SHOP - Earnings call transcript Q4 2024

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Carrie Gillard

Good morning, and thank you for joining Shopify's Fourth Quarter 2024 Conference Call. I'm Carrie Gillard, Director of Investor Relations. And joining us today are Harley Finkelstein, Shopify's President; and Jeff Hoffmeister, our CFO. After their prepared remarks, we will open it up for your questions.

to statements and, call and therefore, could actual forward-looking based that uncertainties make those cause assumptions from on subject results will on today our are that projected. We materially differ to risks Undue statements. reliance forward-looking should placed these be not on law. obligation by undertake as no these except update to We revise or statements, required

You can this risks U.S. as as well assumptions, Canadian morning filings and in with uncertainties read and about regulators. in these release our our press

and financial are adjusted substitute measures, press to not speak non-GAAP Reconciliations X a GAAP are the release. also provided measures. financial We'll for which our between in

And dollars so all unless finally, amounts U.S. U.S. indicated. in are we report otherwise in discussed dollars, today

over the I'll With Harley. that, call to turn

Harley Finkelstein

Thanks, Carrie, good everyone. and morning,

excited just us X solidified achieved as how product We unified As would. by we close of we XXXX. leader another a marked X for commerce. maintain and speed executed year, I rapid for what in more with it's and additions, We by a the we positioning have was position as been XXXX said one -- honestly books. we discipline, we've yes, innovation our further never

we ago. $X the it hitting and the putting cash to of the delivering of few in more And We our in that an size rare annual margins, in shy and annual GMV Or the absolutely high in and at Xx we global a with more year growth rule $XXX of delivered ended scale on us and way, very air cash park, knocking really GMV free year. note, growth revenue just for flow margin of XX XX% billion and of achieving. are a QX the XX% revenue free years billion put XXXX, scale, continued just revenue X That is in X.Xx of coming XX% reach expand to nearly another than and revenue it XX%. flow out

We in success that deliver succeed. XXXX, was that our our flywheel the and specifically our the can did today. grow their other In belief merchants fuels and we success we helping Shopify throughout the because remains on QX, And own. behind by success words, like founded grow

making across to the pushing merchants billions corners From Shopify local of more why brands landing GMV, has Shopify. first global commitment become common are go-to Our sale is everywhere all entrepreneurship start-ups choosing their very platform to in commerce.

grow U.S. over I'm the e-commerce alone, market especially of Europe rapidly Japan. in and share to now like XX% proud to that share. the in is places we continue Shopify And

how U.S. American we than our quickly $X.X From a Let's XX%, touch on entire regional in closed crossing with up was XXXX. the which revenue, is North in out revenue billion XXXX. more company's revenue perspective,

a growth With America, driving growth to Our North international XX% X for exceeding presence. regions at year. years continued we the as achieving of to global consecutive expand we international rapid continue scale our are growth outperform rate XX%,

Shopify. And Monday Cyber while in in crossing on successful our selling full-year period to merchants' our offline In million finally, revenue we XX% XX% most compared the ever, $XXX $XX.X Black offline, also GMV year, to accelerated $XXX which to billion for merchants generating Friday, GMV billion cumulative last year includes processed grew GMV.

growth did Shopify. What's to while it our for these numbers deliver that even impressive about milestone we an more is incredible growth managing expense operating

our of our margin XX% year, operating $XXX the of $X billion on in expanded income to peak free up in XXXX. XXXX. top than Xx that, And for which XX%, flow cash surpassed higher from Our million is previous

Internet Pay essentially demonstrate massive of hit crossing hundreds from from of our $X Shop XXXX bought representing And XXX Shopify. of users. for a merchant's is store. XXXX. that some been we Shop major through cumulative that GPV mention We to GMV in in Shopify minute passed something with in milestone millions online a up Shopify X every now of million processed That take to want Over also have strength. XX% GPV, I milestones consumers trillion a users, the mark has Pay XX% X

strongest In years short with was XX believe to this is of I firmly a my Shopify, spectacular, version company date. the XXXX especially QX. of most durable powerhouse the nothing and the of

our sure absolutely the very that revenue I them. QX discipline, we This was laid Nothing entire more exactly if second an really year with pause business to clear we not clear. growth, delivered set very goals, across our performance as this as and incredible out This just flow XX% just well. strong. want may, products, crushed exceptionally our was company peak operational I XX% a a and then an XX% X cash XXXX quarter. growth free even matters we call On more than is And GMV and doing growth we importantly, out operating is here this. for team, we really, model would. We make margin. is and and And said at Shopify Shopify ago,

on though get get through the to bigger year we walk on even the quarterly we here a results, And are picture. times X to laser-focused

the Our next vision just goes way beyond quarter.

next anticipates a meet in merchants but durable building the what to need even XX, that XXX-year just committed company needs of XX doesn't the X, they'll our years. are We

really pleased up. how things shaping are are We with

is position strengthening. market Our

model profitability very levels them effective. are And Our want our be. where exactly to proving we operating is

If call away this it's walk from nothing else, with I hope you that.

I? Okay. Where was Okay.

incredible fine-tuned optimizing edges, we made performance, and together. improved and focused we a we the sure seamlessly have platform works everything we So We built. in on the fortifying XXXX, ton

are call, Now I this of time-saving past that while couple year. products many want we listen this most new too on hit a and features to on to there impressive the launched

Shopify to X,XXX on account customer complex larger merchants operations extensions to limits We focus ] programs engineers and features enable ease more like and and flexible added payment for of merchants. can make reducing and by touching efficient. building Shopify Plus, and [ our Shopify in communications customer options EU intuitiveness Balancer so increased enhanced even to use We improve more without enhanced Inbox, next-day Shopify's varying add APYs launched flow First, code. in loyalty and Credit We cash expanded AI friction. leveraging enhancing introducing Shopify We U.K. management. the Tax catalogs streamlining to attractive payouts

introduced multiple launched to In Orders. Pay out order and Store our offline countries, to Metafields Ship we Draft Bundle Customer Tap and business, features rolled management like robust and in Shopify

capturing acquisition effect We also help merchants Pay. by channels more at checkout powered Shop turn locations into the powerful network e-mails retail of their by

expanding additional X integrating and strides in taken by our POS we've Payments Internationally, to terminal big countries France.

a merchant-focused We merchants The the home engage easier highlighting and for richness discover feed, new also and diversity made of their customers. App to introduced brands. Shop it with

Google to We more on with Shop, also available made acquisition platforms plans, Shopify shop like merchants run Meta, new campaigns campaigns the customers and enabling to lapsed targeting and all shop-out. in incentives

of and for e-commerce our expanded relates outbound economy, global, it UPS market. the option standard Europe, services. enhanced tailored by We to U.S. As Japanese significantly our experience markets, team coverage across adding global go we've Japanese for first as helping comprehensive expanding launched multicurrency our and yen Shopify across labels introduced in parts buyer merchants the carrier select in payouts plans managed flagship express Rise, a

Payments certain into and across further method and Klarna Shopify Additionally, local increased for shipping as we market countries, the broadening merchants. a Europe and streamlining our we've local U.K., operations our for payment options integrated coverage our

partner greatest one Beyond is the of ecosystem. thriving strengths our our products,

Last one recognized widely Shopping in of beneficial first partnership. are We companies commerce a the search with fostering buyers the Roblox's through in our world we to the We launched integration Complexity, with partner. enabling first a with PayPal, year, at became Oracle long-term, merchants, a AI-powered U.S., for integrated expanded new mutually payments best find integration for new with our offering enterprise. collaboration and launched partnership ways YouTube

Additionally, year, benefiting $X we paid out merchants. for our over to the billion apps past partners have

apps XXXX, are built-for-Shopify to by XX,XXX also XXX our part Store, total more App the end our over that to bringing We new X,XXX program. over of including of than our apps the added

This all a Again, product is year. We us. in what accomplished year. this a of single innovation in differentiates single

that. for aspects XX-year and history. of most and all years just our in the of business are across one our the long balanced term, strongest We XXXX shows building It's

with our QX And from I'll wrap mind, overview that our of across XXXX. accomplishments in let you through drivers, me the of some our for growth then sharing by and an aims take up

into So QX. let's dive

Since on Shopify. brands brands. expanding merchant BarkBox all base earnings call, Champion, Westwing launched like larger, to our global include is last Shopify and high-volume its Reebok,

Dooney Reitmans, adding from continued Warner signing covering our also verticals, the Hunter We deepen verticals, newer largest like including behemoth, Goop, luxury David's handbag and &Burke, while brands and company, companies designer, renowned like health Uncommon of apparel across the Goods, our legendary portfolio names the and the and beauty Bridal, Douglas. accessories vertical to Group, to Music window Canadian

In over Europe, Karl also signed locations will global luxury we launch retailer, XX Lagerfeld, who Shopify. fashion with iconic point-of-sale

L.A. of XXX thrilled Newcastle Toronto football point-of-sale Most the impressive of recently, already beyond roster sports European some including the base and Shopify. as sports expanded our and just use unified an Bull Madrid the of biggest moving million FC soccer as to the Red their Maple Real and also the to Dallas well global join United, online. has Sacramento Lakers, and Leafs to welcoming include a our continue Miami powerhouses team fan Mavericks Heat, iconic We're system Kings, renowned and major such teams most NBA Shopify, over Barcelona, teams They of platform leveraging like with giants as commerce Racing.

mention Shopify our eSports course, Team own Rebellion. Liquid including Not within of to global and, teams, very

are You the playing the game. knocking just in And the own as can most MVP, the the valuable commerce of league beginning. park a we're platform. Clearly, out say in that of our is we

diversity this, got window business and to businesses, of even we from them powers scale. about isn't sports that largest Shopify music teams you any the have reliably compelling one top your proves covering This matter the to looking impressive. covered. choice Think labels industry, is No for all. Shopify It grow at major most just and quickly,

And commerce should But a this year, ago. Shopify merchant with operations the In addition about also Shopify agreement for its Shop time over has only consistently to choosing of into continue play we comprehensive then, this months more brands. believe their of since brands bringing QX trend to Everlane Pay point Shop our component Shop for them, And expanded partnership first was enterprise enterprise-level for up component. has for grown over the the entry component our for Everlane, XX out stronger. Pay Shopify. we've commerce ecosystem new compelling by to to the Take sign Pay become example. commerce offerings,

integration simple of a We expect may with that Shopify's Shop and gradually, products retailers enterprise Pay adopt more and time, more of and begin often over services.

Or our combined at here's team signed it commerce as in physical offline another Shop seeing and singular lead entire example. all go an I strategy unified up what Call merchants point were to that brands: Initially, can retail both can example their component they adopting e-commerce that this over component. shoe full and with very looking will sale. only conversations do, bring But brands a In our after platform. open go-to-market X Sperry online offering QX, XXX it offering of clearly that through to love large including to our working with businesses highlights locations Shopify, and our so us. we because option these decided of Pay each Aldo, Spring, our closely

Now most products, the becoming that's Shopify of shop trusted simpler, brand making all let's out delightful more dive for buyer-facing shopping everywhere. the commerce and into about

X by pillars: and Installments, Pay Shop Pay, main anchored Shop are products shop Shop the Sign-in Shop with Our App.

Let's talking Shop about start Pay. by

actively Pay button that of merchants estate available, much are believe so has checkout, that, it checkout. and both highly so more The valuable are out buyers. a during they their not seeking real Shop likely for to if We piece become buyers abandon

Pay's we very this Shop ability drive long merchants and have underscores our conversion understood. Now what is to powerful. behavior

from that merchant XX% stores. year of processed on quarter, Shopify billion up the last Pay next checkout Shop and of This accelerated $XX double GMV,

I sure make closest caught everybody want double option. that of the that: to that nearly next

component alone this GMV So by been in amongst Shop it's also further Barn generating XXXX, and component with no has Pay component, as very Arctic, strong level In commerce this Pay surprise that enterprise particular it. adopting and nearly surged from well-known brands. XXx interest expanding quarter, reach. like GameStop brands Boot brands for And our Bespoke Shop such major up Post Crocs the signed commerce

to Xx years in its alone, Shop App, across scale grew GMV continues has the Now the in-app-native past GMV. which active X and seen users

to and make Shop compelling as we fresh favorite checkout shopping launch XX% a mobile This destination improvements to through native the devices. allows browsing personalized events it Pay include web is to more on users curated even In up year their of their prior for shopping continued cart the App really buyers and sinking, category fact, the GMV an really, Shop feed, was complete cool. Recent more App. Shop versus find and which new brands abandoned

And merchants. first with celebrated locations new over location XXX quickly to and region X opening pop-up finally, BXB large and Asia first our multi-location our to Pacific with offline launched expanding our brands NYC Beams' Notably, grew we the SKIMS's of in and the XX%, store. thanks let's on offline on XXXX. turn before reach touch QX we focused largely focus effort GMV

retailers retail XX% our industry. & cost Additionally, highlighted is effectiveness. and Ernst cost in the really our a recognizing deal a enterprise of commerce, enables its point-of-sale of really, ownership point-of-sale physical leadership validated efficiencies. efficiency in big faster revenue and enhancing achieve operational recent point-of-sale that XX% E&Y This unified and best-in-class lower architecture, has both Shopify Shopify to implementation, for report market because Young

X In it is BXB, with XXX% Shopify GMV really year-over-year over crushing quarters straight of growth.

was QX GMV. an XXX% smashed records and all-time alone high with monthly a in fact, In November increase,

not by rankings, capabilities, robust XXXX. compared secured to that a spot Throughout the showcases more but we our In merchants. in Forrester our the than BXB year, Wave XXXX, also appeal only GMV recognition BXB top our enhances XXX% also a larger climbed to

brands reach and new our various welcomed base. customer also industries, We from expanding market

still BXB experiencing of a we for our strong highlights vast are opportunities accounts While portion small GMV, ahead. the the growth

on is and unified to offline platform, a solution aim way online, Our self-serve that And the that. between. Shopify well to purchasing in we powers make achieving our commerce offering premier everywhere wholesale are

Okay.

yes, the importantly, growth as of scaling for a and themes core strong we product by reminding particularly us guiding focus build of full continued the by success was on work the impact Toby now, for off So into innovation our capped built. and, But sets emphasizing actively of XXXX off already are an Every XXXX, aims and ahead. our we know commitment successes, performance, incredible all QX. ahead year, steam building foundations year, company, you have of directly our the last a continued to year year's year's rapid This operational merchants. most the strong the our

our committed and to continuing basics. a on the First, business. do front more we growing nailing we what remain And even as help make merchants. words, their our away for Shopify Everything user-friendly is result, and processes adds should center. simplification to focus means our merchants complexity for value. truly revenue and stripping focusing on In other with a This grow unnecessary build

redefining transformative the continue it technology of is we We've part it. potential This a embrace future; of just the to this. not is will Next, AI. anticipated

seamlessly in help already We deepen a merchants brand-new also launch, users AI our greater platform other productivity. Sidekick help scale not to transforming drive to into faster work plan we're and machines and capabilities where investment just together. larger but to Shopify and So merchants to

Our improve shift more decision-making. towards further software streamline efforts to to goal-oriented and operations help will

AI-driven but working as for new only with focus thinking on This also era in technology. the platform and of commerce today, relentless embracing focus ways on positions leader a choice cutting-edge us not of a as the

particularly in a greater reach plan Japan. entrepreneur to internationally from all market presence XXXX, our across the to countries to and various and we across enterprise, build and term. to continue for like remains expansion Europe share geographies, gain grow Additionally, long for our ability cornerstone In merchandises

leadership to as start online to continue defend our will the We place and to grow position an business.

business We as in strategic reinforcing the online shop, initiatives. by driving point-of-sale, areas our platform dedicated to position go-to-market BXB go-to are starting and marketing growth and targeted for and like supported further

across Internet. increasing and trusted our about not expect while our that merchants It's the to all the is strengthening working by become for expansion Shopify, gold buyers about This the just commerce from reliability standard footprint. trust

is create profile. to cash our all multiple focus to we And this strong plan operate We as growth to This of of possible the we than flexibility continue for continued a the to free margin in before to want allows flow commitment on disciplined investing further that investment backed long-term us. gains. efficiently areas us strategies rather see short-term by approach in just

our in In are cash is and that Okay. for position enterprise, markets like helping enabling areas solid We've To will path close we consistently offline key our these groundwork our and invest innovation. growth to laying growth future well demonstrated our clear free margins profitability. and this fuel and and commitment out, financial and to top the for XXXX, continue flow us are to executing. discipline, key success in as ongoing drivers platform line core international growth we

commerce the positioned record, evolves, proven our on innovation track of to to platform, thrive, landscape success our product Shopify relentless best we agile the is thanks believe firmly As merchants. focus and

entering driven era by are of in exciting shifts commerce technology transformative like an We AI.

We ready the competition this embrace confident to it continue our change are the brings, in to ability leading way. and

So year our merchants commerce to team, for our amazing to thank ecosystem to of and the entire better another all you partner making for Shopify everyone.

point, is let next. this ready for at over And we we are call excited evident the turn Jeff. is that, hope with I me As are and what to

Jeff Hoffmeister

where greater, or positive quarter exceptional growth we free and year. us, free quarter our year expanded XX% of of in and to of margins. logistics, XX% margin ninth sixth or top consecutive growth an was flow cash each when flow This delivered greater revenue for free forma pro excluding capping flow for QX delivering cash quarter XX% consecutive Harley. cash exceeding you, marks a XX%, double-digit of consecutive growth the of Thank sixth rate quarter straight GMV quarter seventh quarter our line

also but that expense later. achieved milestones We on more the some on significant side,

growth and delivering multiple disciplined expenses across types, Shopify's products, but on are We continued investing for merchant thoughtfully and sizes multiple all while multiple geographies being growth.

results. let's Now into our dive QX

outside our driven XX% combined region increased internationally led merchants, GMV This with of results continued the XX% North of to Africa our rate QX QX, platform, on GMV Europe, QX versus merchants, the same-store rate year-over-year. Plus of highest in East sales the that continued XX% by And our year-over-year, In growth QX. pandemic-driven XXXX. same-store in sale, strength marking from fourth, by America momentum growth GMV where we growth existing the had slightly XX% were of by in online, GMV The quarterly led number the our sales growth merchant since in GMV with acquisition. merchants from growth growth growth XX% was weighted growing Middle and point region new primarily

beauty, In garden and QX terms verticals, from food and notable and home industry of accessories. apparel health beverage, growth and saw and

from notable in for few us and supply. and pet We animals but also had QX strength interesting like games verticals toys a and smaller

QX drivers $X.X stemming key and the to from $X.X merchants platform revenue Payments full-year the QX. degree, lesser were revenue number and, billion. our a variable hit and penetration, mentioned, growth platform XX% up just growth for which The year-over-year, apps was of on to the in that and up increased XX% in and XX% Subscription was Solutions billion, revenue GMV I growth domains, fees

than of our by to versus driven our expected. merchant. products geographies, available and the was percentage in of revenue More so Canada per relative outperformance are revenue in higher U.S. The North larger representing America America GMV North other brings outperformance outlook a

the penetration XX% on driven QX last the Plus, merchants the increased GMV revenue which and XX% of increasing on quarter's performance that's strength the of higher penetration Payments, to $XX GMV was across QX, year-over-year, quarter. in XX% Payments. Shopify than QX Several and volume, drove year, Shop gross Shopify of globe XXXX. merchants increased an of of in XX% XX% primarily of Payments Shopify was compared payments Shopify more which and the Pay, factors GPV of percentage higher processed in in greater use Merchant adopting of Payments, Solutions are including by GMV billion strong who continued

quarter As a percentage of reminder, which QX a revenue from is sees traditionally the Payments. highest

was XXXX. from penetration up GPV year, the in XX% XX%, For

to driven Subscription merchants Solutions by an higher platform a Plus variable the of up over QX degree, growth change. revenue fees increase benefit lesser of last The from was pricing year. platform was on number in and XX% the our and,

share continue represented with execute market. increase to with MRR X both scale, commerce impressive QX of Plus categories quarter, the driving of was in year-over-year our continued consistent MRR all an at We of and growth of standard, seeing an commerce for each Plus QX. the in XX% and XX% offline, up the number merchants. overall with

QX, X-month growth, in Important trial our shifting to based a X-month paid trials. our rollouts, change previously standard to was on timing QX This certain paid of markets and during particularly note into a that versus we headwind MRR QX we our impact QX. predominantly started Moreover, the expect to it to offline. and

durability, from always to are giving at trials on trial GMV achieved enabling clear to for over merchants Shopify we of for cost it through they specifically, became likelihood were various on time suggested that our focusing did quickly term. setting the merchants how also paid lengths merchant know, approach milestones. came This greater merchant success long the point platform accelerating more our term. our that With with GMV themselves regarding certain the experiment and that trials, testing data little long faster, X-month a bit the increase success to respect up to the acquisition, revenue but we yielded you As iterating

results long-term X-month For to Therefore, nearly merchants or geographies. every moving of business we trial the geography yielded are trials in lens X-month our Shopify. most for and type, merchant better like

acquisition of tools. As one a reminder, our paid trials are just merchant

Solutions fourth cloud profit part as year-over-year, higher for in higher in and have QX full year XX% XX.X%, the gross year. infrastructure expect do we $X.X gross to this volume the up to XX% to billion XX.X% hosting to impact due But billion. quarter. $X.X our much support Subscription an gross quarter, compared prior mainly forward. margin costs, up profit was not and going was to of our was decrease The was

Merchant from gross the by margin in gross was certain which as these primarily driven XXXX. noncash compared QX headwinds other by XX.X% products partnerships of the Markets. previously known selling, strength XX.X%, and partnership was to lower carry from expanded with Merchant PayPal. Solutions high our impact margin Partially was QX The in decrease revenues a international offsetting Solutions led in

turn significant down X of to let's the Now and operating we further the That years, provided. excluding to XXXX, of in expenses, with to estate expenses. were was outlook in QX, Reflecting went we've on XX% past operating real right this line just QX the charge, QX XXXX revenues. In made strides. XX% which XX% down

way. come a long We have

we leverage expense sales largely management due QX, operating marketing each of R&D, and For achieved to of G&A, and in headcount. disciplined our

X,XXX As end XXXX. X,XXX from at down the of approximately of XXXX, under our headcount XX, employees, just was December

consistent range. higher for Important a this that both and simply and a within In for the that. volumes our the we are as capital each year. is that to losses, remained percentage saw smallest well operating increase a does note involve we of payments This loss was our on which capital an not outgrowth Payments and growing have revenue function ratios of and of businesses. income fourth X% a from X% and the categories previous of headcount, slight increase our to X expense loans transaction statement,

of and thank all my the on take discipline colleagues growth of to a I we leveraging the headcount moment invest want in key hard they're automation, and and to all constant innovation exercising while for continue opportunities. to work

QX XX%. milestones year, some going X Operating a and since remarks, for the of quarter that time I Operating opening XX% the revenues. hit my margin of public year first were for for XX%, operating for we margin double peak expenses for to reached side. to decade in year our XX% XXXX. down QX the the milestones the previous the were expenses In of was down In on And Operating for referenced expense ago. nearly revenues.

in at profitability metrics while public that growth scale. and, achieved levels have maintaining accelerating since going in these All of represent strongest the XXXX, instances, all we many

was or our margin coming QX, $XXX our free million past was quarter compensation the We revenue, in primarily of year, better delivering increases QX revenue in and Stock-based delivered than XX% in outperformance. flow XX% cash million both $XXX each outlook last due free quarter. and flow for free QX, quarter. XX% in this XX% QX flow dollars cash in XX% cash successive to

achieving For cash free year, margin the cash free year. billion, $X.X flow for the of up was XX%, flow XX% a

the in Our of flow and these throughout I achieve manifestation the but free invest to strength allows work are levels our flow XXXX still, business attractive importantly, cash cash hard us the future. XXXX. the margins, believe of free

term. level and we future thing delivers the impacting that simply maintain we enterprise driving and key a near we flow immense opportunities we areas platform, right of We BXB, can free opposed to the without clear, for It's offline, margins see be growth. To profitability in ahead, like the do but further in proud as our core with are a growth international, company. plan to to cash investing are higher prioritize believe

drive QX, XXXX outlook to year Subscription for out. diving call Before we into years strength these to over adoption offer outperformance of number the and of of theme that merchant growing normal recurring the our for offerings. the payments of the growing the quicker Solutions dynamic ability full of Merchant been one product, has Solutions expect Solutions. Merchant This our we additional Merchant pattern to products Solutions to A year, our than return

this Two year. Solutions Subscription things to impact are growth expected

trials. to move the X-month First,

Plus. Solutions recently for Subscription Standard from plans our our and the pricing revenue benefited Second, in changes

we Subscription pricing expect While changes we this to always this examine expect to to pricing across growth products Solutions and, benefit substantive geographies, don't have year and therefore, normalize.

for With this to backdrop, QX. expectations let's our move

by growth our QX revenue driven noting mid-XXs expect that seasonally quarter. factors that revenue the strongest our XXXX, many supported specifically of year-over-year the same to is We in QX be strong growth in

profit. gross to Turning

that versus impact in of XXs. profit mentioned We driven and mentioned, QX rates dollars X QX of to growth Merchant the of growth is that and continued expect grow dynamics Subscription shift I our revenues. regarding of the strength Plus by The Solutions the just I mix the Solutions margin low noncash gross enterprise, gross gross year-over-year the between XXXX and accounting Payments, lower PayPal and the including margins,

We I continue our last to XXX XXX to The from leverage improvement operating XX% in expect QX, into revenues, year. detailed will a QX. be that expenses of as QX that earlier, factors point expense XX% reflecting contributed to our expected basis QX are to

committed to opportunities but continue to and in and R&D investing finding to including support sure We areas to enterprise, marketing we'll I leverage, key our that talent invest offline growth in for want international. notably, are are operating we make

is $XXX million be QX. Stock-based compensation in to expected

in we believe our the as last in into X years, I XXXX we strikes we and investing Finally, for we've thereby, margin. GMV right best that cash Despite It our mentioned have typically revenue this, and into note building which to free on margin flow free expanded mid-teens, margins move affects profitability scale as quarter, the be free lowest the QX is flow significantly our and, year. from cash between important future. margin QX margin. today the our our our while expect flow over profile last cash our we that cash naturally to the cash call, the balance last XXXX, merchants XX% still is flow free achieved free products flow and up in

ahead. in profitability to than of aim further for simply many the level growth rather optimizing near flow cash compelling maintain this are too term. There margin expansion opportunities We

call And with over to back questions. that, your the for Carrie turn I'll

Carrie Gillard

Thanks, Jeff.

Harley call for now back some the before We turning questions to [Operator final your Instructions] take words. will

comes question Andrew Wells first at Our from Fargo. Bauch

Andrew Bauch

results here. looks of sort with through roughly we It expansion. the can free margin the remainder flow cash start for year? way the just the of guide expansion of cash Maybe move first for to basis flow as Is kind about right the margin points of you're think Nice free the quarter. this calling XXX like we

theme. key marketing investing what of we these performance if Is the investments new you're you're year a of with And making now lot consistent for about was it then that think last the in a opportunities? was kind

Jeff Hoffmeister

with that. start I'll Yes,

a As free of cash to we also about level back terms of get think in And it go I'd Andrew, believe gotten invest the I overall accomplish. we've and any profitability quarter. allows quarterly free what margins, how to this it. given looking of the to back differentials the the want future but the made, relates cash to which I'm flow to flow, we level not we us to maintain very obviously into good in into aspect comments

comments it's some cash it I free the quarterly to So as that. the I evolution made in -- past flows. relates by of stand

obviously you our into of of know, which revenue, translates our is is into quarter As terms then terms largest -- GMV, in GMV cash dollars, QX then margin. down just just translates traditionally flow in the which free

at But right the in feels these how go about I we the aggregate, in we're think back again, on like level. my margins, terms to perspective this of

that on performing of marketing, our marketing about still, performance numerous spend. to majority relates the talked paybacks marketing it obviously They're very the on side, focused as are the continues We calls. on well. to we've And be

be As always you always testing, analyzing. best we're could marketing We're know, spend that in there. of at we're strategy But nothing's work. our changed incremental dollar where put always to looking

Carrie Gillard

will Jeff question next from at Our Seaport Cantwell come Research.

Jeffrey Cantwell

me? Can you hear

Jeff Hoffmeister

Yes.

Jeffrey Cantwell

be Obviously, should like It it than about we given some the on higher Solutions' platform. But this just take take in was rate momentum looks sounds higher Maybe seeing across be a Merchant to you're your think going there. expected the like Merchant Solutions we basis, there clarify. seasonality a contemplating all there's rate year-over-year maybe How that in should quarter. to Great. QX?

you're XXs. gross low like looks it then the on guiding And margins,

much get moving you a ] said enterprise? I the just upmarket bit, versus PayPal the of that If little guide, how [ growth on might you success the what's think due to there accounting. revenue delta to

to to trying go-forward. on just clarity get more So that the about think

Jeff Hoffmeister

Yes.

is keep products additional out that's, And the of to growth the As well you've which as strength got rate, impact we're payments if as to Merchant pro-forming over obviously, look going year-over-year it Solutions logistics. on obviously, the all you it of the 'XX and adding. Capital like what relates Merchant to in basis, Solutions products Tax attach and 'XX, the the continued mind and in is a at

actually the terms rate. would that strength in Merchant add so attach you're And Solutions seeing some additional of on what

all And see of come will reflective us obviously of for will you from products in we terms is attach what will their and the drives as attach drive there. Merchant rate, output. our continue We're within Solutions, we that be that in an more for great in So we've what past, to obviously the that product to the and revenue to GMV. that, of the again trying recognizing about merchants, rate talked build monetization success realize obviously in

alludes, the we're But -- side. Merchant in yes, your performing as we're well question Solutions

margins for terms that from year-over-year rates I and normalize. of Part on of obviously, this I Subscription the just As of Solutions to I through a relative QX, part half will of on and there. it which alluded Solutions first talked will gross an are impact headwinds play be the trials which obviously, growth to, paid in impact a perspective, gross and to is the guidance trends will what that year, in alluded of the but as we're relates have Merchant at have the seeing for that some year, margin, function, then something the what of terms will

are what primary So I Those in key I anything don't drivers. there's the think beyond the covered call.

Carrie Gillard

at from Craig Maurer Financial comes question next Technology Partners. Our

Craig Maurer

think your should wanted should understand the impacts that play? about tariffs I come de First, include minimis into and that how how exemption business we and to

help the advertisement or understand AI you moderation wanted around just content controversy place? listing considering to the can I that Super with Bowl Second, took how

Harley Finkelstein

question. with there start that I'll

businesses our the start question created. of account the of They sort think alone in jobs sort and midsize border. across something small all and merchants de tariffs minimis almost are with X/X job Look, new of billions for the just I of creation. general. move like Let's responsible And for all

out we and are entrepreneurs protect what for business to every And is impact So the but obviously, tariffs empower livelihoods with real care carving we especially, Shopify themselves. can, underdogs. every that day we obviously, we about try do try to

we've anything, I new now product perspective. a tariffs mean work right to filters. it's as we and display minimis, using we whether App, actually during search can their duties or And get checkout. from seen from can away. shop Consumers easily all soon de did Shop merchants as collect usually So that country home

comes of in business down these crucial trade. at it shipments think larger taxes By think, they when from are minimis. to minimis mean I to specifically scale. small duties, costs de entrepreneurs, sort allow that protections And for and low-value engage and exempting compete much we like de keep I a

easier. than really rather de think things lot digital make custom duty these try collection streamline I a countries and So minimis, processes improved to to eliminating

Carrie Gillard

Okay. And ISI. our Mahaney next Mark come Evercore from question at will

Mark Stephen Mahaney

please. of was Okay. or headcount fourth Two Great. -- questions, sort you Headcount growth, declined quarter. in out, pointed the

how headcount Just you should X? Do enough that we going think next operational relatively for do going growth you the about forward efficiencies Shopify think got modest for you've or forward? expect year headcount

you've to take your on the pricing you the X, you you're look last pricing creating that over from more year your or actions allow drawn the confidence that and back taken value for customers time from And time if will that that of then level you've to actions? lessons the

Harley Finkelstein

and So Jeff, of kind jump maybe you I'll in. start can there,

we across to grow headcount making focused only every just take products more main months Shopify. shape It's merchant-based Solutions since us. we which this area. really, and Merchant with our both like Obviously, shape On GMV, without our about revenue, been surface focus us business, XX on we now to of growing now Shopify, something sell Shopify at and think also we're headcount sure online a the our where all fairly help on size we the of sort very they headcount the thing, the really important maybe that's of We of not we sure single matters. can point we entrepreneurs making to so that the new is talked flat. meaningfully, merchants, of But about quest we continue like way think enterprise but sell do leave

product finished component turning and merchants I'll are least even commerce introducing of to more every value not to your retailer we personal to of Shopify around terms XX major that your is initially them, to including the and how is best them. I the brand really mentioned Shopify we say at to we That want figure now conversation comes parts at planet companies to the simply we've and particularly noticed related started that every us to out of these seeing that in question themselves merchants with Aldo, for enterprise Shopify like the a the the pretty still What around that or deal offer much in component when Shopify, with into months to then happening can coming level. was think of product this In Shopify. it town, another seeing if previously, and entire on work coming, the looking ended believe They Everlane, ago. or is the cool from question and experience, up -- And more eventually Shopify, example was just enterprise. entirely one learn for to where but I on unified come January, come. we about NRF is commerce example,

the long them want they all and players, winning large for increase to And think like also one, I they that matter high time still value. flywheel This some room we're X there other But Certainly, pricing. creating this immediately. is, is to town. incredibly the future-proof really product, us Shopify product. the sell some is things is these no value. to a means are right price can. deal helpful it's to it's Relative in which term, the where that elasticity incredible right seem merchants and But enterprise the doesn't best the now,

people keep plan you little ratio. one previous like said, we an saw it's -- pricing, that lower to that, on on while being we're calls, are very comes incredible pricing it back that, pricing of I ago, very that from driving wasn't our $XX when we to our great And to even in at And mentioned of driving pushback few still us about plans, a going very We -- that. merchants we that saw of end had little still But not changing calls $XX. the tells value. earning price-to-value which X amount earnings to our think feel little our again, also basic

Carrie Gillard

Our Sills next America. Bank Brad of comes at question from

Bradley Sills

Wonderful. that which of for presence? I these making Any marketing investing wanted to geographies? kind regions, And just you how some there? Could like some push? new setup a more there. you're investment ask color exciting which you're opportunity on countries of a is about also, you're the direct what in Is us international. it experts, sense It give bigger making expansion sounds

Harley Finkelstein

or and of international Yes, growth and countries or Netherlands. I'm for retailers, expansion EMEA American Shopify. And Europe you saw Look, Paris It outpaced GMV or delivered East question. Running a QX Shopify to Omni Barcelona seeing FC which Karl is obviously, a asked glad for or by now. XX% On lot Luxottica was and also like very the XX% large it's Germany, particular, Africa, France, all was QX the whether driver year-over-year. grew XXXX. in Middle in come certainly a GMV in We're of North GMV. That and led brands, key lot growth QX, U.K., in In you large Lagerfeld particular, of

Klarna countries. like it's investing like we've things keep a in, of in Shopify.com, been an rolling shipping we new as frictionless local a drive compliance So that Shopify point-of-sale payment is more method. with localization sign-up that out improvements, adoption, product perspective, available from certainly, area now local things There's integrated methods to

well. Obviously, So it. agencies comes it from integrating of the and your to a places available and as that we're about perspective, with point some partners, product more Shopify making to

area And our that's to work America. opportunity. on we're that, on you where of retail, U.S. now a share. But of made growing that. XX% outside X%. speak, -- And around a continue less XX% international global base. think are look merchant just currently market at we look at I mentioned have over call we're we in you the base We've of of huge merchant if of North we'll terms as We ton headway an if our than now e-commerce,

a to online scale grow just across so but have room also We on us much for offline. global not

Jeff Hoffmeister

Europe, only prior Britain, in it's Brad, lot those we've strength bunch Europe. narrowly to I'd Denmark, France, very to a All Great very, perform all Germany, of continue the well. in calls the talked Western of specifically whether Yes, most the countries a that, there the point continues, Italy, add about Netherlands,

between And getting growth rates multiple -- to same-store to this a for call, of the what we're look at seeing grow balance at and same-store in in growth, sales in terms on rates continue the terms sales acquisition, of made we're what's of I when in the the growing allusion new growth versus growth e-commerce merchant you we those each countries.

product job So we we're the good doing market side. a really on think

Carrie Gillard

Borges of comes question Sachs. Goldman Gabriela next Our from

Gabriela Borges

talk up to of than excited some that in momentum have product on at Maybe little this enterprise that be? continuation incumbents a from on trend. I being know and help in sticky of And given milestone on comments lift the or shift NRF. share on wanted follow you we over momentum in trend anecdotes indicators a rather change standpoint bit other the you're roadmap a internal highlight enterprise you'd you enterprise can a the anything about your a just any sometimes that how Harley, about the can

Harley Finkelstein

mean were sort as where a of stay and want to now in into Shopify. come question. Music to a sort cost though sort or by reasonable good Hunter towards. Bridal, at for innovation, are Shopify signed for a Look, they're are that brands looking of brands they They And of for these they software Even are that all that system seeing is team looking commerce in David's especially were the Crocs, legacy with themselves or quarter. they comes It's example, all what engineering rate, we're locked total they're that Thanks, historically things not or Warner Gabriela. like in-house some massive some platform. have or is walking companies new Yes. them duck-taped. be But of Douglas is didn't I had effectively that, either there, built to ownership of management did these what

where like XX And to those launch, in they take record Reebok launched or XX see once quarter, it to it's becoming doesn't launched speed, Westwing launch, it at then BarkBox brands takes past to or incredibly brands where and the compelling. months months the launch, are this that X

migrating at enterprise think is I the to the high But level, Shopify.

fits about we things them. CCS. Hydrogen. these think, If If a want we're If that. seeing merchants want we're created want have have And to all, specific component, of that's great bunch one that of the optimistic for one is the I they really we was we did they suites, they something a some we our fact size migrate Plus. headless, -- have we think component now full really we commerce of options

you on Oracles their Shopify WPPs, of partners, the to agency around building enterprise existing layer When now and large the working. these practices IBMs, customers, large all top the of that the these the ISVs world, who are it's delivering L the Cattertons, EYs, really

NRF saying people and thing on the of you get absolutely were how it'd board prime at to how excited a a go-to-market so -- at Shopify of largest are what the be the show, -- and amount that that one to if really are Enterprise really NRF, cloud, and enterprise. incredible peek I is win had sort saying now and time on I So understands clouds. pick product Shopify insight And team board and to ready an of think one of think of what people about, combination that for it's very I'm to the the strong I

the things way. think locations, us all incredible fact I we BXB, to or point-of-sale They exceptional value. allows for coming like And like everywhere. can retail coming in They they're physical product. it's of sell really new So this example, they like add as X,XXX up the our because to it's that -- together

Carrie Gillard

next Our comes Benchmark. question at from Mark Zgutowicz

Mark Zgutowicz

quite accelerated just 'XX from Thanks, its relative cohort. 'XX you to GMV contribution the Carrie. to your in cohort and in what saw Jeff, noticing accelerated a into that XX-K and of terms analysis bit the 'XX Harley glancing cohort at your

to related X So that. questions

you attribute this what imply year? and what sort of acceleration into cohort of Sort that that to terms the in 'XX might of

Jeff Hoffmeister

and lot that on a accelerate thinking more of and those obviously, Mark, solutions evolve internally something therefore how time, as spend the is about. view definitely and lot spend over We about Yes. adds from time. thinking we time our of And a cohort merchant platform, our definitely they stay our take a of success, more

I to don't for think there's a don't there's your into whole what whole lot question. to I think that read means a lot 'XX.

go back to you lot sale, a that BXB, Tax a got introduce. as roughly out long initiatives we up years, for know, you enterprise. time. as running, point started had We'd 'XX, things Capital think of really We the of on there there I was X and

the you -- about product think can I that's time fit Europe. well, in market we got better say good when arguably even product

those a of a of part have So seen over we the I of what lot ramping you've Solutions. of last Merchant couple than in is years things think other

whether 'XX while So our more we've I think what merchants can want geography the be use I things however starting of want they and side they're or do to predict on the they're done successful. the of really in, which it. online expanding don't to do sale, Whatever more necessarily side, that great offline the job for point means to a what that is cohort,

obviously applaud metrics as something definitely we well. So you, point. looking vantage to that I give to I but just it at any specific that's have an it's our trend you encouraging from don't because think about

Carrie Gillard

Treiber Paul from comes question RBC next Capital. at Our

Paul Treiber

AI in regards use question a of and Just internally. to the AI

or you you've that the made Over year having significant been gains the the impact? last of it productivity then And what magnitude has investments. so, are Where seeing operationally seen? most you

Harley Finkelstein

earlier got that a I think to question Yes. address. the don't I about was able

of now. one let this net Shopify So beneficiaries AI in be era. I actually major very will that new do right the me think much

long-term think foster recognized the we widely I of best that one are partnership. companies

or direct we results search it using when AI, internally, our whether their product perplexity, we APIs we're a product as where the partnership comes we in across help we're where powering are it -- incredible so to with OpenAI it's catalog us of as Shopify really best now to set can. have leveraging And

of Now we X sort in think ways. about it

a more more first our things merchant do The way how make faster, successful, is we can get from perspective, effectively. merchants to them

started, these scaling Media available when So every their are Editor Shopify And Sidekick things just are Search, Sidekick, are now-- also or or things like getting that things Semantic should from only merchant that want those not Shopify. Inbox, business. but they're

So get the of focus an the them only mundane they trying easy And things more that's aspect I bring. think on Shopify make some merchants and far tasks that will can to important we're do -- what to more can to only of do.

happening. You'll see more of that

-- I ML think really Shopify talent headcount overall from our good people Obviously, while we a we many keeping the talent new to here and having perspective, as mean, from CTO, and more is keep can Mikhail reputation his come adding leading to more industries, our some AI even stable.

our having [ AI. a conversations, can high-quality with configuring domain think that that actually interesting, or whereas a ] use organization, gets a where our developers be can things user is password and really issue, you support our by because team can conversations C low-quality this only merchants, now more we elegantly we or make also, really to it however, very name support handled not Internally, like effective, a lot name of about ensure it but is if

use Shopify. but become unlock AI. also power to whether for merchants unprecedented harness merchants we And successful, how that are uniquely for how more So or positioned, will internally it I help our it's the of our we capabilities think, we

Carrie Gillard

Sebastian And Baird. from our final will at come question Colin

Colin Sebastian

what's things of opportunity. like maybe are larger traction. you the for and the You're investing guess, Shopify Shop that to buyer-facing using combined base shoppers a It et here ultimate of like add like maybe shopping products, the the vision highlighted I functionality seems Appreciate lot opportunities I a of Harley, use App, platform? Pay, app. cetera. mean, of lots seeing cards, Shop there increasing in the

ahead? any of a plans nice and lot a lot of you And generating a have comments so allocation capital sort cash then, balance, flexibility cash have year I of mean the Jeff, you're there. on for

Harley Finkelstein

QX I XX%. as mentioned, GMV Shop Look, App up like was

favorite making devices. their even destination we're an compelling think mobile to buyers for So I find brands more their on

consumers to something goal the I it's out time more. think there to side about of buyer-facing and Shopify. across better goal Shop And enjoyable. way make hear that and that and We're The becoming Internet. are clearly, commerce check And for and there. The more the will trust as and we Pay the it's much consumers though all is shopping see purple recognize if who -- more that to will the invest on more comprehensive they going button it get the suite in better, gold Shopify drive it. commerce. products security really the is to of become of continue the all think simpler And increase center Shop's Shop only is I drive

want. if traffic the an is helps And you Shop only mean, they owned them drive on I that can something merchants remember, way channel for is And get Shopify. you're that

investment continued customers. but you'll you Shopify. well, new you'll authentic brands, see unleashing like get their And these can engage the -- in Shop also to really as high-quality using see come high-quality something to if again, ways So App you're new for deep with only brands things new personalization, connections merchants it's with that

Jeff Hoffmeister

examine capital. the sense to also think on I various that of terms actively, of course, of the we of there it which well we your the healthy discuss And amount cash percentage question, the is, a everything return daily that's stewards spend that of definitely still and overall. importance believe have to a in both then, the I something on allocation as a behind we And of topic on allocation both obviously, now marketing, decisions good balance, that we makes capital our absolute cash coming. regarding about capital internally And -- benchmarks cushion. Colin, capital to, recognize R&D as being said, And right Yes. comment, is

mind outstanding, matures which convert bit later have year. this under a that $X little we the It's billion. in Keep

[ other We source X Those talent have depending are have acquisitions, and done, year, acqui count our them, seen you done, of the for us. but last as you've of hires calls, in relatively tuck-in ]. we've some roughly AI last important how on all small, talent those an been

things to strategic -- that's so want in partners. continue And something which investments we our to do, and make

announce very AI but on cash, continually judicious -- to that and today we We important have proactive big have return And we any plans things to These relates thoughtful don't want we for to any as clear, to on be acquisitions. don't thinking thoughtful about and but recognize as any don't tactical, I been the be it how have, have hires. is, capital.

you. it let But me to let turn Harley, me, back

Harley Finkelstein

Yes.

just second off close me take we here. a of before Let sort

First of to everyone things. few for a all, wanted for joining thanks I call. the mention just

have making when cash Since inception, growth. business revenue is possible. successful quarter laser-focused actually better remind think I said, Jeff be I our that of the that, the consecutive as on of to well, as most quarter of results financial XX% do story consecutive our rock-solid sixth it's And that margins, want follow. quarter incredibly everyone model story beauty our been us growth remarkable have just of that: free our And we of merchants the seen double-digit it And following was was 'XX you of over mission, seventh it's as GMV is sixth a quite growth. and flow example execution XX%, QX and simple. Its that durable or

discipline. you but So we that I indeed with company, incredible operational are can we think see operate a this also growth

of all the we're this the grow to some best is take are seeing industry we of results in quarter, taking share grow. we in Shopify And of continues also delivering, you're a think, pie, part to of just not market quarter strongest after that pie us that larger amazing get But itself. software. more I the And piece the

we And on I to think that. great we'll emblematic was pretty of deliver that. have confidence continue this

best us version want years, I've just ahead. can improving in keep is year each me, to to and since hired I you Toby So of well, XX seen this and expect Shopify every that the say

So the building call. Thank our now for thank back And for merchants. you. you all joining we go to

Carrie Gillard

for concludes that, call. quarter our Thanks this joining XXXX With fourth conference us.

Shopify (SHOP) 11 Feb 252024 Q4 Earnings call transcript