyer orders are coming in at nearly twice the rate of other channels. And this is not just AI taking share of search.

In fact, search remains one of our largest sources of buyer traffic to our merchants, and it's still growing. Traditional search sessions are up 1.3x over the past 2 years, holding roughly 1/3 of all storefront sessions.

That is AI as a complement to search rather than a substitute for it. Okay.

Now let's talk about agentic building. AI is not just opening up new surface areas for discovery, it is also democratizing code and software development, lowering the barriers to starting a business even further.

The way entrepreneurs are pursuing new ideas, the way developers are building software, the way merchants are running their businesses, they're all being rewritten. So naturally, the tools we're arming our merchants with are also evolving at an incredible pace.

And Sidekick is the prime example of this. In the second quarter, daily active merchants using Sidekick were up 3.6x year-on-year and daily sessions were up 4.8x.

It handled nearly 34 million conversations, and it was used to create more than 36,000 custom apps, up from 12,000 in Q1. More merchants are using Sidekick, and they're using it far more often.

That's because it's driving real value, getting new merchants to their first sale faster and helping establish merchants run smarter. Sidekick's personalized guidance for new merchants during onboarding led to an 8% increase in merchants reaching 5 orders within 15 days, and it's getting more intelligent all the time.

It can now access data and take action through extensions to third-party apps like Klaviyo without the merchant ever leaving Sidekick. Now adoption is widespread across merchants of all sizes.

But what's really interesting is how the value evolves as merchants grow. In a merchant's first 30 days, roughly half of their conversations with Sidekick are about store setup, design and theme configuration.

Now for merchants 5 years in, that drops to about 8%, while analytics and reporting claims passed 40% as they use Sidekick as their intelligence layer to interrogate their own data and make better decisions. Same product, different job.

At the same time, we built connectors to agents, including Claude, ChatGPT, Perplexity, Manus, Replit, and Vercel with our AI Toolkit. So our merchants can build on Shopify however they choose.

And these are just a couple of examples. Our integrations across vibe coding platforms like Lovable, AI chat agents, and CLI IDEs show Shopify's commitment to meeting builders where they are, however they choose to get there.

These tools are a real competitive advantage, and they're exclusively and seamlessly available to Shopify merchants. Interface layers are changing in the agent-first world, but Shopify is still the core commerce infrastructure underneath it all.

One where every step of commerce from buying to building, from starting to scaling, moves faster and is within reach for more people. Beyond what we at Shopify are doing to move the needle for our merchants, there are early structural changes we are seeing in the market that also strengthen our position even further.

First, let's look at the type of merchants benefiting from these AI shifts. Early indications show that AI search has been particularly helpful to some of the smaller brands that form the long tail of commerce.

These are brands that also happen to make up the majority of Shopify's merchant base, smaller businesses with specialized products built for a particular customer. We saw that AI search was starting to disproportionately benefit the long tail in 2025.

And that trend has continued, with 75% of AI-attributed orders in the second quarter coming from outside our top 100 categories in Q2. And the explanation is simple.

While search engines rank by popularity against a handful of keywords, AI agents make multiple calls into Shopify's Catalog working with richer structured data to match products with the buyer's specific intent rather than just keywords. So when a buyer asks an AI assistant for the best car seat that fits 3 across the Sedan, traditional search focuses on the keyword car seat.

An agent, however, understands the actual need, the dimensions, the vehicle type, and the fact that they need 3. It searches across all of those constraints at once to find the product that actually works not just the one that ranks highest.

And in this world, relevancy reigns. So specific products made for a specific buyer do particularly well.

Same for things like reef-safe sunscreen that doesn't leave a white cast or even the best dog harness for a French bulldog. These are real Shopify products that have benefited from the specificity of AI search in the last quarter.

And this specificity is leading to better conversion for merchants. Buyer shopping journeys are being compressed as half of all AI-referred sessions are landing directly on a product description page.

That is 2.5x more than what we see with traditional search. All of this is a serious tailwind for our merchants and in turn for us at Shopify.

Second, as AI makes commerce more fragmented, the value of a best-in-class checkout that can sit underneath any commerce experiences grows exponentially. Our checkout is intentionally designed to look simple.

One click, done. But in reality, it is anything but simple.

From taxes to discounts, pre-orders to bundles, fulfillment, inventory, validation logic, payments, I could go on. There is a world of complexity that neither the merchant nor the buyer ever has to think about.

But if it breaks, everything breaks with it. And every seemingly simple transaction inside of Shopify checkout is made up of countless customized logic flows.

The ability to handle that complexity is what Shopify is world-class at. And the stakes only get higher as commerce expands to more surface areas and as agents start having a role in the transaction.

So the agentic landscape favors Shopify's core merchant base, and it makes our checkout even more valuable. It also significantly increases the importance of trust and identity.

An agent acting on a buyer's behalf needs to know who they are, how they want to pay and what rules they've set. And through Shop, we've built a buyer network of hundreds of millions of people with identity, preferences and payments working as one system.

Shop app's native GMV grew over 70% in Q2. And one of my favorite features Cart Sync, represented over 30% of Shop app GMV in this quarter.

That is the value of known buyers. And Shop Pay is where that trust and identity show up in conversion.

In June, Shop Pay surpassed $400 billion in lifetime accelerated GMV. And as new surfaces grow, Shop Pay remains the trusted payment layer that travels with the buyer.

So when you zoom out, here's what you see. A new powerful surface area for discovery that disproportionately benefits our core merchant base, a fragmented environment that needs a reliable check of sitting underneath it all to power it, a world where humans must be able to trust that an agent acting on their behalf knows them and follows the rules they have set, and a greater need all the time for a unified operating system that makes commerce everywhere, not just possible but easy.

And this is what Shopify was built for. Now before I hand it over to Jeff, let me give a couple of quick highlights from across the business that fueled our growth in Q2.

First, international. International GMV grew 37% in the quarter, and we launched Shopify's first local payment method offering in Mexico, and we expanded managed markets beyond the U.S.

merchants for the first time, making it available to merchants in Canada and the U.K. Now let's talk about offline.

Shopify point-of-sale GMV grew 32% year-over-year in Q2. And we continue to widen the gap on what sets Shopify apart, delivering our fastest-ever point-of-sale experience and deeper unified commerce capabilities.

Merchants can now fulfill orders across locations, move inventories more efficiently between stores, complete returns, exchanges and new purchases within a single checkout. We're seeing particularly strong momentum with large complex retailers who are our fastest-growing segment.

And this quarter, we welcomed the iconic Canadian retailer, Holt Renfrew. We powered the rollout of multiple Canada Goose locations and we expanded our relationship with the furniture retailer, Arhaus, to include their offline business.

In B2B, we expanded native B2B capabilities beyond Plus for the first time, giving more merchants the ability to manage wholesale and DTC from the same Shopify admin. That means fewer separate tools, fewer custom workflows, and more of their business running through one unified system.

Finally, let's talk about our growth with larger brands. Some of the biggest and some of the most important names in commerce and retail continue to move to Shopify to modernize their next chapter.

This quarter alone, brands like Guess, Fred Segal, an Aritzia Company, and Avon, all chose Shopify. And e.l.f.

Cosmetics, Claire's, Burton, and Suitsupply, are all now live on our platform. As I mentioned earlier, we expanded our work with Arhaus, and this is a perfect example of the power of our unified commerce offering.

Arhaus started with us online, and now they're expanding into offline, B2B, and Shopify Payments. Different customer groups, different channels, different pricing models and one back end to run it all.

Now here's what else really matters. Once merchants come to Shopify, they stay.

Our merchant retention is something we are very, very proud of. Put simply, Shopify is a platform for brands at any stage of their life cycle.

And each channel they add makes the others more powerful, embedding merchants deeper in our platform and driving more profitable growth for our company. So let me bring this back to where I started today.

Shopify built what most merchants need most of the time. For everything else, we leverage our ecosystem of partners to build with us.

20 years ago, most merchants meant a much smaller group with a much smaller set of needs. But today, we power every size and every shape of commerce business.

And as the merchant base has expanded, our focus has remained the same. Absorb that complexity on behalf of merchants, so they can continue to focus on what matters most to them, their products and their customers.

Every time commerce gets more complex, the value of the Shopify platform increases. Today, an entrepreneur can have an idea in the morning and their first sale by the end of the day.

With Shopify's AI tools helping them build their storefront, with Catalog servicing their products to buyers and Sidekick already guiding them to the next step. This is an entirely different velocity of entrepreneurship, and it's only going to continue to accelerate.

It doesn't matter whether commerce is built by a person or an agent. It doesn't matter whether a transaction starts on a store, in an app, a chat or an interface that hasn't even been invented yet.

The underlying needs of merchants do not change. Products need to be discovered, inventory needs to be accurate.

Checkout needs to work seamlessly and payments need to move. And the infrastructure underneath it all needs to be fast, reliable and infinitely scalable.

And that's what we do at Shopify. And with that, I'll turn the call over to Jeff.

Thanks, Harley. It was an incredible quarter.

Q2 represented a continuation of what we've seen for several quarters now, broad-based growth across the business. Strength in GMV flowed through all of our financial results.

We achieved greater than 30% growth in each of GMV, revenue, gross profit, operating income, and free cash flow. Q2 marks the fifth consecutive quarter with constant currency GMV growth of 29% to 30%.

A tight band, and importantly, even as our scale has grown and the year-over-year comps have gotten tougher, we have consistently delivered these growth rates. The durability of our growth is driven by one of the most powerful dynamics of our model, our cohorts.

Newer cohorts continue to outperform, while older ones keep growing. That strength compounds over time as our older cohorts generate multiples of their first year GMV.

For example, our Q1 2015 cohort now has a quarterly GMV that's 5x its initial size, implying a compound annual growth rate 3x that of the overall commerce markets growth rate over the same period. This is the mission of Shopify.

We make it easy for anyone with an idea and the courage to start the business. It's why we cast a wide net in bringing merchants to the platform.

This approach is a feature, not a bug. Through that wide aperture, we find, nurture and build for merchants, many of whom go to do millions and then hundreds of millions in GMV.

And the ones that scale, stay. Over the last 5 years, merchants who reach $1 million in annual GMV had a 92% retention.

That jumps at 97% at a $10 million annual GMV. A lot of entrepreneurs are serial entrepreneurs.

So even if their first business doesn't make it, Shopify still supports the next one. Merchants who build a second shop on Shopify, on average earn more than twice the sales per shop compared to first-time founders.

That is how our cohort strategy work. We give every entrepreneur a shot, arm them with tools to build and watch the winners compound their success.

But it's not as simple as just offering tools. We offer a breadth of products in an integrated platform to simplify the complex backdrop of commerce.

And every piece of that solution makes the others more powerful. GMV drives payments revenue but also informs our capital offers.

Checkout fuels buyer identity, and that identity benefits advertising precision. And every transaction sharpens the data underneath all of it.

Last year, we surpassed $1 trillion in Q1 of GMV facilitated by our platform. Then this past quarter, we also passed that threshold for gross payments volume through Shopify Payments.

That is a data foundation underneath everything I just described. It's less about any single capability, but rather how they lead together and inform and enhance each other.

This is a magic of combining the bravery and vision of entrepreneurs with the power and capabilities of the Shopify platform. And when merchants win, so do we.

Now let's take a closer look at our second quarter results. Q2 GMV was $116 billion, representing year-over-year growth of 32%.

On a constant currency basis, GMV grew over 30%, accelerating on top of a very strong 29% prior year comp, diving deeper into GMV from a few different angles, first by merchant size. Consistent with trends for several quarters, we've had broad-based growth across merchant sizes.

The $25 million in greater band is the fastest-growing, albeit off of a smaller base. The $2 million to $25 million cohort continues to contribute the most incremental GMV and we are still growing the space with the majority of the growth coming from existing shops graduating up into this band.

Moving to regions, North America GMV grew 28%, and Europe grew 34% on a constant currency basis. The contribution to GMV growth from new merchants and same-store sales remain relatively balanced and in line with multi-quarter trends.

Finally, turning to channels. Offline GMV was up 32%.

B2B GMV grew 76%, all a continuation of prior quarter strong trends. Now looking at revenue.

Q2 revenue grew 34% or 33% on a constant currency basis, clearly surpassing expectations. Merchant Solutions revenue grew 37%, driven primarily by the strength in GMV and increased payments penetration, which grew 3 points year-over-year, reaching 68% of our global GMV.

We see clear runway on payments penetration, both domestically and abroad. This past quarter, we launched Shopify Payments in the UAE, bringing to 40 the number of countries where we have payments available.

Penetration in Europe increased by more than 350 basis points year-over-year, even as many of the countries we serve launched only last year. We also continue to add more and more local and regional payment methods, including, for example, our additions this past quarter in Mexico.

As of Q2, we also now dynamically surface the most relevant payment methods for buyers. Doing this helps eliminate reasons for buyers to ever abandon their checkout, creating better conversion.

Shop Pay GMV grew 53% year-over-year. In Q2, we made more local payment methods available to consumers within Shop Pay.

This continues our 2-part strategy of adding more local payment methods to Shopify Payments and then making more of those available within Shop Pay. More choice and payment method availability means fewer drop-offs to guest checkout, and helps drive Shop Pay usage.

Shop Pay also allows buyers to choose to finance their purchases and Shop Pay installments continues to gain share. Each of these make Shop Pay a better consumer experience and a more complete wallet with additional ways to pay, helping drive consumer adoption.

Subscription Solutions revenue grew 22%, the largest contributor to the growth was monthly subscriptions for our standard plans, as we saw a strong quarter of merchant net adds in Standard. We also saw relatively equivalent-sized dollar growth in Plus subscriptions and variable platform fees, which were driven by the higher GMV.

Q2 MRR grew 19% year-over-year, with continued growth across each of Standard, Plus and point-of-sale plans. Plus MRR represented 34% of MRR, also growing 19% year-over-year.

Bringing these all together, our revenue beat in the second quarter stemmed from three key areas where we outperformed, broad-based GMV outperformance, higher-than-expected payments penetration and strength in other Merchant Solutions, primarily from our partner rev shares and financial services. Now turning to our profitability.

Merchant Solutions gross profit grew 39%, with gross margin up slightly from last year. Margin pressure from increased payments volume was more than offset by growth in higher-margin revenue streams.

Also, to my earlier comments regarding local payment methods, our payments gross margins are generally higher in international markets due to the greater prevalence of debit transactions and lower interchange fees. Subscription Solutions gross profit grew 19% with gross margins just under 80%, in line with our Subscription Solutions gross margins in Q1.

As a reminder, the vast majority of AI costs related to merchant use of Sidekick appear in Subscription Solutions gross profit. We were able to hold gross margins at a relatively consistent level quarter-over-quarter while Sidekick usage scaled, which reflects some cost efficiencies and support as well as our ability to continue providing merchants unique AI solutions like Sidekick, while diligently managing cost.

We are big believers in Sidekick and the value that it can deliver to merchants. We believe these types of investments in our platform will translate into more merchants joining the platform, and those merchants have an even greater success.

That translates to more gross profit for us, but more importantly, it is helping our merchants accelerate their businesses. Now looking at operating expenses, which were 34% of revenue, a nearly 4-point improvement from Q2 last year.

This reflects continued leverage as we grew gross profit dollars faster than our expenses, primarily by maintaining our discipline in headcount, sales and marketing, R&D, and G&A as a percentage of revenue each improved year-over-year. This operating leverage provides the financial flexibility to continue to invest in our platform, including in our internal AI capabilities.

We've moved from a place of just reflexive use of AI to a place of AI leverage. Our AI philosophy is straightforward.

Maximum leverage paired with thoughtful cost management. We use the best model for the job, frontier intelligence where it matters, less expensive models where it doesn't.

We believe widespread adoption of AI tooling already is and will continue to yield benefits in the quality of our output. Looking more closely at our OpEx.

Sales and marketing in Q2 was less than 14% of revenue, approximately a 160-basis point improvement year-over-year, even as we funded additional dollars into our merchant acquisition efforts. On R&D, the majority of our internal AI spend is allocated here.

So you've seen a modest uptick in year-over-year growth. Overall, we've driven substantial leverage in R&D as a percentage of total revenue, and we'll continue to be disciplined in managing the spend.

Transaction loans and losses came in at 3.9% of revenue. It will scale with volumes in our payments, capital, and credit products.

Capital was a larger driver this quarter, while loss rates and payments and credit are both at normalized levels. Each of these products continues to grow well, and we are constantly improving our measurement and forecasting to keep loss rates low as adoption grows.

And finally, our Q2 free cash flow margin was just over 18%, exceeding our outlook. This represents roughly 1.5 points of year-over-year margin expansion after excluding the benefit of the accounting change in merchant cash advances that we mentioned last quarter.

This free cash flow margin expansion was primarily the flow-through of our operating margin expansion, partially offset by about 1 point of increased taxes compared to last year. With that, let's move to our Q3 outlook.

We expect Q3 revenue growth in the low 30s year-over-year. The expected sources of growth are consistent with the drivers that we saw in Q2, broad-based across geographies, merchant sizes and channels.

We do not expect any significant FX impact. We expect our gross profit dollars to grow in the mid- to high 20s.

The differential in the revenue versus gross profit growth rates is driven by the same factors as the second quarter. The continued mix shift between the growth rates of merchant solutions and subscription solutions, and the continued strength of payments.

We expect operating expenses in Q3 to be 33% to 34% of revenue, reflecting continued leverage and meaningful improvement compared to the 37% we delivered in Q3 of last year. We expect our Q3 free cash flow margin to be in the high teens to low 20s, inclusive of less than 1 point of tailwind from the accounting change in merchant cash advances.

Bringing it all together, when I look ahead, our runway is long. Even though Shopify represents over 14% of the U.S.

e-commerce market, our margins take a disproportionate share of the growth. According to eMarketer, since the start of 2025, Shopify merchants have captured nearly half of all incremental e-commerce dollars in the U.S.

Early results internationally near that trajectory albeit earlier in their maturation. That's headroom in both the U.S.

and globally. Absent any other growth drivers, these are already strong, structural and persistent tailwinds in the base case.

And as we enter this agentic era, any acceleration in e-commerce growth or disproportionate value to the long tail of commerce is upside to our underlying growth story. With that, I'll turn the call back over to Shane for your questions.

Thanks, Jeff. We'll now take your questions before turning the call back to Harley for some final words.

[Operator Instructions] Our first question will come from Ken Wong from Oppenheimer.

Harley, you touched on a lot of key points in terms of AI driving the commerce platform forward clearly providing a ton of value to your customers. How are you thinking about potentially harvesting some of that value back to Shopify?

Or is the intent still to kind of open the doors as wide as possible to bring in as many merchants as you can?

Thanks for the question, Ken. I mean, look, when it comes to monetization, the focus is very simple here.

We unlock more places for our merchants to sell. And when we earn on those sales the way we always have.

We think -- you've seen this, of course, but the agentic transactions carry the exact economics as an online store transaction. There's no new fees.

There's no separate pricing. But more agenetic GMV, it means more Shopify revenue, and that's the model and it's been working really well for almost 2 decades.

I will say -- I mentioned in my earlier comments, that we are seeing incremental dollars flow through agentic. I know there are some questions on the last call about whether or not it was taken away from search, but search is growing incredibly well.

Agentic has really taken off now. But the other thing that I think is incredibly important is when you look actually at where -- what is happening here, I mean, 75% of AI-attributed purchases in Q2 were from outside the top 100 categories, meaning a standing desk for a small apartment or I mentioned a car seat that fits 3 across the sedan.

These are real Shopify products discovered because an AI agent understood what the buyer actually needed. And that's a structural advantage for these small specialized independent businesses.

And that's -- I mean, that's our base. That's our sweep spot.

So we think that these trends suggest that merchants on Shopify will disproportionately benefit from this new surface area. And as they grow, we grow with them.

We'll take our next question from Bryan Smilek at JPMorgan.

Great. Harley, I'll steal your words, a great monster guide of 30% revenue growth.

Definitely wanted to dig in more on the enterprise side. Can you just talk about the ability to onboard new enterprises quicker and truncate that selling cycle?

And I guess what's next on the product road map here where you can lift and shift that GMV target from $100 million-plus to north of $200 million over time?

I'll tell you something sort of in almost real time. I woke up this morning to an e-mail from Balmain, one of the most iconic, legendary retailers in Europe, luxury retailer in Europe, saying that they migrated to Shopify in a matter of weeks.

Balmain.com is now fully launched. So let me maybe start at the top.

Shopify -- Merchants on Shopify are simply better positioned than those that are not. And that is true of businesses of all sizes.

We think, in particular, you've seen this and I've said this on the call, but you've seen the velocity here. Larger merchants are now choosing Shopify at a higher clip.

They see that there is enormous and often invisible complexity. I think the fact that speed to market, this all-in-one platform, this velocity of innovation, but also, I think our pole position on agentic commerce, there's no custom stack or legacy platform can match that.

So what these larger brands are looking for is they want a future-proofed commerce partner. They don't want to have to think about ever migrating again.

The olden days of enterprise e-commerce, every couple of years, you have to sort of migrate to a new platform. That's not the case with Shopify.

And so they want to kind of go -- we sort of jokingly refer to as their final migration, and that road leads directly to Shopify. What you're also seeing is some of these less modern brands, more iconic brands that have been around for a long time, Barnes & Noble or Claire's or Suitsupply or Guess Jeans or Avon, coming to Shopify as well.

It's important they come to us, but the best part about this model around enterprise commerce is once they come to us, they stay. And we've seen that with brands that have both started on Shopify or migrated early to Shopify, like Alo or Vuori or FIGS.

They come to us, and they continue to stay here. I mentioned Arhaus on the call in my prepared remarks, because actually that's a really important point.

We're really getting -- we're seeing a lot of success right now in the sort of cross-sell motion where they come to us for one particular channel, online store, for example, that's the on-ramp in. And then over time, they really migrate towards this unified commerce platform with Shopify.

And so in the case of Arhaus, we are moving well beyond just e-com to point-of-sale into things like B2B and obviously agentic. So I think the commerce landscape has shifted.

I think enterprise -- large enterprise brands see Shopify as the very best option. And we've built our team and our sales function around getting them to launch much faster than pretty much anyone else.

And that will continue, whether that's a migration of inventory or SKUs or it's helping them understand how to modernize their stack. We feel like we really have nailed how to get more large merchants onto Shopify faster.

And then again, once they come to Shopify, they stay with us.

We will now take a question from Mike Morton at MoffettNathanson.

If we could maybe follow up on those comments, Harley. The question we get a lot is, for your total addressable market, what is serviceable?

And we'd love to know, is there an upper bound on a GMV per merchant? Or is there maybe a business model, like marketplaces that you don't think are a right fit for Shopify over the long term?

Would love to know how much of the TAM you think is serviceable.

I mean, that's part of, I think, the magic -- the secret sauce or the magic sauce to Shopify, which is that we want to make sure that anyone who is starting a business at their mom's kitchen table uses Shopify. We know not all will succeed, but what we've seen over 20 years, that the ones that do stay with us indefinitely, and over time, they take more and more of our solutions.

So we become -- we start by being important, we become incredibly important as they grow. At the same time, getting more of these General Motors, for example, or Amer Sports, which owns Wilson and Salomon and Peak Performance, getting more of these more established retailers to come on, Burton Snowboards is something I think that Tobi has probably been salivating over since he started Snowdevil before Shopify.

The fact that we're getting these as well suggests to us that there is no necessarily upper bound. There are some merchants that just -- it doesn't make sense.

And there's not that many, but there are times where we may look at a particular type of business model and say, this just doesn't -- a full migration to Shopify may not make sense just yet. So that's where these things like Shop Pay as a commerce component really plays a great role.

We'll say to them, look, start with Shop Pay, even if it's a marketplace, use it. We think you're going to see a conversion uplift.

You're going to see this accelerated checkout experience that is going to be far better than whatever you have. It's a major draw.

And then once they begin to work with us, we can begin to evaluate how do we create this sort of cross-sell with them or how do we get them take on more. But in terms of upper bound, I don't think it's a GMV issue.

We have merchants that are doing billions of dollars with a very, very small team. So there's no upper bound in terms of GMV.

Complexity, I think we've gotten really good at. There is something for everyone now, whether that's headless or it's a commerce component.

And again, we start with them early on, figure out how we can be very valuable, kind of underpromise but overdeliver to them in that first component. And over time, in the case of Arhaus or in the case of Canada Goose, we see them just taking more of our services.

So I think -- I don't think there's an upper bound. I will say also on the international side, that's also where I think we are still underpenetrated.

I think we've captured less than 1% of global retail sales. And in the core geographies where we operate, the opportunity is still massive, but I still think we are -- I mean, my team hears me gripe about this all the time.

I think we are underpenetrated internationally, and it's growing. I mean, obviously, we saw revenue grow.

GMV was up 37% internationally this quarter. But there's just -- there's a lot more we can be doing there because I think that is -- we are less known there than we are in our core geos.

Thanks, Mike. We'll take our next question from Terry Tillman at Truist Securities.

Harley, Jeff and Shane, can you all hear me okay?

Yes.

Awesome. So it's a multi-part question.

On Shopify Catalog, I mean, how often is this actually now being a primary driver of demand gen and actually getting the new merchant? And the second part of this is, Harley, let's go back a couple of years to COVID.

There was a lot of folks that said, "Hey, I want to take my own destiny in my own hands, I'm an entrepreneur, I'm a builder." This feels like we're having another moment here.

How does this compare to that moment in terms of this kind of builder economy around AI?

Thanks for the question. I mean, look, in terms of Catalog, this is real.

I mean, if you just look at conversion of our Catalog -- Shopify Catalog versus general search conversion is 2x. I mean, so I'm comparing Catalog to just scraping a bunch of products.

So that's a 2x increase. When you zoom it even further, conversion from AI search runs nearly 80% higher than traditional organic search as well.

So I mentioned this on the call, but Catalog is the most important inventory of products that consumers want. And we've built it in a way that has super high fidelity, that knows -- I don't know if you tuned in to Editions.dev 2 weeks ago, but we talked about these like taste-driven attributes that we're now building in to Catalog, things like, is it formal enough for a wedding?

Is it great -- does it have a breathable fabric? What's the wrinkle tendency?

Are these sneakers suitable for an endurance run? These are -- these sort of taste-driven attributes are things you can only get with Catalog.

So number one, I think consumers are finding -- we have the data to back it up. Traffic on agentic is 3x year-on-year.

Orders are up 3x as well. And then if you look at new buyers, new buyer orders from AI channels on Shopify are like 2x versus other channels.

So one, we are already seeing -- even though it's small relative to a very large GMV, we're already seeing agentic start to really expand the discovery of these products. That's on the consumer side.

On the merchant side, yes, I mean, I meet these very large retailers and the executive teams there literally every single week. Every one of them is being pushed to figure out what their agentic strategy is.

By coming to Shopify, we take their agentic strategy off their plate. We make it so that they are the best positioned of any company.

And so I think we talk about Catalog from the consumer perspective quite a bit, but it also is a driver to use -- to come to Shopify. On the second piece, yes, I mean, certainly, you'll remember sort of the COVID run, we saw entrepreneurship exploding.

People were using entrepreneurship to either supplement their income or if they lost their job to find new income. Right now, when you look at things like Sidekick, it is remarkable how well that's going.

I mean, Sidekick in particular -- and again, Sidekick is different for every stage of merchant, but it is becoming a bigger part of how merchants build and run their businesses. And we are seeing that it's helping them reach early milestones faster.

It's helping them make smarter decisions as they grow. It takes work off their plate.

And because we have so much context, only Shopify can build something like Sidekick. And I mentioned on the call, but it's fascinating.

We see that when you use Sidekick, the onboarding guidance that it gives you as you're just setting up a store, it drove like an 8% increase in new merchants reaching 5 orders within 15 days. We know that if merchants get more orders earlier on, not only they stay longer, but they tend to be more successful.

So this is really helping. And I think Sidekick and all the other tools we've made available are just making entrepreneurship far more accessible.

We'll take our next question from Adam Wood at Morgan Stanley.

I have a question about Sidekick, coming back to that. So again, some very, very strong data in the quarter.

Could you just go into a little bit more detail? You started there talking around the benefits to merchant outcomes.

But could we see how retention is happening? How GMV growth is happening?

How product attach is happening where merchants using Sidekick as well as the traditional Shopify offerings? And over time, do you see that indirect monetization as the main driver?

Or could those premium AI capabilities become a more direct pricing opportunity for you?

I mean, look, we reserve the right to wake up smarter every single day. But in terms of monetization now, the business model is predicated on merchants doing well.

The better merchants do, the better Shopify does and Sidekick helps with that. Now I think what sets Sidekick apart from any other agent is that it understands the merchant's products.

It knows the merchant's customers, it knows their transactions, it understands their storefront, it knows the entire history of the business. And that context allows us to give advice grounded in the actual practical realities of the merchants' businesses, and they can act on it as well.

But it's an advantage that actually gets stronger as Sidekick becomes connected to more of the work merchants do on Shopify. And it's because we have the merchant data and transaction history that can do it.

What's really interesting is, if you look at daily active merchants using Sidekick, it grew 3x year-over-year. Daily sessions are up 4.8x.

But if you actually look at what they're doing with it, merchants had nearly 34 million conversations with Sidekick in Q2, and they built 36,000 custom apps in Q2. That's up from 12,000 in Q1.

So the pattern is very clear here. More merchants are using Sidekick and each merchant is finding new ways to use it.

For new merchants, the first job is just getting that first sale and then the next one. And so I mentioned our onboarding is helping them get to that first 5 orders within 15 days faster.

That is super important for momentum. What we also see is that as the business grows, Sidekick's role grows with it.

During the merchant's first 30 days, 50% of the conversations are about store setup and design and theme configurations. But if you look at 5 years in, setup accounts for like 8% because they're already at scale, and that's where analytics and reporting make up more than 40%.

So the idea is like Sidekick helps the merchant get launched. And over time, it becomes a way to understand the business to spot new opportunities to make better decisions.

And we're already seeing power users, if I can use that term of Sidekick, pushing it way further into things like advanced design or content or SEO or even product creation. So the idea is, it becomes more cable inside the flow of running the business, and it's the context it has across all of Shopify that makes it possible.

And so we're really, really happy with this. We think more people will find success in entrepreneurship.

We think more larger merchants will also -- one of the things I get to do as part of my job is I get to meet our largest merchants. And this is sort of one of my favorite things is I often ask them how they themselves are using Sidekick if they are.

The ones who use it will show me right away what you're using it. The ones who don't, I'm able to sit there at a meeting over coffee and show them, like I ask them often, what is the #1 query you have currently for your data team.

And they'll say, well, I'm looking to know like what is the exact city of our -- of where most of our customers are from. And I'll say, just ask Sidekick right now, and Sidekick will pull it up within seconds.

It is a mind-blowing experience for anyone who hasn't used it and the ones that start using it continue.

Great. We'll take our next question from Deepak Mathivanan from Cantor.

Right. Harley, AI model capabilities continue to expand at a pretty accelerated pace and Shopify has always been at the forefront of building on these cutting-edge capabilities.

Can you talk about a few areas where the recent advancements that we've seen with the Fable and GPT 5.6 series are enabling pretty good product improvements or perhaps improvements in operational capabilities for Shopify.

I mean, look, it's -- it should be very clear now that AI is now baked into how Shopify operates. Every decision, every experiment, every merchant interaction AI is helping us get smarter.

And over the past year or so, we've really moved in from experimenting with AI to just rebuilding teams and our work around what it can do. And the way we think about these models is, we use the best model for the job.

We use frontier intelligence where it matters. We use less expensive models where it's simply not needed.

And everything that we've done runs through an internal proxy, which gives us incredible visibility, gives us control, gives us security. And then as soon as the task becomes repeatable, we look at how to move it to a more efficient model.

And actually, what's really cool is we now have a number of distilled models where we take a teacher model, usually a big frontier model, then teach it a specific use case to a smaller model, which results in much faster, less costly, and actually sometimes even better at the narrow task. So, I think Shopify is, I think many of you have heard from the leaders of these models out there, Shopify is probably the most AI-pilled company in the world.

Certainly, credit to that goes to Tobi, who I think is been thinking about this longer than most and certainly put Shopify on the path of being AI reflexive before almost anyone else. But it's not just what we're using it for.

It's also how we're using it, I think, sets Shopify apart.

Great. We'll now go to Todd Coupland with CIBC.

Great. I wanted to ask about free cash flow margins.

Is roughly 20% the new normal? And how should we think about the levers around that?

Thanks for the question. I apologize for my voice.

I'm fighting a cold. Nothing's changed, Todd, in terms of how we look at free cash flow and kind of the levers we have at our disposal.

The gross margin is something where we've talked about in terms of any pressure we see on gross margin, we'll more than offset that with OpEx success. When you look at what we delivered in Q2, it was roughly 150 basis points.

Ignoring the change on the MCAs, it was roughly 150 basis points above where we were last year. I don't think we can say, can we have a new normal?

I would focus you on the guidance we gave for Q3. And I would tell you, we continue to drive more and more leverage through the system.

We'll take our next question from Gabriela Borges from Goldman.

Harley, I wanted to ask you a little bit about headless, because you mentioned some of the tooling that your customers are building around the Shopify platform, for example, on Vercel. Could you talk to us a little bit about what you think is working well with the headless strategy?

And the second derivative implications for your model longer term as you become more entrenched in some of this third-party tooling.

Yes. I mean, I think what Shopify offers that no one else does or can match is this composable architecture, that if you can come and take Shopify out of the box as is, which a lot of merchants, especially enterprise merchants want.

I think the days of some of these retailers, a cosmetic retailer having to have 100 engineers on staff and thinking -- and trying to keep up, I think those days are long over. I think that cosmetic retailers or brands want to focus on what they do best, which is making incredible cosmetics.

And the same thing goes for any vertical. So what we try to do is, we try to create this composable architecture where you tell us how you want to build.

And in some cases, they want head list. They want to use hydrogen, and that works really well for them.

They want to do some very, very complex commerce experiences. In other cases, they just don't need it.

Our job, though, is to provide them with effectively a bunch of -- a ton of different on-ramps into Shopify. The reason that the Shop Pay commerce component is so effective to us is because it's an easy way to get started with us.

It begins as a wonderful relationship. We get to prove to these new retailers that may not know us that we are the best at what we do, and over time, they can expand to us.

And the same thing goes with in terms of all these different agents or these other tools, like Vercel, for example, which are amazing tools to build these great web experiences. We want merchants to build however they want.

The key though is underneath all of it sits this commerce retail operating system, which is Shopify. That's where your inventory is, that's where your transactions are, your customer data, your analytics are.

We handle taxes for you and shipping for you and all the messy complexity of commerce sits underneath it. But in terms of, if there's a particular agent or an agentic application that any merchant retailer wants to use, they can do so, and they can do so because we have those extensions directly from them into Shopify.

And each of them have a really great use case. But it all feeds back into centralized back office, which is Shopify.

And I think that's the reason why pretty much every company, every partner, every application that helps merchants or helps a potential merchant start and get started faster, we want to partner with. And I think we have a really good history.

One of the first things I did when I got to Shopify 20 years ago was work on our partnerships. We have this great history of being able to find incredible collaboration with other companies.

And I think it's because we know what we're really good at and we leverage what they're really good at.

We will now take our last question from Arjun Bhatia.

All right. Harley, I'm curious, just it sounds like some of the agentic traction is starting to increase, still very early.

But I'm curious if there's any surfaces that are worth calling out where you're seeing an uptick in transactions or usage initially? And as a sort of maybe a follow-up to that, just how do you view the Shop app sort of playing a role in this agentic commerce area?

It seems like there might be a lot more room there.

Yes. Thanks for the question.

I mean, just to sort of start maybe on the agentic side. Look, it is early and the volume relative to $116 billion GMV is small, but the trends are really exciting, both in terms of growth we're seeing and the merchants we are seeing it uniquely benefit.

I mentioned traffic is up 3x. I mentioned orders up 3x.

New buyers from AI channels or 2x versus other channels. Conversion from our Catalog being 2x more than the general AI search is pretty remarkable.

But the thing that on a very personal level, and I think at Shopify level, we're really excited about is that this is a real -- like these trends, that I mentioned earlier, the 75% of AI-attributed purchases in Q2 being from outside the top 100 categories. I'll tell you a quick example.

We were looking for a screen-less phone for our daughter, for our 10-year-old, and I just started putting in my own prompt to look for different products. Five years ago, I would've done that in search, and I probably would have received some big box retailer selling a bunch of different random products.

Instead, I was directed to the Tin Can Phone, which is this amazing product, a Shopify merchant. The product's amazing.

I never would've found it otherwise. So I think there's a real structural advantage for small, specialized independent businesses, and we're really lucky that, that is a big chunk of the Shopify merchant base.

In terms of Shop, I think Shop is getting really exciting. We see it continue to grow.

It's this wonderful front door for commerce. It's one of the most important ones we are building, and its becoming this daily destination for buyers with a high-intent discovery.

And native GMV was up 70% year-over-year, and we're seeing things like Cart Sync represented 30% of Shop app GMV. Cart Sync is, if you haven't used it, is like magic, this idea that a shopper can move between the merchant's store and the Shop app without the cart breaking, having all your inventory filled there.

It's becoming this incredibly rich experience. So, Shop app is really starting to grow.

We have a lot of work there, especially as things like Catalog and the agentic application gets built into it. But I would say that both agentic and the Shop app are two major legs of our stool for the future.

Maybe with that, I just take a moment to close the call. I just want to kind of start with something that, I think, I said last quarter on the call, which was, I said that AI is going to accelerate entrepreneurship more than any other job.

Tobi mentioned that to me about a year ago, and I'm seeing that. I totally agree with him.

We are already seeing early signs of that happening. Yes, Shopify Catalog is driving higher conversion.

We are also, of course, seeing Sidekick helping merchants reach their first sale faster. But I want to zoom out from that for a second, because I think the true value of Shopify is so much bigger than any single product or feature, even any quarterly result.

The value of Shopify comes from the compounding power of everything we've built over 20 years, all working together. And every new product helps our merchants succeed and drives more transactions.

Every transaction gives us more signal, making our products smarter. And smarter products then drive wider adoption.

As our merchants scale, Shopify becomes even more valuable to them. I think that is a very powerful flywheel.

But it's powered by this durable operating model, strong operating model, and if I do say so myself, a truly world-class team. Two weeks ago, we held our annual company-wide summit in Toronto.

The energy inside the company at the summit, and frankly right now, is the highest I've felt in a very long time. I've never been more proud of this team.

We are the world's commerce infrastructure, and whether it's the first-time founder making their first sale, or it's the largest retailers and brands in the world, or any builder at all, these exceptional results are not the product of one quarter. They are the result of 20 years of focused, disciplined, hard work.

And I've said this before, and I think it's never been more true. We are still just getting started.

Thank you for tuning into the call, and we will talk to you all next quarter.

Great. Thanks, Harley, and thanks, Jeff.

This wraps our second quarter 2026 conference call. Thanks to everyone for joining us, and we look forward to speaking with you all soon.

Goodbye.