second quarter 2026
Filed Aug 6, 2026Commerce Announces Second Quarter 2026 Financial Results Total ARR of $360.5 Million, an Increase of 2% Versus Prior Year. GAAP Net Income of $1.1 Million Versus Net Loss in Prior Year Period. Operating Cash Flow of $5.1 Million.
Profitability improved materially, with positive GAAP net income, GAAP income from operations and higher non-GAAP operating income, but total revenue grew only 0.1%, subscription solutions revenue declined 1%, gross margins declined, and operating cash flow and free cash flow were below the prior-year period.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueother | $84.5 million | – | up 0.1% |
| Total annual revenue run-rate (ARR)other | $360.5 million | – | up 2% |
| Subscription solutions revenueother | $63.1 million | – | down 1% |
| Gross Merchandise Volume (GMV)other | $8.8 billion | – | up 14% |
| Net Revenue Retention (NRR)other | 95.8% | – | – |
| Gross marginGAAP | 75% | – | – |
| Gross marginnon-GAAP | 76% | – | – |
| Income from operationsGAAP | $2.7 million | – | – |
| Operating incomenon-GAAP | $8.1 million | – | – |
| Operating marginnon-GAAP | 9.6% | – | – |
| Net incomeGAAP | $1.1 million | – | – |
| Net incomenon-GAAP | $6.5 million or 8% of revenue | – | – |
| Basic net income per shareGAAP | $0.01 | – | – |
| Diluted net income per shareGAAP | $0.01 | – | – |
| Basic net income per sharenon-GAAP | $0.08 | – | – |
| Diluted net income per sharenon-GAAP | $0.08 | – | – |
| GAAP basic weighted average shares outstandingGAAP | 82.6 million weighted average shares outstanding | – | – |
| GAAP diluted weighted average shares outstandingGAAP | 82.8 million weighted average shares outstanding | – | – |
| Non-GAAP basic weighted average shares outstandingnon-GAAP | 82.6 million shares of weighted average shares outstanding | – | – |
| Non-GAAP diluted weighted average shares outstandingnon-GAAP | 82.8 million shares of dilutive shares | – | – |
| Adjusted EBITDAnon-GAAP | $9.7 million | – | – |
| Net cash provided by operating activitiesother | $5.1 million | – | – |
| Free cash flowother | $0.1 million | – | – |
third quarter of 2026 and full year 2026 outlook
- NoteThird quarter of 2026 total revenue between $82.5 million and $85.5 million.
- NoteThird quarter of 2026 non-GAAP operating income between $3.3 million and $5.3 million.
- NoteFull year 2026 total revenue between $336.5 million and $344.5 million.
- NoteFull year 2026 non-GAAP operating income between $28.0 million and $34.0 million.
What drove it
- Gross Merchandise Volume (GMV) was $8.8 billion, up 14% compared to the three months ended June 30, 2025.
- Net Revenue Retention (NRR) was 95.8%, compared to 95.4% in the three months ended March 31, 2026 and 94.5% in the three months ended June 30, 2025.
- Revenue in EMEA grew by 12% compared to the three months ended June 30, 2025.
- Commerce announced Feedonomics Agentic Catalog Exports (ACE), a new enterprise service designed to help merchants make their product catalogs discoverable across emerging AI-powered and agent-driven shopping environments.
- The Company announced product enhancements spanning core platform advancements, new growth capabilities and emerging agentic commerce experiences.
Concerns
- Total revenue was $84.5 million, up 0.1% compared to the three months ended June 30, 2025.
- Subscription solutions revenue was $63.1 million, down 1% compared to the three months ended June 30, 2025.
- Revenue in the United States declined by 1% and revenue in APAC declined by 4% compared to the three months ended June 30, 2025.
- GAAP gross margin was 75%, compared to 79% in the three months ended June 30, 2025.
- Non-GAAP gross margin was 76%, compared to 80% in the three months ended June 30, 2025.
- Net cash provided by operating activities and free cash flow were lower than in the same period in 2025.
- Net Revenue Retention was 95.8%, below 100%.
What to watch
- Third-quarter total revenue guidance of between $82.5 million and $85.5 million.
- Third-quarter non-GAAP operating income guidance of between $3.3 million and $5.3 million.
- Full-year 2026 total revenue guidance of between $336.5 million and $344.5 million.
- Full-year 2026 non-GAAP operating income guidance of between $28.0 million and $34.0 million.
- Whether sequential improvement in net revenue retention continues after NRR reached 95.8%.
- Revenue trends in the United States and APAC, where revenue declined by 1% and 4%, respectively, compared to the three months ended June 30, 2025.
- The effect of investments in product intelligence, AI-driven commerce and open architecture on merchant outcomes and revenue growth.
Balance sheet and cash flow
- Cash, cash equivalents, restricted cash, and marketable securities totaled $157.5 million as of June 30, 2026.
- For the three months ended June 30, 2026, net cash provided by operating activities was $5.1 million, compared to $13.6 million provided by operating activities for the same period in 2025.
- Free cash flow of $0.1 million in the three months ended June 30, 2026, compared to $11.9 million in the three months ended June 30, 2025.
Analysis
Commerce reported a mixed second quarter. Total revenue was $84.5 million, up 0.1% from the prior-year period, while subscription solutions revenue was $63.1 million, down 1%. Total ARR was $360.5 million, up 2%, and GMV was $8.8 billion, up 14%. The contrast between GMV growth and limited reported revenue and ARR growth is central to the quarter's demand picture.
Retention improved sequentially and year over year. NRR was 95.8%, compared with 95.4% in the three months ended March 31, 2026 and 94.5% in the three months ended June 30, 2025. Geographic performance was uneven: revenue in EMEA grew by 12%, while revenue in the United States declined by 1% and APAC revenue declined by 4%. The company also highlighted ACE and broader product releases focused on AI-driven commerce, global selling, promotions, catalog management and checkout performance.
Profitability improved substantially versus the prior-year period. GAAP income from operations was $2.7 million compared with a loss of ($6.8) million, and GAAP net income was $1.1 million compared with a net loss of ($8.4) million. Non-GAAP operating income was $8.1 million compared with $4.8 million, non-GAAP operating margin was 9.6% compared with 5.7%, and adjusted EBITDA was $9.7 million compared with $5.7 million. Those gains occurred alongside lower gross margins: GAAP gross margin was 75% compared with 79%, and non-GAAP gross margin was 76% compared with 80%.
Cash generation was positive but below the prior-year period. Net cash provided by operating activities was $5.1 million compared with $13.6 million, while free cash flow was $0.1 million compared with $11.9 million. Cash, cash equivalents, restricted cash, and marketable securities totaled $157.5 million as of June 30, 2026. No capital-return activity or debt balance was reported in the provided text.
For the third quarter, Commerce expects total revenue between $82.5 million and $85.5 million and non-GAAP operating income between $3.3 million and $5.3 million. Full-year 2026 expectations are total revenue between $336.5 million and $344.5 million and non-GAAP operating income between $28.0 million and $34.0 million. The release does not provide GAAP income from operations guidance or operating cash flow guidance, and it states that the company cannot provide a reconciliation between forecasted non-GAAP operating income and comparable GAAP measures without unreasonable effort.
Management, verbatim
Our second quarter results reflect another period of disciplined execution, with revenue of $84.5 million, 14% GMV growth, positive GAAP net income for the second consecutive quarter, and a third consecutive quarter of sequential improvement in net revenue retention.
Travis Hess, CEO of Commerce
Not in the filing
stated, not guessed- Prior-quarter total revenue, ARR, subscription solutions revenue, GMV, gross margins, operating income, net income, EPS, adjusted EBITDA, operating cash flow and free cash flow.
- Dollar revenue by United States, EMEA and APAC geography.
- Reportable operating segment revenue and segment profitability.
- GAAP operating margin.
- GAAP and non-GAAP operating expense figures.
- Debt balance.
- Share repurchases, dividends and other capital-return activity.
- Prior guidance, which was not provided.
- Guidance for gross margin, operating expenses, tax rate, GAAP income from operations, GAAP net income, EPS, adjusted EBITDA and operating cash flow.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.