SHOP · Forward model · Bull case
The Bull case, 20 quarters out
Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.
What is disclosed: both revenue lines and both cost-of-revenue lines every quarter for fourteen quarters, GMV and MRR every quarter, total operating expense by category, capex, shares and the balance sheet. What is derived: the attach rate (merchant solutions revenue over GMV), the seasonal factors, the deseasonalised trends, net cash of $5,472M, and the overhead/tax pair. What is assumed: forward growth rates, the margin glides, the discount rate and the exit multiple. Three things are NOT split, because Shopify does not report them and inventing them would be fabrication: operating expense by revenue line, the merchant count behind MRR, and the composition of merchant solutions between Payments, Capital, shipping, POS hardware and advertising. All operating expense therefore sits in corporate overhead. That overhead rate, 27.28%, is a CALIBRATION and not Shopify's operating expense ratio - the disclosed figure is 34.05% of revenue including stock-based compensation, 30.53% excluding it. Solving the engine's identity (free cash flow = EBITDA - capex - tax) against the basis quarter's disclosed $654M of free cash flow at a 10% tax rate gives 27.28%; the two numbers are one calibration and must move together. Alternatives: tax 12% pairs with 26.82%, tax 15% with 26.08%. Two further cautions. Free cash flow from April 2026 excludes merchant cash advance flows that were previously in operating activities, worth $37M in the basis quarter, so the historical margin is not strictly comparable with the projected one. And GAAP diluted EPS of $1.16 is dominated by $1,063M of after-tax marks on equity investments; the company's own net income excluding equity investments was $439M. No EPS figure is a model input.
Both drivers were still accelerating at the basis quarter and management beat every line it guided. In May it guided 2026 Q2 revenue to a high-twenties growth rate, operating expenses to 35-36% of revenue and free cash flow margin to mid-teens; it delivered 34%, 34.05% and 18%. Payments penetration added three points in a year to 68% of global GMV, so the attach rate has runway outside North America even as the United States matures. Operating expense fell 3.67 points of revenue year over year on headcount discipline, and this case takes overhead toward 25% - carried as a 2.3-point margin credit because the engine has one overhead rate, not a glide. The scenario tilt is +0.8% a quarter on revenue, which the control panel reads as GMV growth of 7.2% rather than 6.4%; the discount rate eases to 8.5% and the exit holds a 9x growth multiple. Fair value $224.60, 50% above the price.
Latest: $11.31B (2031Q2E)
| Period | Value |
|---|---|
| 2023Q1 | $1.51B |
| 2023Q2 | $1.69B |
| 2023Q3 | $1.71B |
| 2023Q4 | $2.14B |
| 2024Q1 | $1.86B |
| 2024Q2 | $2.04B |
| 2024Q3 | $2.16B |
| 2024Q4 | $2.81B |
| 2025Q1 | $2.36B |
| 2025Q2 | $2.68B |
| 2025Q3 | $2.84B |
| 2025Q4 | $3.67B |
| 2026Q1 | $3.17B |
| 2026Q2 | $3.58B |
| 2026Q3E | $3.80B |
| 2026Q4E | $4.97B |
| 2027Q1E | $4.25B |
| 2027Q2E | $4.74B |
| 2027Q3E | $4.97B |
| 2027Q4E | $6.47B |
| 2028Q1E | $5.48B |
| 2028Q2E | $6.06B |
| 2028Q3E | $6.32B |
| 2028Q4E | $8.19B |
| 2029Q1E | $6.89B |
| 2029Q2E | $7.58B |
| 2029Q3E | $7.86B |
| 2029Q4E | $10.17B |
| 2030Q1E | $8.49B |
| 2030Q2E | $9.32B |
| 2030Q3E | $9.61B |
| 2030Q4E | $12.44B |
| 2031Q1E | $10.33B |
| 2031Q2E | $11.31B |
What drives each segment
Subscription solutions
Growth pathThe recurring half of Shopify's two disclosed revenue lines: platform plans from Basic to Plus, POS Pro subscriptions, variable platform fees charged to large merchants above contractual GMV thresholds, themes, Shopify-sold apps and domains. It was $802M of the $3,583M basis quarter - 22.4% of revenue - at a 79.7% gross margin against merchant solutions' 38.4%, so it is a minority of revenue and close to half of gross profit. The disclosed volume metric is MRR, $221M at 30 June 2026 and up 19% year over year, but Shopify has never published a merchant count, so a subscribers x ARPU driver would have to invent the subscriber base. The line is modelled as a deseasonalised growth trend instead.
Latest: $1.69B (2031Q2E)
| Period | Value |
|---|---|
| 2023Q1 | $382M |
| 2023Q2 | $444M |
| 2023Q3 | $486M |
| 2023Q4 | $525M |
| 2024Q1 | $511M |
| 2024Q2 | $563M |
| 2024Q3 | $610M |
| 2024Q4 | $666M |
| 2025Q1 | $620M |
| 2025Q2 | $656M |
| 2025Q3 | $699M |
| 2025Q4 | $777M |
| 2026Q1 | $750M |
| 2026Q2 | $802M |
| 2026Q3E | $868M |
| 2026Q4E | $948M |
| 2027Q1E | $901M |
| 2027Q2E | $969M |
| 2027Q3E | $1.04B |
| 2027Q4E | $1.13B |
| 2028Q1E | $1.07B |
| 2028Q2E | $1.14B |
| 2028Q3E | $1.22B |
| 2028Q4E | $1.32B |
| 2029Q1E | $1.24B |
| 2029Q2E | $1.32B |
| 2029Q3E | $1.41B |
| 2029Q4E | $1.51B |
| 2030Q1E | $1.42B |
| 2030Q2E | $1.50B |
| 2030Q3E | $1.60B |
| 2030Q4E | $1.71B |
| 2031Q1E | $1.60B |
| 2031Q2E | $1.69B |
Assumptions & reasoning
- Shopify has ONE reportable segment - the CODM is the CEO, managing on consolidated net income. Subscription solutions and merchant solutions are disaggregated revenue lines printed on the face of the income statement every quarter with their own cost of revenues. That is a disclosed split, not an apportioned one.
- Driver kind is deliberately 'growth', not 'subscription'. Shopify publishes MRR but has never published a paying-merchant count, and inventing a subscriber base to back into $802M would manufacture a split the company does not report.
- Seasonality is mild and derived, not disclosed: [0.955, 0.982, 1.011, 1.052] by calendar quarter, from a ratio-to-moving-average on the fourteen quarters 2023 Q1 - 2026 Q2. Amplitude is 0.097 index points against a worst per-quarter observation spread of 0.030. The Q2 and Q3 factors are indistinguishable in this data; only the Q4-up, Q1-down axis is load-bearing.
- The mechanism behind the mild shape is disclosed: variable platform fees are charged to Plus merchants above GMV thresholds, and Plus GMV spikes at the holidays, so part of this 'recurring' line is in fact GMV-linked and a GMV shock hits both verticals at once.
- Because the engine deseasonalises the basis quarter before the driver runs, 4.3% is a deseasonalised TREND rate, not a printed sequential step. The printed 2026 Q3 step off $802M is about +7.4% once the Q3 factor is reapplied.
- Fiscal note: Shopify's fiscal year is the calendar year, so seasonality index 0 is genuinely January-March and no fiscal-to-calendar mapping is needed.
Merchant solutions
Units × priceThe success-based half and the engine of the company: $2,781M of the $3,583M basis quarter, 77.6% of revenue, growing 37% year over year. Its volume constraint is disclosed every quarter - GMV, $115,567M in the basis quarter, up 32% - and its price is the attach rate, merchant solutions revenue per dollar of GMV, 2.406% as reported. Both halves compound: deseasonalised GMV has grown 7.0% a quarter over the last eight quarters and the deseasonalised attach rate has risen about 1.1% a quarter as Shopify Payments penetration climbed to 68% of global GMV, three points in a year. The unit driver carries deseasonalised GMV as units and the deseasonalised attach rate as unit price, because runUnitCurve ignores the vertical's base and the engine reapplies the calendar factor afterwards.
Latest: $9.62B (2031Q2E)
| Period | Value |
|---|---|
| 2023Q1 | $1.13B |
| 2023Q2 | $1.25B |
| 2023Q3 | $1.23B |
| 2023Q4 | $1.62B |
| 2024Q1 | $1.35B |
| 2024Q2 | $1.48B |
| 2024Q3 | $1.55B |
| 2024Q4 | $2.15B |
| 2025Q1 | $1.74B |
| 2025Q2 | $2.02B |
| 2025Q3 | $2.15B |
| 2025Q4 | $2.90B |
| 2026Q1 | $2.42B |
| 2026Q2 | $2.78B |
| 2026Q3E | $2.93B |
| 2026Q4E | $4.02B |
| 2027Q1E | $3.35B |
| 2027Q2E | $3.77B |
| 2027Q3E | $3.93B |
| 2027Q4E | $5.34B |
| 2028Q1E | $4.41B |
| 2028Q2E | $4.92B |
| 2028Q3E | $5.10B |
| 2028Q4E | $6.88B |
| 2029Q1E | $5.65B |
| 2029Q2E | $6.26B |
| 2029Q3E | $6.45B |
| 2029Q4E | $8.66B |
| 2030Q1E | $7.08B |
| 2030Q2E | $7.82B |
| 2030Q3E | $8.02B |
| 2030Q4E | $10.72B |
| 2031Q1E | $8.74B |
| 2031Q2E | $9.62B |
Assumptions & reasoning
- The units trace reads DESEASONALISED GMV of $119,957M, not the reported $115,567M. runUnitCurve emits units x price and ignores the vertical's base, so the deseasonalisation has to be baked into the inputs; projectVertical then reapplies the calendar factor. Check: 119,957 x 0.0241318 x 0.9607 = 2,781, the reported quarter.
- Unit price is the deseasonalised attach rate, 2.41318% of GMV, against a reported 2.4064%. It is disclosed by arithmetic - merchant solutions revenue over GMV - not published as a metric, and it has risen in eight of the last nine quarters.
- Seasonality [0.918, 0.961, 0.935, 1.187] is the clearest signal in the company: amplitude 0.269 index points against a worst observation spread of 0.030, and all three Q4 observations land between 1.164 and 1.194. The company states the mechanism in its own 10-Q - merchants process additional GMV during the fourth-quarter holiday season, so merchant solutions revenue is historically higher in Q4.
- 6.4% is a deseasonalised TREND rate for GMV, below the observed 7.01% eight-quarter mean because the path decays toward 3.2%. Over twenty quarters it compounds deseasonalised GMV 2.63x, more conservative than a flat 5.5% would be. The reported sequential step is the trend times the calendar factor, which is why the projected December quarters print roughly 30% above their Septembers.
- No revenue split is published between Payments, Capital, shipping, POS hardware and advertising, so the model cannot and does not show which of them is lifting the attach rate.
- Shopify stopped publishing GPV as a key performance indicator after 2024; the 2026 10-Q names only MRR and GMV. Payments penetration of 68% comes from the earnings call, not from a filing, so the attach-rate drift has no disclosed saturation point to glide toward.
Where each case comes from
Bear case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Bear column is what happens if they are taken at face value.
The downside is in the company's own history
- Feb 11, 2026 GMV of $378.4 billion for the full year 2025, an increase of 29% over 2024, with fourth-quarter GMV of $124.3 billion.
- Aug 5, 2026 the impact of changes in economic conditions and consumer spending in key markets such as the United States, Europe, and globally, and the impact of measures that affect international trade, including tariffs.
Bull case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Bull column is what happens if they are taken at face value.
Guidance beaten on every guided line
- Aug 5, 2026 For the third quarter of 2026, we expect: Revenue to grow at a low-thirties percentage rate on a year-over-year basis.
- May 5, 2026 For the second quarter of 2026, we expect: Revenue to grow at a high-twenties percentage rate on a year-over-year basis.
- Aug 12, 2026 Payments Penetration -- 68% of global GMV, a 3 percentage point increase year over year.
From cash flow to fair value
| Present value of free cash flow, 20 quarters | $21.97B |
| Terminal-year revenue | $43.70B |
| Terminal-year EBITDA | $8.88B |
| Exit multiple, on revenue | 9.0x |
| Terminal value | $393.26B |
| Discounted at 8.5% a year, terminal value becomes | $261.54B |
| Enterprise value | $283.51B |
| Net cash | $5.47B |
| Equity value | $288.98B |
| Shares | 1.29B |
| Fair value per share | $224.60 |
| Against the current price of $154.33 | +46% |
Move the exit multiple before anything else. In the base case the terminal value is 91% of enterprise value - $167.6B of the $185.0B - so the answer is a multiple, dressed as a discounted cash flow. 7x the 2031 revenue run rate of $37.7B is a deliberate de-rate from the 14.1x trailing revenue the market pays today ($187.3B enterprise value on $13,269M of trailing revenue at $149.80), because a company still compounding above 30% today will not be one in 2031. The sensitivity is the whole story: 5x prints $110.85, 7x prints $148.07, 9x prints $185.30, against a $149.80 price. There is no clean comparable - the payments half rates against Adyen and Block, the subscription half against enterprise SaaS, and no listed company carries both at this growth rate - so the multiple is judgement, not a comp. The 9.5% discount rate is above the 9% used for Netflix here: Shopify is debt-free and cash-generative, but GMV is consumer-spending beta and the growth premium is not free.
Read the other way round: at $154.33 the market is paying 5.9x terminal-year revenue, holding every other assumption on this page fixed. That is the number to argue about.
The projected path
| Quarter | Subscription solutions | Merchant solutions | Revenue | YoY | EBITDA | Capex | FCF | R40 | PV of FCF |
|---|---|---|---|---|---|---|---|---|---|
| 2026 Q3E | $868M | $2.93B | $3.80B | +34% | $870M | $4M | $779M | +54 | $763M |
| 2026 Q4E | $948M | $4.02B | $4.97B | +35% | $1.06B | $6M | $951M | +54 | $913M |
| 2027 Q1E | $901M | $3.35B | $4.25B | +34% | $948M | $5M | $848M | +54 | $798M |
| 2027 Q2E | $969M | $3.77B | $4.74B | +32% | $1.04B | $6M | $934M | +52 | $860M |
| 2027 Q3E | $1.04B | $3.93B | $4.97B | +31% | $1.11B | $6M | $991M | +51 | $895M |
| 2027 Q4E | $1.13B | $5.34B | $6.47B | +30% | $1.35B | $9M | $1.21B | +49 | $1.07B |
| 2028 Q1E | $1.07B | $4.41B | $5.48B | +29% | $1.19B | $8M | $1.07B | +48 | $924M |
| 2028 Q2E | $1.14B | $4.92B | $6.06B | +28% | $1.30B | $9M | $1.17B | +47 | $990M |
| 2028 Q3E | $1.22B | $5.10B | $6.32B | +27% | $1.37B | $9M | $1.23B | +46 | $1.02B |
| 2028 Q4E | $1.32B | $6.88B | $8.19B | +27% | $1.68B | $12M | $1.50B | +45 | $1.22B |
| 2029 Q1E | $1.24B | $5.65B | $6.89B | +26% | $1.46B | $10M | $1.31B | +45 | $1.05B |
| 2029 Q2E | $1.32B | $6.26B | $7.58B | +25% | $1.60B | $11M | $1.43B | +44 | $1.12B |
| 2029 Q3E | $1.41B | $6.45B | $7.86B | +24% | $1.67B | $12M | $1.49B | +43 | $1.15B |
| 2029 Q4E | $1.51B | $8.66B | $10.17B | +24% | $2.04B | $16M | $1.83B | +42 | $1.37B |
| 2030 Q1E | $1.42B | $7.08B | $8.49B | +23% | $1.77B | $13M | $1.58B | +42 | $1.16B |
| 2030 Q2E | $1.50B | $7.82B | $9.32B | +23% | $1.93B | $15M | $1.72B | +41 | $1.24B |
| 2030 Q3E | $1.60B | $8.02B | $9.61B | +22% | $2.01B | $16M | $1.79B | +41 | $1.27B |
| 2030 Q4E | $1.71B | $10.72B | $12.44B | +22% | $2.46B | $20M | $2.20B | +40 | $1.52B |
| 2031 Q1E | $1.60B | $8.74B | $10.33B | +22% | $2.12B | $17M | $1.89B | +40 | $1.28B |
| 2031 Q2E | $1.69B | $9.62B | $11.31B | +21% | $2.30B | $19M | $2.05B | +39 | $1.36B |
Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.
Model revisions
Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.
| Date | Changed | Fair value then | Note |
|---|---|---|---|
| 2026-08-27 | all | $148.07 | First publication, built on the 2026 Q2 basis quarter from the verified research brief. Two disclosed revenue lines, both seasonal, GMV and the implied attach rate as the merchant-solutions drivers. |