Shopify CRUSHED Q2 earnings

🧠 The Takeaways

Today, we're enjoying + riding the Shopify high from their incredible Q2 earnings. Here’s what I’m watching out for.

1. The overblown strong consumer spending narrative.

2. Watching Shopify go whale hunting.

3. The warchest they’ve built and what they’re going to do with it.

+ The July Coco Update. Spoiler alert: it was our best month ever.

LBAB! Community - July Coco Update

July was CoCo AI's best month in history. 

• Rev hit a Record high.

• MRR +27 MoM.

• Onboard + Scaling our biggest brands yet.

Despite the summer pipeline slow down, on 7/15 we were 16% to target for monthly new logos, usage exploded with our brands running summer promos.

Product:

We spent August overhauling our infrastructure and data collection to get ready to scale up for the holidays. We’re giving Merchants the ability to process and filter a lot more data,

We also spent the entire month building out our new flow builder, which launches in Beta next week. This will really set us apart and put us in the same league as Klaviyo from a targeting perspective.

Growth:

We ended the month 3 deals short of the net new logo target, which was frustrating, but impressive considering we were only 16% to target half way through the month.

1 of our top customers promoted us in their private Discord community, sending a wave of new customers the last week of the month.

Financials:

We swung from maxing out our credit card to squashing our credit card debt and getting the biz in normal working capital condition. As we start to grow and keep our costs lean we should be able to get off this see-saw of constantly robbing Peter to pay Paul.

Since taking over in Feb we’ve now grown the ARR run rate by 40%, and we’re pacing really well to double the ARR by the end of the year.

Momentum is really starting to kick in and now my job is to keep it going  and accelerate it going into the Holidays. 

Let’s Examine This Biz

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. I previously was an investor in Shopify’s stock, but sold my position earlier this year to fund the CocoAI acquisition. And I was never here.

Shopify’s stock is ripping this week on incredible earnings and strong consumer performance. It’s $17 off its COVID all time high.

• Share price: $149.61

• Market Cap: $194.4B

• L5 Performance: +42%

• P/E Ratio: 83x

Shopify’s earnings report was so good it increased the value of the entire consumer sector. Shopify is hitting the notes they have to and investors love it.

Financial Summary

Q2 2025 Financial Statements (YoY Comparison)

Sales: $2.6B (+31%) 🤤
Gross Profits: $1.3B (+25%) 👍

OPEX: $1B (+26%) 👍

Net Income: $906m (+430%) 🤯 🤤

Link to Company’s earnings

TLDR Analysis: Dammmmmmm

• +31% YoY growth at this scale is incredible.

• GM% falling from 51% -> 49% is expected as Services accounts for higher % of Rev

• Net Income +430% is just unreal.

This is why you let software bizs get to massive scale then focus on profitability. They have the scale that making small optimization that don’t feel like amputations unlock massive amounts of profits/cash.

Shopify operated at a 34% Net Income margin (it was 8% in Q1 ‘24). At their scale and the profit they are starting to unlock while growing topline faster this year than last is going to make this biz a juggernaut.

Let’s Fix This Biz

Here are the 3 things I’m paying extra attention to in their earnings.

1) Consumers are spending through the Taco trade.

This 1 insight lifted the stock of the entire consumer market this week. It’s too early to say how the current American political and economic policy will affect the economy long term, but 1 insight is for sure…

Consumers are still spending.

GMV (total $$$ consumers spend on Shopify’s platform) is growing at its fastest pace in 5 quarters. 

Now there are a couple important notes in this data:

1. As Shopify brings on more big brands, GMV increases. That doesn’t exactly mean consumers are buying more from all brands.

2. Shopify touted big European GMV expansion +42%. So probably a big increase on a small number.

3. Tariffs were delayed and didn’t actually hit most consumers goods in Q2 (Apr - Jun).

I think everyone in the stock market is wrong. Or making determinations too early.

This is not a sign that consumers are still doing well, or the current economic policies won’t have a negative impact on the economy.

This is a sign that consumers kept spending through all the doom and gloom narrative.

Tariffs didn’t actually go into effect for most countries until August, so most products haven’t actually changed in price and bizs haven’t adapted yet.

We’re still seeing what spending looks like before tariffs go into effect. Q3 and Q4 data will start to show the impact.

Takeaway: Don’t over index on good narratives with irrelevant data.

2) They’re Whale hunting now.

It’s not just DTC brands that are the impressive logos they are bringing onto the platform. Now Shopify is grabbing Fortune 500 bizs who are looking to test/trade down into a more affordable eCom platform. Some of the names they’ve recently called out:

• Canada Goose

• Starbucks

• Signet Jewelers 

We’re far past the rebel stage where Shopify is calling out the wins of the little guy or Influencer led DTC powerhouse. 

The focus continues to be grabbing the massive Ent brands. It makes perfect sense with their biz model. The more GMV a brand has = the more Shopify will make in payment fees.

I called this out 4 years ago when we saw 9-fig brands coming in to work with us at Daasity and what still feels insane is 4 years later how early we still are in this march up market.

Don’t get me wrong it’s very impressive the logos that they’re bringing on and how it’s propelling the biz forward.

BUT…

It’s not like Starbucks is bringing on their main eCom experience onto Shopify. They’re bringing on an aux store or a new test. (Similar to Lululemon, Nike etc). 

Takeaway: Shopify is just launching the land & expand strategy.

3)  The absolute warchest Jeff Hoffmeister has built.

Jeff was brought in to be the CFO that got Shopify into shape. When he joined the narrative was all growth over profits. From the recent earnings you can see how he’s flipped the company to be both a Growth (+31% YoY) and Profit Stock (34% Net Income Margin).

Why is that so important?

Because it lets you hoard cash.

And Shopify is doing just that.

• Cash & Securities: $1.5B

• Marketable Securities: $4.3B

• Equity & Other Investments: $4.4B

That is what you do when you’re printing $1B/quarter in profits.

This will allow Shopify to play different games.

• They can weather a brutal economic storm.

• They can massively invest in growth (Organic or Acquisitions)

• They can start taking R&D moonshot bets on new areas.

• They can take big risks in AI investments or Equity investments in other bizs.

• They could buy back stock to increase the valuation. (Crazy at this stage but possible).

And the best part about all of this. Shopify is actually growing faster YoY recently compared to previous quarters (Currently +~30% vs. +20%. Disproving that the trade off always has to be Growth vs. Profits.

Takeaway: Cash Rules everything around me.

Final Thought

Are existing Shopify brands growing at all? The 1 stat Shopify doesn’t release and no one really talks about anymore is overall store growth (how many new stores Shopify is adding) and same store sales growth (How much YoY Rev increases are existing stores seeing).

Because honestly it doesn’t matter for Shopify’s stock price anymore.

The narrative investors are buying is Shopify is an eCom platform for every brands, not a DTC platform anymore.

Shopify closing Whale leads (Fortune 500 accounts) is the driver that matters, because 75% of Rev and 57% of Gross Profits come from Payments.

They have perfectly aligned the biz model to the north star metric (GMV). 

1. The more money a biz makes on Shopify (GMV). They’ll be happier customers.

2. The more a biz makes on Shopify the more Shopify takes a cut.

Shopify has perfectly balanced the experience + pricing model to explode their flywheel.

The natural end goal when volume matters. You move upmarket and close the customers with the most volume possible.

The march to a $1T cap continues.