The company is keeping costs in check while signaling upbeat growth trends, analysts say

Shopify delivered better-than-expected results on Wednesday.

Shopify's stock was headed for its best day in a year after an earnings report deemed to be "incredible," in the words of TD Cowen analyst John Shao.

The company, which sells software and payment-processing services to businesses, reported revenue of $3.6 billion, up 34% from the prior-year quarter and above the $3.4 billion analysts were expecting. Shopify (SHOP) also issued upbeat forecasts that made investors more confident about the growth trajectory ahead.

The free-cash-flow performance from the latest quarter was a particular high point, Shao wrote. Shopify reported free-cash-flow margin of 18.3% ahead of the 15.6% analysts were expecting.

"This year, investors have been more sensitive to Shopify's cost management and margin dilution, and we believe today's print largely abates those concerns, and establishes an upward trajectory for FCF margins going forward," Shao wrote.

The company's reported take rate, a measure of how much money the company retains from the transactions it processes, came in well above what was forecast. Additionally, Shao noted, the company did a better job than expected at controlling costs.

Shopify shares were up 17.5% in morning trading Wednesday, on pace to record their best one-day performance since Aug. 6, 2025, when they increased 22%.

Jefferies analyst Samad Samana wrote in a Wednesday note that investors were reacting to more than just the "clean sweep" evidenced by Shopify's results. He said the company also addressed several major investor concerns.

Heading into the report, investors wondered whether the company's gross-profit growth outlook would be in the mid-to-high 20% for the third quarter, which could pave the way for the company to record 30% growth for the second half of the year. Additionally, investors wanted to see an upward trajectory on free-cash-flow margin. The company checked both of those boxes.

Shopify's guidance for the third quarter "left no doubt in investors' minds about the durability of growth" for the second half of the year, and the company's "commitment to delivering margin expansion even with AI investments," he wrote.

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-Hannah Pedone