Canada's Shopify tops quarterly revenue estimates (updated)

Shopify

05/05/2026 12:11

Shopify's Q1 revenue, profit beat analysts' estimates

AI-driven traffic to Shopify stores up eightfold in Q1

Quarterly operating expenses surge over 20%

Rewrites with details from earnings call, analyst comments; updates share movement

By Deborah Mary Sophia

May 5 (Reuters) - Shopify's SHOP.TO lukewarm forecast failed to stem investor worries about disruptions from artificial intelligence, sending its shares down 8% on Tuesday and overshadowing comments that its own AI efforts were driving in demand and consumer traffic.

The Canadian e-commerce company forecast second-quarter sales and profit largely in line with estimates following a strong first quarter, a sign that demand was expected to slow even as it spends heavily on AI services such as its Sidekick assistant.

The company's stock had already taken a beating this year before the results, falling 20% in a software selloff caused by fears that AI poses an existential threat to the industry.

Rising costs from the U.S. and Israeli war with Iran has also threatened to hurt demand for its products from businesses.

Shopify President Harley Finkelstein, however, touted that AI could sharply boost demand for its tools.

"AI is making entrepreneurship dramatically more accessible. That means there are about to be a lot more entrepreneurs and that means more people that need the Shopify platform," he said on the earnings call.

The number of weekly active stores using Sidekick, which helps with everything from setting up a website to analyzing sales data, jumped over four times in the first quarter.

Shopify's tie-ups with OpenAI's ChatGPT, Google Gemini and Microsoft Copilot, which allows retailers to sell directly within the chatbots, also helped its business.

AI-driven traffic to Shopify stores increased eightfold in the January-March quarter, while orders coming from AI-powered searches grew nearly 13 times from the year-ago period.

But investing in those efforts and running the AI services drove up its quarterly operating expenses by over 20%.

Revenue jumped 34% to $3.17 billion, while adjusted per-share earnings were 36 cents. Both topped expectations.

The company expects second-quarter revenue to grow at a high-twenties percentage rate, while analysts expected a 26.8% increase, according to data compiled by LSEG. Gross profit is expected to grow at a mid-twenties percentage range, versus an estimate of a 24.6% rise.

"Shopify reported another very strong quarter ... Investors' only hesitation is the operating expense guidance being slightly higher than expected," said D.A. Davidson analyst Gil Luria.

 (Reporting by Deborah Sophia in Bengaluru; Editing by Shilpi Majumdar)

 ((DeborahMary.Sophia@thomsonreuters.com;))