Shopify price target raised to (US) $180.00 at National Bank

Shopify (Shopify Inc Stock Quote, Chart, News, Analysts, Financials NYSE:SHOP) delivered stronger-than-expected second-quarter results, with revenue rising 31% year over year to $2.7-billion, outperforming both National Bank and Street estimates. National Bank of Canada Financial Markets analyst Richard Tse called it a “solid” print and raised his target price to US$180 from US$140, maintaining an “Outperform” rating.

The beat was driven by a surge in Merchant Solutions revenue, which jumped to $2.02-billion versus consensus of $1.89-billion. Gross merchandise volume also came in ahead of expectations at $87.8-billion, up 31% year over year. Adjusted operating margin rose to 15.4% from 11.9% in the same quarter last year, supported by ongoing capital discipline. Free cash flow margin held steady at about 16%.

Shopify guided for third-quarter revenue growth in the mid-to-high-twenties, ahead of National Bank’s 20.6% estimate and the Street’s 21.5%. Gross profit is expected to rise in the low twenties, compared to forecasts of 16.5% from National Bank and 16.8% from consensus. Operating expenses are expected to be between 38% and 39%, roughly in line with expectations.

“The results and outlook are consistent with our investment thesis where we see the Company executing on a number of growth opportunities (enterprise, scaling take rate, point of sale (POS), international, and B2B),” Tse said. “Interestingly, Shopify also noted it’s not seeing any (material) impact from macro uncertainties and has limited exposure to the removal of de minimis exemptions (Shopify’s exposure represents ~4% of global GMV with 1% from China).

“Meanwhile, execution across all growth levers (noted above) under operating leverage is helping drive profitability and cash flow. Bottom line, we think it’s still early days for many of those growth opportunities, which is why the name remains one of our Top Picks.”

Tse said Shopify’s Q3 guidance for revenue growth in the mid-to-high twenties was well above both National Bank and consensus expectations. Despite tariff and macroeconomic uncertainties, management signalled ongoing momentum based on internal forecasts.

Shopify noted it has not seen any material impact from tariffs through Q2 and July, with only about 4% of global GMV tied to the de minimis exemption and around 1% exposed to China. The company also said there was no pull-forward demand in Q2, suggesting continued strength into Q3.

Tse said Shopify’s Enterprise segment remains a key growth driver, with the growing mix of larger clients improving the company’s long-term value to customer acquisition cost ratio. Shopify Plus now represents approximately 35% of monthly recurring revenue, up from 34% in Q1, reaching around $65 million, an increase of 25% year over year and 5% quarter over quarter.

Growth was driven by greater adoption of higher-tier plans and expanded features, including B2B tools, multi-entity support, and advanced checkout capabilities. The strength in Plus continues to help offset weakness in standard plans affected by longer paid trial periods.

Tse said several high-profile client wins this quarter further validated Shopify’s growing momentum in the enterprise segment.

“Brand wins this quarter reinforce Shopify’s enterprise traction, with additions like Starbucks, Canada Goose, Burton, Miele, Signet Jewelers and Boart Longyear,” he said. “These diverse wins span luxury retail to industrial services. In our view, those marquee wins underscore the capabilities of Shopify’s platform and services. Notably, and consistent with our recent earnings preview, the platform is opening up new vertical markets as well. For instance, Shopify announced a client win in the mining/drilling vertical with global leader Boart Longyear, as Shopify is replacing fragmented legacy systems with its flexible, cloud-native stack. In our view, that expanding TAM contributes to the valuation re-rating for this name.

“With respect to B2B, we see that as offering a considerable opportunity where historically that market has represented upwards of 75% of global commerce activity.”

Tse expects that Shopify will generate $1,900.6-million in Adjusted EBITDA on revenue of $11,238.8-million in fiscal 2025. He projects those figures will rise to $2,462.7-million and $13,758.6-million, respectively, in fiscal 2026.

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