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Shopify (SHOP +20%) is surging today after reporting its Q2 results this morning. The global e-commerce platform reported a substantial EPS beat, which marked the company's largest EPS beat in 13 quarters. Revenue increased 31.1% yr/yr to $2.68 bln, which was quite a bit above analyst expectations. It also surpassed SHOP's guidance of a mid-20's percentage growth rate. This now marks 4 consecutive quarters where SHOP has achieved yr/yr growth of at least 26%, and encouragingly, management expects revenue for Q3 to grow at a mid-to-high 20's percentage rate. Investors are pleased to see SHOP continue its strong performance despite the current macro uncertainties.

• Revenue was driven by GMV growth across all of SHOP's geographies. What stood out to us is that total GMV had a nice acceleration from Q1, growing 31% yr/yr compared to 23%. Key growth areas, including offline GMV and B2B GMV, also had strong quarters. Offline increased 29% yr/yr relative to a 23% increase in Q1 and B2B had another quarter of triple digit yr/yr growth at 101%.
• The GMV outperformance was driven by strength in North America, with particular strength among plus merchants and continued strength in Europe. The US, its largest market, had GMV and revenue accelerate in the quarter, which tells us its US consumer is in better shape than feared. Notably, management pointed out it did not see any drop in US demand, whether inbound, outbound or local.
• Its international GMV accelerated throughout the quarter, up 42% yr/yr compared to 31% in Q1. SHOP's international regions are contributing more to growth in each quarter, with Europe continuing to be a bright spot. Europe's GMV grew 49% yr/yr, a nice acceleration from 36% last quarter.
• Another positive was that SHOP had included a potential tariff impact in its guidance, but it did not materialize throughout the quarter. Additionally, its merchants have adapted well to the changing environment and continue to perform well. Management noted that recent AI initiatives, such as Sidekick, are helping merchants address current business challenges.

Overall, SHOP's results this quarter were impressive. While investors were likely expecting another strong quarter from SHOP, its results exceeded vaulted expectations. The GMV outperformance and the acceleration of many key metrics, specifically in the US, are encouraging to investors. In addition, management's commentary surrounding US demand and tariff impacts are also positives.