Shopify (SHOP) can maintain its current free cash flow margins even as it becomes a cash taxpayer, with employee headcount expected to remain steady at about 8,000, Oppenheimer said in a note Thursday.
Analysts, including Ken Wong, said that for fiscal 2026, they expect Shopify to sustain high-teens free cash flow margins. The lapping of prior headwinds, including promotional programs and PayPal (PYPL)-related impacts, and revenue from apps and themes, should help offset margin pressure from a growing payments mix.
The company's management also said that artificial intelligence investments are already reflected in gross margins and should not meaningfully weigh on profitability, they added.
Some investors see a risk that Q1 operating expenses could rise faster than expected, as Q1 typically has the highest customer acquisition costs. Management contextualized recent media reports about layoffs, saying that they reflect routine resource reallocation efforts, not a reduction in force, or RiF. Overall, Shopify's headcount is expected to remain stable at around 8,000 employees, the analysts said.
"We are confident in Shopify's multi-year growth potential. Shopify is a generational technology disruptor in a large and underpenetrated Digital Commerce opportunity," the analysts added.
Oppenheimer has an outperform rating and a $200 price target on Shopify.
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