Shopify 1Q'26: Impressive, But Still Not Enough to Justify Valuation
1Q’26 was yet another quarter for Shopify in which it added almost the same GMV as Amazon retail likely added in the same quarter.
Back in 2017, Shopify’s GMV was only ~10% of Amazon’s estimated GMV. Given the way Shopify is growing, it seems likely that it will be half of Amazon’s GMV by the end of next year. To go from just ~10% of Amazon’s GMV to half of Amazon in just a decade is a remarkable feat! It’s not like Amazon has been struggling to grow during this period; it’s just that Shopify has access to a reservoir of growth that is somewhat inaccessible to Amazon retail which is helping Shopify close this gap quarter after quarter.
What is this reservoir of growth Shopify has access to? Shopify’s platform business model can inherently scale much faster internationally than Amazon’s marketplace business model can. Shopify’s international GMV grew by a whopping 45% in 1Q’26 with cross-border GMV representing 16% of total. Shopify highlighted why they’re growing so much faster internationally:
“We are consistently rolling out new updates and products to grow our international footprint. In Q1, we quietly shipped updates that individually may not make headlines, but together are steadily making Shopify more native to more places. Things like merchant billing, which is now in 7 new European currencies or capital now available in France or smart market and smart language recommendations where merchants get relevant recommendations based on the markets they sell into. Every quarter, we build more. And we removed more barriers for merchants all over the world to choose Shopify.”
Given the results they are seeing, Shopify actually spent ~40% of their marketing dollars in Europe. Moreover, off-line GMV was +33%, accelerating from Q4, and B2B GMV grew +80% in Q1. It is mind boggling that Shopify has been organically growing at >30% in each of the last four quarters. I’m not sure many people would have predicted that five years following the pandemic, Shopify’s growth would have a 3-handle!
I will discuss more about their margins and key takeaways from the earnings call behind the paywall.
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