Shopify's Subscription Growth Accelerates: More Upside Ahead?
Shopify’s SHOP prospects are being supported by solid growth in subscription solutions revenues, reflecting continued merchant additions, higher-value plans and deeper adoption of its commerce platform. In the second quarter of 2026, Subscription Solutions revenues increased 22% year over year to $802 million. Monthly recurring revenue rose 19.5% to $221 million, with Shopify Plus accounting for 34% of total MRR and also growing 19% year over year. This reflects healthy additions of new merchants as well as existing merchants upgrading to higher-tier plans as their businesses scale.
The expanding merchant base and Shopify’s ability to move customers up the value chain should continue to support subscription growth. The company is attracting merchants ranging from entrepreneurs to large enterprises, with Guess, Avon and Holt Renfrew among brands choosing Shopify during the second quarter of 2026. Management also highlighted strong retention among scaled merchants, with retention reaching 92% for merchants generating $1 million in annual Gross Merchandise Value (GMV) and 97% for those exceeding $10 million. This increases opportunities to monetize merchants through higher-tier subscriptions and additional services as their businesses expand.
AI-driven product innovation is expected to further strengthen subscription revenues. Shopify is embedding tools such as Sidekick, Catalog and agentic-commerce capabilities into its platform, making the subscription offering more valuable to merchants. Daily active merchants using Sidekick increased 3.6 times year over year in the second quarter of 2026, while the platform handled nearly 34 million Sidekick conversations. Shopify’s unified platform also allows merchants to manage online stores, offline commerce, B2B, marketplaces and emerging AI channels from one infrastructure, supporting deeper customer relationships and potentially lowering churn.
Shopify Faces Tough Competition
The competitive intensity in e-commerce remains high for Shopify, with Commerce.com CMRC and Wix.com WIX standing out as key challengers.
Commerce.com, through its open, composable commerce architecture and growing focus on product intelligence, B2B and payments, is challenging Shopify. The company’s Feedonomics platform processes more than one trillion product listings each month and helps merchants structure, enrich and distribute product data across AI assistants, marketplaces, retail media and search engines. Commerce.com’s B2B capabilities represent another competitive pressure. B2B GMV increased 17% year over year in the second quarter, exceeding the platform’s overall 14% GMV growth, while management said B2B pipeline growth, win rates and gross retention were stronger than in B2C.
Wix is challenging Shopify primarily among small businesses, creators and agencies through its expanding AI-powered website and application-creation ecosystem. Wix Harmony combines AI with visual website creation, while BASE44 enables users to build applications and software through natural-language prompts. Wix is therefore positioning itself across both traditional website creation and emerging “vibe coding,” giving customers multiple ways to create and operate digital businesses. Wix is also broadening its competitive reach through headless commerce and deeper AI integration. The company has integrated Harmony with Gemini and is developing AI tools that handle increasingly complex business workflows, positioning Wix to compete with Shopify not only in storefront creation but also across the broader digital-business infrastructure layer.
SHOP’s Share Price Performance, Valuation & Estimates
Shopify shares have lost 11.6% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 22.7%.
SHOP’s YTD Price Performance
Image Source: Zacks Investment Research
Shopify stock is overvalued, with a forward 12-month price/sales of 10.23X compared with the broader sector’s 6.22X. SHOP has a Value Score of F.
SHOP’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $1.89 per share, unchanged over the past 30 days. This suggests 61.54% year-over-year growth.
Shopify Inc. Price and Consensus
Shopify Inc. price-consensus-chart | Shopify Inc. Quote
Shopify currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
