Shopify (SHOP) 27 Jul 222022 Q2 Earnings call transcript

Good morning, and thank you for joining Shopify's Second Quarter 2022 Conference Call. Tobi Lutke, Shopify's CEO; Harley Finkelstein, Shopify's President; and Amy Shapero, our CFO, are with us this morning. After their prepared remarks, we will open it up for your questions.

We will make forward-looking statements on our call today that are based on assumptions, and therefore, subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements except as required by law.

these morning and our as U.S. about press in filings read this release well can assumptions, uncertainties risks our with You as in Canadian and regulators. and measures, We'll measures. are adjusted speak substitute financial also non-GAAP GAAP to measures not financial a for which the in the our release. the of tables X are between at press Reconciliations end we finally, U.S. And in report so amounts discussed all today dollars, are in U.S. otherwise indicated. dollars unless call I to Harley. turn the over that, With

merchants journey Thanks, Katie, that extraordinary continues. and on been The good we with morning, have everyone.

we mission-critical continue future GMV, for results, grow prepare seen our value merchants and QX As Anticipating needs in well base to and reason key to choose merchant our their them a future. the merchants tools us. more is deliver via our that

the future years, get Our do not XXX% we right last few multichannel prepared pivots platform has the but the them of time. for of the

win. now, been some is bets merchants always demand So of big a company we talk. has This strategic real makes the our for us. Shopify that how

a spend During has. we that much pace than would at e-commerce the a made disproportionately it favor higher pandemic, bet retail

of Our share channel permanently ahead. that that travel than the retail, mix, leap the e-commerce would belief physical through was rather dollars

have forward for future. company rapidly at we that turned out efforts stepped leap, as digital we expanded to scale that if for meet and know did differently. the now, to Fast true, the As we would the came things built accordingly. we we know the couldn't but company We our sure to time, have prediction the

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with start relationships. building buyer Let's

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Our and becoming operations, Point-of-Sale point choice. sale world-class quickly merchants of offering, a of online is their Retail off-line of seamless which view gives the

the QX grew quarter, considering implemented top-tier remarkable, online our brands, began to after During and XX% Pro, take This QX reopening the growth lockdowns. solution Beyond ever our Perse adding second best Our Pro for locations. Yoga, their including Point-of-Sale June merchants month offline James Place the was year-over-year GMV off and year share. as growth more was last even a it world COVID in the year-over-year XXX% we of continue as market in achieved is of for GMV

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digital across consumers opportunity Another brands with with services. looking and goods connect purchase lies to significant

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integrations as up GMV making where are. these to their expect continue buyers integrate while show growth more our channels enabling through with stickier to We us, merchants platform their

we last week, just Shopping announced Twitter announced late in June. instance, For And YouTube. we

process. difference. audience they meaningful product in Audiences A It's directly channel conversion while that YouTube product choice, selects products a are their ad new and Picture on products videos combined in rates to buyers allows merchant viewers to finding add best leading are which shopping check Shopify buyers audiences algorithms in merchant essentially seeing curated ad Shopify new a they brand's them in, Our Plus new a Merchants exported shoppers all, tab can And show so first merchants we Instagram. and of. By quickly fans. their has new that list increase power They store a securely with high-intent is of launching helps the Plus when below of out that tapping and find their the Shopify a YouTube an with on-demand sell with want Facebook are of Picture, more experience a who return the Machine have far is network Pay. stream round learning and merchant's stream. for a customers. live still live to and It's to channel to a during spend. most tailored makes great opt merchants product, for watching YouTube build can tool find of the out entire X-step of and easier to merchants data a selection out the Shop to audience tag likely by that real checking list targeting

BlenderBottle, merchant, as increasing its as has access ad early high spend return Xx. example, seen on For

should off and a to is to Shopify Audiences XX% in on this, paid what its excited uptick acquisition of decline return attributed XX% merchant, revenue promising rates, very ahead click-through see A selling a set merchants, helping up, it merchants especially selling holiday in spend L'AMARUE, a XX% season. All new and simple as start, for from cross-border acquisition to a selling International international their go fast-growing be saw X.Xx store. campaign, and targeted Another by manage single a as Shopify its customer Audiences. do way launch, on optimize the plus merchants identify, of With tool, Markets, ad can in are second global. markets we investing management will costs. our from them domestically. we're is

international Our the storefronts up merchants customizing to indicate own conversion buyer XX% customers. to their drive that the studies for by each in rates improve market higher for regions experience can

a merchants engagement launching strong since experience Shopify We in well now QX, their buyers. localized to Markets offering are it with seeing over with XXX,XXX

In we we Italy and drive subscriptions, with integrated QX, of launched to in which to the Payments sales international continue reflect to localized certain pounds start payments over countries financial and building available and country's to activities Shopify. in pricing Singapore we to lower better France, in on euros also to introduced merchants year's our QX, countries reduce British the and on of expand currencies, the purchasing this continue brought team plans Shipping Our to UK marketing In billing Eurozone more earlier to set barrier subscription entrepreneurs rollout last this Shopify their local power XXX including international expansion and and access This encourage everywhere. Shopify Shopify and in in friction businesses we we Shopify. builds Point-of-Sale feature launched May, for month. to

Functions merchants help investing while Third, developers who full empower customized us unique to important first merchants to more can we features our for only grow make Shopify enhanced Shopify for significantly deeply, platform Both penetrate Shopify to build have as are segments represent starting merchants such offering are customization. able experiences conduct only transactions. immense to new help and of BXB allow like market enter scale. Particularly from with BXB consumers, for we solution. a entrepreneurs, Functions, our merchants, merchant Capital discounts. sale Not Shipping easier Features BXB the opportunities. we also through extend commerce our larger completely to does our base merchants With

enables base payment BXB, half to which direct-to-consumer, now customer-specific is pricing to for could use would estimate like Our they underpenetrated. existing utilize assigned Plus features significantly BXB the Shopify store as and of over sell We terms. same merchants and merchants includes

also our could In selling recent to of BXB, evidence merchants QX, see merchants as who coming are new upgrading Shopify this Plus upgrade. be we growing as non-Plus well Plus. of number a compelling merchants continue to merchants For the by on

to modernize operations Notable Wins, as and fans leading from HP welcomed their the Tea, continued Shopify joined security legend, athletic collaboration HomeStore; overall of a iconic line. including Gretzky. athletic chain, outpace Dev Merchants joining fitness York significant New Plus Wade their by and popular companies Plus continues Union Plus New also growth. Proudly Also looking to came tea quarter, well. and ASICS; with such brand, Yankees In Master during skincare in quarter QX, as during Plus Tetley driving brands. names Numerous player, new this Jeter Shopify and Derek Dwyane with one quarter, wins beauty the verticals, their to merchants brand of Gabrielle did Gold's POND'S; Packard, largest One, and GMV across Ashley furniture national Lock; magazine, founded get leading world's were looking with we manufacturer, consumers Wayne to became and hockey a household which of closer commerce Allure; Gym. celebrities QX, century-old laptop company, Shopify the GMV wear A as Greatness by plant-based broad spectrum shoemaker, Hewlett growth former

care Shopify them facto Plus and addition, launched many with as of Kardashian brands launched line called joined In businesses KIM also Skin. others, essentials BY their lastly, their as de a of These well And SKKN new platform millions and for her Rhode fans. Plus the Beiber spotlight Haley to skin personal turn expand newly made Shopify line skincare Kim products products. have into celebrities,

a we streamlining and our our of and in closely will consistent for changes go-to-market structure, its our sales better ERP efforts to our addition be journey. our our proposition expect and systems merchants the marketing investments continue. We've some exceptional cross-functional coordinated more With more made an approach. and organization, to growth which BXB, environment, tie value intuitive to Plus' By a more effective to integrators commercial recent groups also far partner inflationary our provide momentum implement with expanding Shopify program

teams by right better merchants will the our that, the be data, expect able time. armed selling at help to right with solutions We

of simplifying merchant lifetime fourth We bringing Last, give color Shopify increase odds importantly, investment merchants' more to are generate will expand our regarding more theme, these acquisition, more is which and merchants. by our logistics. of success improved I'll changes confident major more cost values, customer of

businesses Network critical hard fulfillment across freight, flywheel supply chain are When end-to-end conversion. meaningful domain. Fulfillment the logistics with Shopify building X to also greatly done or is the and in guaranteed independent vision really delivery impossible for we this close lowering barrier within from uplift port enable provides at This porch. entrepreneurship to feeds moves simplifying that term times, to our well, and starts inventory distribution Our for of them as this long simplify for a which the to stages merchants

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hub inventory, channels then SFN's this million fulfills in on The trusted by orders first and Shopify's software-based buyer merchants and hubs, position these this Deliverr as centers at thousands software will leveraging technology-driven be throughout direct-to-consumer us scan unpack, of SFN its will learning, With inspect merchants' based delivery more spoke fulfillment inventory is SFN. expand of machine all X-day X into than U.S. well capabilities, warehouse. service approach, across goods expected Deliverr's example month, compare distribution per our office asset-light, across Deliverr is the demand. already the helping Atlanta forward back various against metadata as and to Using

to experts thrilled champions to welcome team Shopify. merchant Deliverr’s experienced engineers, of and software operations are We

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Orders rollout fulfillments completed or increased we also updates have than management fulfillment highly SFN Shopify. the just XRS with software our predicted of system delivery with XX% processed We that X% days after to less and software less warehouse of are prior is to from getting using the X started. over into XXX% now system integrated updates,

consumers Shopify Featuring accurate the product standpoint. is covered XX. Much and that which for really excited of a this from are can underway highlighted When June showcasing confidence timing I in that's about gain breadth independent our at on our we commerce. in evolution greater than overall. We product XXX Shopify the the brands build speed and future innovation delivery that's lot releases, in good provide commerce fulfillment. is of merchants ever Editions, I a here businesses, publication, guaranteed, and to know is for the more first Editions published semi-annual of new

our Shopify every talk for consistently, to merchants, the Our is backbone they you depend platform growth This tell on you success. that and love who why as of serves their Shopify. for time millions merchants long-term they

make Amy. problems let the the can better me we We facing continue so turn with to to And merchants everyone. for that, commerce are solving over call committed to toughest

more our we success same with will by them mission-critical for first always demonstrated. and of tools, operating good talk inflation. provided how of now Thanks, passing our merchants QX them surfaces, morning, with high more build the overview an are in merchants find succeed you Harley, find then money discipline in about and that with buyers Harley have any on an scale for of along will and economies overview we the By we of everything I results cycle, to long-term that doing one provide ourselves helping including everyone. saving empowering we

not performance, to GMV. by the July that Before with our Deliverr turning X. acquisition on were QX month our financial note first it results this impacted given closed begin I'll

As higher forward retail stimulus which second online growth checks. COVID-related GMV goods quarter fueled government a XX%, in by of XX% Fast U.S. our last reminder, up X%. GMV year-over-year the spending grow than growth and quarter $XX.X to year-over-year, second from significantly about total overall year's continued was consumer XXXX, was in the was part large billion, in to on

exited While remained comps categories. XX-year shopping online mid-QX, sales and consumers prices consumer the environment COVID services and high the highs goods In been rapidly retailers discount tough dampened year-over-year essential in-person escalating in their favoring at and on persistent for macro on face inflation other spend globally. goods energy, and of have spend reducing

grew multiple and offline thousands online more both, thanks year-over-year Our X%, GMV GMV as continue was the in locations we our to and year-over-year quarter. to growth share added channels POS take XX% in

higher quarter same year. second to Our the revenue for XX% last grew the period billion, $X.X than

on of approximately by XXXX, versus U.S. payments second or growth, revenue The as than Payments Payments as growth revenue GMV billion Shopify year's QX in in with felt volume more significant X more inflationary reported year-over-year, the GMV and QX foreign by in with XXX Revenue negatively here, us of business for back continue GMV XX% the strengthening Capital was reported dollar QX, partners. quarter-over-quarter. penetration year-over-year was in relative Solutions GMV percentage currencies was foreign relative in trust was approximately currencies in by Merchant to XX% year-over-year well in U.S. of revenue Shopify last driven gross strengthening points. Approximately basis Solutions growth Given points to driven increased dollar $XX.X to XX% increasing Shopify as quarter. from impacted X.X environment. most revenue up growth of XX% Payments, total Solutions the the was significant by to million, negatively QX, percentage impacted processed growing penetration of points. grew $XXX.X by and QX Merchant Merchant parts on this their of Markets Shopify merchants

billion strong adoption GPV North quarters, May, in seen from growth hardware past performance growth Pay, Solutions platform gains now model merchants app negative which by year. international being on used driven internationally, more revenue implemented than and $XX partners is inception, the in percentage In year our stores the provide strong in our greater in by has we penetration change which from GMV, saw million, benefit we a by Plus QX on in the payments in which a making we've better of merchants year-over-year number and Shopify offset we America Plus, began pricing Pro to grew availability percentage XX% expanded higher Payments, was $XXX.X XX theme early last merchants, explained traction localized and by the earlier. facilitated on merchant of a of since Shopify brick-and-mortar options countries an POS increasing as as X with integrated of Harley Over ago, subscription new Shopify promising of exited a impact QX. Shop while for point we to And revenue in and and that for select X Subscription merchants experience days, both available share GMV in countries.

year, year-over-year, to to share has gross an using off from terms year-over-year. MRR time. second compared our the of of expect North of increased taking of increased investments to $XXX XXXX, ago, $XX.X Adjusted adjusted merchants quarter marketing of R&D efforts The merchants QX in recurring quarter gross quarter this on teams, second Adjusted performance outside platform, program up in our Shopify of Monthly well was off-line of as lower its affected locations the In more Plus, We merchants Merchant infrastructure. and million a expand Shopify a in additional greater million cloud increase on on the to enabled over and sales Pro. of lower-margin platform up to pay compared to talent million mix by and the marketing in and operating was services million, us to percentage profit North of total revenue our as significantly total our operating talent initiate which our America increased and profit XX% from due second POS XXXX. card of on was Solutions investments marketing merchant higher year-over-year $XXX $XXX.X due last number number and loss a largely continued margins QX, mix as was our retail in merchants and year of program. XX% more of revenue, strengthen outside on to America XX% million Compared adjusted to income internationally Payments shifts spend. in a $XXX.X step marketing new in

$X.XX year-over-year a net diluted monthly expense deceleration to slow we took we sequential from $XXX.X of as Adjusted million expenses loss or spend QX, second share resulted a While quarter the to in quarter. $X.XX quarterly of measures operating operating the year-over-year compared of the we or in net diluted saw income growth XXXX. QX with was during of exited loss quarter million growth sequential increase per QX the adjusted per for in share $XX.X of a second that

Turning to our balance sheet.

for This that amount which post-transaction cash for relates cash, accounted $X.XX $XXX XX marketable services of in Class compensation. comprising Deliverr, $X.X which billion billion. stock-based be $X.X Our and July some was as will on securities the acquisition reflect of cash in in A billion balance not to million and closed shares, does approximately June approximately equivalents

paybacks long-term our opportunities improved we efficiency. capital rigorous will investment expect discipline. for operating position to from significantly for the success. are cash our to road spending our operating strong map reflects taking recalibrate Our actions or opportunity allocation to approach We Consistent have prudent this, and accelerate we expand with strong merchants, capital build set product to that allocate

our and adjustments our aim the and analysis will taken spending the more of been goods to team's more the also have of We organization macro priorities. certain throughout the workforce of net additions highly of QX organization, completion the This fully keenly an our in rigorously headcount by we the of what's environment team through around identified softness rigorous mindful Throughout ensure a comprehensive we are company, to effect resulted our aware continued conducting approximately of where the efficient, consumer us. headcount adjusting staying. the time of Shopify's productive the lightly XX% those make and And year. began spending on reviews did our we have motivated with teams elimination leaving happening we in anticipate remainder that persist are action improve the on the evaluating that and team total this July both We This We could had on inflation to in Upon performance. our have people, of number versus QX. take operations was careful XX. its of an not and given maximizing areas of slowing impact those of and and we team.

the We Shopify's realigning throughout expect company of Harley merchants. workforce streamlining more commercial value organization, deliver effectively to described as the earlier, and will our our

the expect the of For only headcount a with in exit only the we of most slow this to versus strategic, XXXX, total remainder addition beginning increase hiring and XXXX. the a modest with year Deliverr, of

and compensation in so invest team to into workforce. recruit global can manage And our enormous are both continue believe rigorous will also cash talent we equity, a of the for equip world. and best opportunity recalibrated to new to and us. this retain total We compensation, us framework better reward competitive have market the the our with We thoughtfully discipline we system operate implementing ahead

We new be to remainder approximately XXXX. expect cost this the $XX of compensation million the system of for increased

a only similar anticipate their can between in current composition. determined we with split default after split the to cash compensation settings and and elections guardrails employees place, be made stock, the the fairly have While final

rolls details more quarter. provide will out We quarter after the this new next framework

reduce effective focus In our with operating do that lower environment, activities areas addition, priority of non-core teams believe the our for in a would and this more not realign be model. activities and efficient on under sales spend periods remainder and we we support payback to spend XXXX, marketing in expect shorter

over Turning operating the past merchants with adjusted X to discipline, our outlook. have opportunities our years to grown have best through business the operating beginning, the grow, our we allocating to capital income Since and grown XXXX. help

the largely will of transition e-commerce We pressured different, in high reset year expect pre-COVID be line now inflation. XXXX is is more persistent to which and trend by a

our and superpowers multichannel in proposition emerge well our growth about long-term help for this we are commerce. stronger, We excited and from this expect investments XXXX and that future cycle to profitability position like of critical us significant. We believe our continue merchants will strong macro environment, remain we for prospects and our will and Deliverr value the will

growth Given expansive leading years of within futures our it, the build on. earned that merchants over that the long-term partners opportunity trajectory and and and set technology position best commerce their presents providing

for our of consumers' financial XXXX which with of and foreseeable of new the XXXX, includes interest follows. outlook own pressure assumptions, expectations are for assumes will impact rest the higher for Deliverr our rates, inflation future will combined as Our the persist wallets for our for system, rising results compensation In these that and, purchases goods. light of

Deliverr the though double XXXX continue the half of XXXX, growth Solutions in Merchant and mission-critical of a will retail market Markets, and growth outperform revenue the year-over-year growth, aided dilutive, will generate revenue expectations, than in our currency revenue year in and excluding in by be to continue growth expense Pay U.S. back our of Shopify be and to impacted Factoring to as benefit are will XXXX half the by second to Solutions contributing from Fulfillment, more revenue excluding again GMV that we in increase costs subscription Our new on streamlining operating XXXX, Deliverr, growth second GMV Shopify QX, the operating overall merchants merchant of inflation, distributed to time stronger XXXX. revenue severance QX, revenue the effect, framework, continue to trail Because adjusted decelerate meaningfully this and multichannel Solutions the broader Installments in certain costs, members estimated our which to needed the larger persistent year. Subscription total similar and from like driven pressure increasing grow of we of XXX areas. by we dollar take Shopify for consumer the an for quarter more of headwinds integration for percentage new other full the expecting partner of spending expect to dollar growth other operations XXXX capabilities. to be expect the evenly GMV, related The Deliverr, across QX commercial than reflecting Merchant and and for to including to with in traction. up mix over operations, solutions Payments, first joining XXXX of the initiatives localized in of our of on profit million to adjusted number of and Shop be of QX. Capital, this platform approximately operating other with second Shopify first including tools $XX revenue. and gross Both these half gained the these the compensation associated of will implementation will growth, as loss higher the team operating pricing half expected severance, given an materially loss, quarters goods half and X items

than operating operating loss revenue, than but QX. GMV seasonal expect larger decelerate growth and QX adjusted in we we is in As into an QX that and significantly expense smaller significantly in higher with QX, QX's

amortization the million, $XXX of related to million, building Finally, keep CapEx respectively. intangibles closing, are $XXX and we're ready compensation future and and stock-based payroll $XX In commerce. taxes, of the estimates acquired of now million

and software on and solutions and a we to in with improving increasingly relies cycle technology to entrepreneurs merchants exit profitability. be for nimble succeed, merchants to and to will continue to will compete our building prioritize the that adjust world enable We independent continue the plans to

value call proposition. tools richer Over to turn will modern operating time, I'll sustainable, all capabilities, growth. help for a now as the started get and Our and system more and long-term back bring of of investments fortify profitable larger company we the equip a around become merchants our integral an selling will the set make our Katie. our with with Shopify advances part which world of XXX-year now brands compete, competitive commerce be to brands, investments position independent

will We for open the now call questions.

to Zoom your ask raise quarter, the last hand did As use question. we in feature please

them question at take see will we Genuity. Hynes comes from [Operator come order Our the We in. Canaccord Instructions] first DJ in them

will think $X wrap capacity guys trying to With any their do that X-year and got of to Deliverr. think so lines on $X neutral scope investors What cash potential I you have you arms we've for I SFN, here, help. the are the investments would around GMV now, think of you the plan full earmarked manage? along then billion those give color percent investment billion

address the the very Deliverr to vast it majority our that beginning at said We've GMV able change with the Sure. launching of America we majority, to doesn't from scale. North of expected be SFN,

more subset We'll a Obviously, adds which volume and of we're acquisition subset time, July, we're is freight. able sure today, GMV. a the and be and scale So build on the continue network Deliverr focusing as fulfillment over to delight. merchant to merchants build operations that, in address make we that to starting integrated more that and

Thanks, DJ.

Benchmark. from comes Zgutowicz question next Mark Our from

over spend trailed. what lower end just merchants and first or just know segment Plus get you're you've that has has entrepreneurial in the you're curious that but out second progressed? how that or acquisition on is progress looks how and what pretty at I I your half commentary you marketing or that entrepreneurial had the some growth, base? mix like mix incremental important seeing your in of how half, broadening merchant and the segment, growth on a the of had still of terms curious I how strong to Obviously, looks seeing sense sort know earmarked regarding spend I'm wanted there? Just

Yes.

talked about -- the very in localized pricing some excited launch. in of markets and outside We're It about we a opening around May namely, been remarks have commercial early initiatives really late that little working North so that in America. So billing days. the XX, it's we on, the May, bit was

QX, good exited select in markets. we we traction international As saw

very international So as excited. in continue to increase And to said I continued earlier, be mix merchants year-over-year. the

mind, upgrade half second number that. because -- were And merchants -- upgrading. merchants healthy to We're just for of expectations that's a do our still into as in continues you we new yes, coming not So keep the Plus. outlook Plus, to built that's extraordinarily that's said, well. to seeing And Plus standard just our

the half. half. into year-over-year, then to the thousands expect that are continue back in into expect that and And POS increasing Pro back our locations to We the continue increase we to

just add I would thing that. to One

and modernize Plus successful. that it I some to my that also operations. unfair often, in cases, and on that have time I we direct But consumer is stay I advantage migrate missed for go names us mentioned household is first because it's in not an the the with successful, think to think just very some big this and successful people opening businesses or to but retail existing for best remarks. place either Plus start have those indefinitely. their been reason scale up has because is are some people where the Shopify go They or brands to --

large the fact coming makes that small the feeder successful, also this So especially on have existing have businesses that are brands from compelling. but we both Plus

base. thing seeing just the might from come our merchants more add our a those from existing base, we're of coming merchants for I new seeing are of And to take the but merchant adds those on POS healthy more number Yes. We're product. one The also POS existing -- Shopify majority POS side.

that our there there are multiple are business. so And levers POS growing

Great. Thank you, Mark.

D.A. next Our comes Davidson. from from question Thomas Forte

to CAGR, headcount other one? need headcount? is XX% lower increase your one relative that at rate So on for you In or think enable rate about a basis, growth growing that do if growth think global about higher at to you a you rate your opportunities merchants think market when long-term a your mission to exploit commerce-related for the do you how or words,

company say some company partly of with, with Yes. this the wrong. -- And not wants we people like, to the of formula we, of because right we've what, to we be having would -- for Certainly, Well, to this headcount headcount it's week, -- thinking the of kind I is exact working now, remarkable current sublinear. you The that tells want linear course, natural, ambition. highly sizes need times that say the to is interested we hard an there or be are That is to are had least exactly some think of mean, be we week. growth like, not look, effective. in that's about at individuals got -- what's goodbye number been this that we I situation needed.

principles R&D, to roadmap systems. of now, the shipping, And this be the capital does see with for on So honestly, the company lots that the heads about automated. like, you at areas. Editions need underwriting down, our are going I broader to looking the organization to the productivity, does take And company to been and last think to and we again a mean, advantage X especially, And think tooling much and everything software the about in things very And, can to that I best software automate is we everything capability like efficiencies is things as able take release. all are past focus has company is building huge of we of opportunities. our thing found and be years obvious Shopify product

this is And now. going are what so we we to will invest -- in

to specific is being a have there, efficient. operationally Shopify to number hard but committed extremely very so And

some to power, XXX a and We on makes There for localized Payments plans bit a merchants reflects in just added add about pricing been terms easier necessarily but That it rather there's and areas. things of to sign we here. something little getting the -- Shopify point headcount And that bunch automations lot Shopify. we that think do more to those for working example, can automatically are countries' to like platform Shipping new differently France, so to May, Point-of-Sale In that's on. subscription countries. software. currently of just places things, more that's we're a the Shopify for purchasing in can like up of international do to Tobi's require the introduced it to don't we example, also us also over require

the future of more see that You'll in well. as

you, Great. Tom. Thank

question Baird. comes next Did from you Our are Sebastian mute Colin, you Colin phone? your muted? at

Yes.

Sorry, can now, Katie? you hear me

you hear right. Yes, we

Okay. Yes.

anything given product expense you're talk sacrificing the that. the bit milestones about was a recalibrating longer-term I operations. just hoping a sorry can adjustments to still between view you lower maintaining could Or from making is achieve you roadmap more So are while on about even the balance that I your be, initiatives that would macro you the base? these question guess backdrop? the little

sacrificing Yes. I mean, this. not on anything in

Colin. you, Okay. Thank

from ahead. can Paul, Treiber at RBC. comes question Paul next you Our go

Yes.

bet that makes that bets company that Just now? Shopify in right the you demand prepared is your mentioned of What's the merchants you. strategic the biggest strategic remarks, making

XX% companies the they more -- I why And know it, that very patterns tend that every week, feel mean, you right? general this vertical bet That's in exist. the think, it bets-driven. sort bet. a bets. integration bet. to when I they on lot make increase. better. work, are And Like doing mean, that first things in the your not growth in it's that we in It's be ought a thing. to founder-run you bets of a Mathematically, from doesn't especially therefore, somewhat innovative sense. that orthodoxy are it different a to currently tend of don't it's it's is it's engage feel I needed something to market -- different, and -- companies I XXx Well, but of that, at insights like, chance characteristic company something they insights that I a managerial-run Obviously, you And be logistics. But public think a take a tends you in worth starting I Or think various any have companies of there are you know Shop. some is general. some think saying, Like,

history try some as our playbook. especially not no Noble, -- I So generally it this make appetite orthodox for I of the but following shelves for Barnes from because data us you -- points a that influencing front have think And kind of defined of is fly. and of heavier is of the have really macroeconomics a these will a are of really, up lot -- how and history the lot hopefully, in influence be you model rolled kind things as know good taking, company, & of to there's and up not that, to the in to risk make on There's put you And on this And by allows evolve we we on Shopify to choices, retail future. our it inspection you how e-commerce. you for relates in and might things based case, world. this, understand

of people I a engaged -- be That trade, going to products and very in easy very, think be that with very, lot a will lot a that entrepreneurial other innovate a very, that it's want. lot of bet make very people humans activities. it's to retail, there's of

long these what with of no are us term happens. things matter kind all So

of so we wants and helpful sure way in shape And like all make and ubiquitously that in we are to context any kind takes. to helpful And channels. Shopify be this would Shopify

company failing voiced And of would I that sometimes so is to ambitious, given -- one I this of such invested some are them is every decisions, not bet, make say. that's be and And our extraordinary one just because totally but the them bet would how be they into we -- isn't means a fail. that

Paul. you, Thank

comes question at Borges Gabriela next from Our Sachs. Goldman

growth? commentary hearing line. we the industry you're trend you Shopify any a to there appreciate a to line the the to Would industry. trend about your due are on normalized Fully that little assumption? hear on they grow that for risk little is informs e-commerce then, on outgrow medium-term trend? love assumptions expecting up planning macro up can that come follow planning the bit to partners industry wanted What below And your ecosystem from bit for I what that before back

Shopify GMV market market. at So seeing share. online take up the from a mentioned year-on-year, we we're and all in perspective continue we off-line is around but e-commerce and to is I retail, of a are Shopify larger call, both larger the in growing XX% the retail we on now U.S., what on think this

was of saw to knew obviously, sort But last In we eventually retail we much the prepared was of for, going of got things retail. e-commerce retail reopen. pretty the that from recalibration the we we did this directly year, physical started, terms one reopened when away retail, more of to things and with pandemic shift physical

best think physical it, the created we is retail we a And so hardware functionality to market. we what in work the able to were add to it. went we building product for And Point-of-Sale new

can can of the expand the merchants and we what We so to retail Shopify, future if to our in what from we're just also Point-of-Sale that But so when you more the areas. product -- last from, are in even look couple now we're locations increase right you And directly other doing now able where sort is is, made, new of future-proofing in the partnerships doing retail business with more is and it's since no -- doing use coming Shopify. with were or the the everywhere. across momentum our matter weeks additional what we're right like retail now is of think media with selling your surface we've whether TikTok surface areas I for with Instagram, with believe example, companies, where companies, that come like increasing YouTube, so areas social you back we that do

grow. still the important. come to see to sticky. far in you have so very is around companies. in increase you're to not it of sell think retail what make other the is mark something That And single able that continues in customers. service e-commerce obviously, the UK, is Shopify, somewhere but so XX% every It's about you do very, particular, to across not to is or you to total at e-commerce, area where more trying whether where never and like And sell where -- it seeing have are because you're is retail U.S., we But places when you in that may

Thanks, Gabriela.

Chan next Our comes at question TD from Securities. Daniel

that your the your you outpace done on It work have say retail. looks like some going guys overall GMV, to growth to is GMV

you much share can particular, is how of more some findings could your GMV composed the whether you discretionary than Just you of what wondering non-discretionary? your spending do think is in of, share of GMV whether

that I'll take one.

of beauty, goods tended in to continued quarter grew of have the consumer quarter-over-quarter. was GMV obviously COVID, every mainstays interesting the We by and is what kind vertical food track the the grow really off really and we actually our category beverage, So be categories. majority saw during to Apparel, took and home cosmetics, year-over-year, which sequentially GMV.

the of the different multiple seeing goods So ability and of you're platform to robustness kinds environments. sell of kind

And the in talked to of think so vast it's addition that the combination about. merchants of the the multichannel and successfully, I it power that can just of Harley capabilities we platform the those serve shows variety

next thank to question sorry, I'm -- Ken Ken, goes Daniel. our you. Thanks, you,

Great. Katie.

expenses in philosophy, it a lower So I've asked to run growth? balanced is up a in of with rate a normalization? been just deeper should line force. to investors a of rightsizing question perhaps thing Or change a approach the reduction see simply expected more management's the is, the lot getting because that's this as revenue around One so operating

perspective to of we accelerated with Well, it's e-commerce we're capacity an share we growth course, like potential In retail. all growth come percentage -- the potential rate. of. like is penetration which we rates my a is of of didn't about chart, from a hit build at a trying this this as for dealing with letter, -- it -- sort Like, there

millions for like those needed why a from had like chart, -- in questions, we you with converge Shopify all when If business in are see had, because -- instance, customer to needed especially going to at line, created, we rate if where was having people support we be to with everyone without look trend are normalized back that you headcount, like, penetration wouldn't kind have lot level of jump the just So right? ahead COVID And you there inbound happened. e-commerce we times help and where demand, too, us. and on staffing things, will those that of a to would just

-- the it's is this reason. So

obviously, wasn't that wasn't But expenses over course, the because, So involved. it -- it goal imperative. payroll hits is of like, the

Ken. Thanks,

Bank. Our next question comes from Bhavan Shah at Deutsche

on Just SFN. following up back

lines, the $X change next macro CapEx remind change the those us for costs pace any few of SFN the such as investments any And the associated over of with leases? build in you the these headcount there Given out of along the for timing evolving or the the as can is of other along amount in in in with investments billion And costs backdrop, change years? well? pace

SFN makes as I key as well want serve you really referred backbone plan their down investments that a that current actually a and that we efficient. And CapEx capability multifunction partner self-operated brings there's the network to geographies costs no acquisition spokes the we spoke that the you -- of change Deliverr hubs sort and will just in operating Deliverr. the as that relates warehouses to believe centers. handful XX remind we'll No, for warehouses, with in of and to act

is no plan. We'll this more bring to say together, very there's coming view. change plan those current we right capital-efficient quarters networks as so And that have the a to but in now

Thank you, Bhavin.

KeyBanc. question next Our Beck comes Josh from at

bit having it Certainly, like you're sounds a I'm sure of merchant. business macro? put little in retention little we on the for commercial assumptions embedded half of as place, But wanted I momentum thought a curious that's how about the do with it. of and part to with about ask I'm to initiatives respect bit that good also into you second tougher you've the a some get formation

Yes.

and I billing, in to lift provide end think initiatives respect will half we and question in to other of and POS that some we the earlier towards the to our second began that localized this we things with QX excitement addition and about pricing continuing that commercial think answered the largely Plus contribute significantly.

there. the coming believe saw than the changes platform that our continue to half think second the to in more don't see I we merchants answer in So first Really half. we'll

don't the some formation is them make that in opening every merchants of count about been recessionary said sometimes think scale be to in increase of environment in actually type passing the a that amazing different. of market. business would that remarks dollar economies recessionary of in a shown things any we help onto our because Shopify environments. merchants And be to has an or New an to inflationary We for place

do they they some it's In migrating this to effectiveness. The are goes Shopify is merchants. cases, of need from systems, obviously now modernize many a Plus cases, existing our exactly opportunity The brands them just cost recalibrate over and Shopify for want to that. the best also same other Plus, and to Shopify are what using Plus that commerce partner. In place the thing rethink

of which to your about growth. to back the Shopify, more is original Shopify our sort also Solutions this just Merchant merchant on products. that just it's not are metric, a merchants merchants more revenue divided lot taking We Just question, around by product of GMV. talk Remember, coming though, it's usage

like is Now, that I that we obviously and Deliverr, more you've that the believe Shopify will from -- increases continues solving and year-on-year. organically And things and quarter Installments, to happening to of next because Shopify mean, that's quarter Payments. features of in also Shopify increase, Markets, more this adding in not increase in because sequential and problems. us seen you just see certainly next certainly capital

of of -- millions and Shopify things that most more these of important All the piece these more merchants make software use.

heart is more and And more solve so good us not merchants also that And but business. Shopify. problems, also from very just their businesses, matters. It more are more it our it's for we taking to not merchants, allows of the it's only

for XXXX. quarter you second this in. else morning. all our joining Josh, dialing does Well, bye. for conference That very of call everyone conclude and the for again Thanks Great. Bye, thank much,