Shopify (SHOP) 7 Aug 242024 Q2 Earnings call transcript

Good morning, and thank you for joining Shopify's Second Quarter 2024 Conference Call. I am 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.

Good morning, everyone, and thank you for joining. walk quarter. all to from outstanding wait last the cannot you the through results We

focus our significantly. relentless but Our on has our only also merchants, empowered strengthened Shopify mission has not

we We our about future commerce are of Shopify. be the of strongest and the future at and more could yet, excited not

free faster at quarter-over-quarter let's growth with logistics, when down level. flow than Operating QX, decreased a cash growing expenses revenue. first, our than So XX% it we more In and excluding last gross high from break doubled saw revenue margin profit XX% to year.

trillion of from product June, other been These GMV. with along. A massive and saying mark that off-line GMV the our And couple of Editions new $X been XXX a processed Shopify. highlights we updates release latest reiterate surpassed cumulative of $XXX in has business all what as our over we've end features, for the were billion through results the cumulative at passing QX milestone crossed

are model is and for working. our business the We long term, building

As in Edition, central the was our you seen unification theme. recent have may

scales evolved from BXB, becoming Shopify online commerce store Whether key for for or increasingly it direct-to-consumer that, what online This grows, is very mean proposition we by Shopify that? it an at value mark of quality. together consistent off-line, all. or new important. Well, each So beginning. were a have a something if harmoniously, or great there software works more do from is built and that is captures operating Everything global, as believe as that comprehensive feature and is a style we to we anytime, anywhere, the and the crafting system domestic unified as

that even complexity. product reducing work What makes journey. markets understand adds hard, into the We at how stage of parts more Shopify all complexity a a and together, expanding starting business new every powerful is of seamlessly is merchant's so

merchants to. our they grow, don't have As challenges these so Shopify tackles

to Edition international things So Pro markets, selling What one coolest products, of merchants to used new the are our you're stores this sell Markets break juggling multiple into the Markets have into that rolled be means workflows. now cross-border a longer BXB launch retail streamlined worry Whether new and with in process aiming managed a out straightforward. wrestling store, was or This respectively. no a is to Markets. at market or physical about we country, and

good you up a go. it to tweak to boom, your You new you set market, are liking, and

globally. planet many this level speed, scale, be this the for of control, changer platform merchants with XX I huge. address we in of down remember quickly discussing box. And U.K. can't out seamless their integration big to opportunity them. to how a expand how on offers merchants moved understate merchants game this sitting of so our the and this with and see of about all it the is this to one this challenge will the other No I months reach at efficiently exact ago with really

Okay.

Shop Now how into and let's international BXB, merchant off-line, fueling the app. dive we're across growth

Let's start business. with our off-line

EVEREVE are X most was larger which solution global one whom XXX combined, we regions. point-of-sale no In both our examples else that recent can and traction, to multinational in commerce of as unifying launching off-line ways QX, this to attract Our online continued and with rapidly off-line store across multiple continues GMV with match. locations. XX% brands, gain includes locations online merchants up Shopify, and off-line Mejuri, of over are Two of year-over-year

happening physical deal stores. us for still in huge off-line commerce is still a --

such which about out the discounted stack it continuing as most, by the features promotional checkout, point-of-sale our offering. operating remote target the to this of targeted advantage taking marketing care We're grid and efficiency, multiple rules, layout their introducing that editor, return makes are omni-channel customize we new for to they easier to ability So strategies. roll like smart initiatives improving merchants

integration seamless Shopify single admin. entire from their retailers can markets, manage with business omnichannel with multinational And now point-of-sale's a

SMB Just as on for retailers, we now we've businesses are streamlined barriers Shopify. omnichannel operations global for removing

we're ever long-term growth XXX% BXB largely unlocking our In by making the increase, month Another recorded and untapped commerce, with of we're Plus we channel merchants. and year-over-year is GMV progress. fueled QX, highest great our BXB

compared Xx last BXB increase self-serve underscoring a year, BXB value offering Our in purchasing. orders of the to also saw online

in getting commerce. drive methods. modern Shopify channels. of in checkout making Plus, easier our We're the brands functionality, manage at position even on yet for, and to offering merchants business to we've leadership our manual year. for combined back-end, example are features compared payment This deposits many their This across merchants and last like it a to unified unified seen and something and approach increase our BXB BXB seamlessly XX% is with have searching with track more we is of the competitive number orders work doing large been that another makes

know Pura; brand, hitting recently have adopted Dermalogica, mark? skin home Well, BXB, hence, and and Therabody, who we the like like how Lighting new care So that do Progress attracting brands great we're fragrance our of ability brands single we're because example all to the admin. a join up how attracted Ultimately, recently Shopify total BXB to is channels market. they're their expanding of a manage signed addressable from by company,

sites. new merchants of talk Let's really about in XX% international to cross-border. they And more GMV up reach Cross-border notice are eager on more QX. and especially about when our made regions, sales their traffic

we've or out into everything and merchandising, So pricing end-consumer. availability to about to why just localization super BXB, it the all sell right they tailored And that made for like to start. is branch social from and from have think the channels easy when they globally

Lane over and Caden are experienced Markets markets, very XX% and Caden conversion quickly can sales year-over-year well-known experienced new a really growth Lane. for they merchant, up merchants of XXX% Canada in to for apparel reaping in what and With sales. markets baby wherever expand the Take want feature, need these up signing effortlessly. Glasvin, XXX% Australia. growth signed our wine Or they benefits. in customize managed merchants managed company, and After boost Both glassware international sales international which

And when merchants after know selling internationally of that we sale. that lastly, challenges make face is biggest one the they the

Now they've got to actually the get to the purchase buyer.

and also support improve understand international catalog to inclusive prices based added which tax markets rules, ability we've in the rates that expedited on at duty for apply and conversion. in international easier which automatically to simple made make prevent great even managed restrictions buyers. stuck getting it customs it So UPS for to to shipping makes customs adds to we get merchants packages of their We've QX,

We year. significant of last of GMV our for payments Let's from in talk merchant and through and XX% Shop and Pay our GMV, facilitated Payments BXB enterprise which drive up about GPV, channels, in and our In unified strengthen see Shopify checkout which potential boost commerce as scale are especially higher platform, all billion QX, Shopify international was expansion, globally. crucial $XX Shop activity will adoption, parts growth ecosystem. merchants our ultimately Pay, off-line increasing Payments' and XX%; accelerated penetration

payment brands inversion checkout, rates Shop Time like Grove converting again, stores. just draw for Collaborative Shopify. our up Recognized fueling the like is our boosting merchants solutions, growth. as and our a or enterprise it's Pay not it's Greens existing adopting accelerated brands across whether SodaStream or all signing world's and major merchant Athletic time Now Tonal best considering it's

top checkout I cite brands. can personally one as attest And they biggest challenges they call reasons on move the to I'm of CEOs to the without often and historical to fail, of these this want the as with one the Shopify. of

rate deal and enabled by helps conversion again. products is key absolutely that Our differentiator close these time Shopify the time a

purchases than builds Shop comprehensive Pay within unlocks engagement customer order more is wallet. via just merchants, opportunities to tracking reach digital Shop redeemable offers buyers app the Shop app. This Cash to customers. and earn and a greater additional For the allows It for

in helping XX,XXX strengthen expand their on their led Shop brands Week the GMV their ever campaigns app, solid teamed relationships. of showcasing early customer to and with best Glossier widen the we consumer merchants Shop Stanley over Cash draw to merchants new to in, the Shop and During progress in brands and making Thousands joined buyers. audience. This in top posting like leveraging Shop up week June, we're

Now me quickly helping let own ways our strategies on are touch for we enterprise. fuels turn beyond merchants great we're growth, the our grow, making and Shopify: progress which other the in growth international; X across

by our international driven in growth outpace from year, Our introducing expanding presence; in merchant marketing more goals: America, led markets. increase And to year-over-year. continues products a X last international efforts GMV go-to-market XX% and QX, main up North our more XX% in growth to and

Newcastle club, Paris French United, where U.K. we Europe, welcomed apparel XX%, in like GMV company Notably, to brands football major by luxury grew Shopify. Ami and

Luxottica, Shopify. be many acquiring who first the come launch that the a brands will the Italian with stay announcement conglomerate, brands to is recent Shopify the of signed best also we in And We with on coming on already to eyewear global know Supreme, hope Shopify, what future. agreement we their and on

product called out in through the to and QX, in X on point-of-sale launched latest our simplifying e-commerce UX experience. remain more From sign-up we terminal available rolled And contributing increase flagship end-user mind. the impressive Shopify products standpoint, theme specifically a Japanese compared our obsessively customer yen to user process focused unique additional Rise, with which we the is designed terminal out aesthetics Japan, QX. GMV first-party we In point-of-sale and rolled to enhance X.Xx to in an and in localizing Japanese plans countries, of

helps all relentless Shopify, flywheel ultimately to merchants to enhances commerce more our make better market-specific of start Every extending for brings their business competitiveness everyone. helping merchants merchants launch and in This grow and feature our we fueling succeed and product into locally. ability facets our commitment

golf resonating of industries footwear geographies. within set TravisMathew; signed and strongly brand, mattress flock QVC; our company, Casper. larger is card to our Barnes Camuto; verticals, brand, Now designer bookseller, to We Brands luggage high-volume Shopify. Noble; enterprise Topps; deals And across shopping Away; opportunity, diverse continue a apparel our with Vince manufacturer, they and the trading new flexibility, and channel, & value line, speed like brands.

platform now toy along Dios Mio by the Coffee incredible Sofía are and all our powered the brands Más+ Lionel on launched quarter Toys"R"Us Shopify. retailer, Shopify and well-known Additionally, Messi launched like with celebrity by on Vergara during by some

partnership to we ability needs the announced cater the Combined commerce convey also Our bring including with continuing new with partner underscores as to validate of our the planet. progress our a strategy, but the growing wins to the these growing quarter, biggest in brands ecosystem, on Oracle only these high-profile, the our not unique high-volume Shopify on recognition of in premier that platform. merchants

confidently, truly leading leveraging marketing Now strength, adapting looking evolving, see we not in that you game. at the strategy our implement and strategy it this continually are our of year, part sophisticated ahead is about This to we've how can the in. built. that all stay large platform continually for but marketing we to is thanks new, It's

push what Shopify Our curve. and clear: stay strategies aim ahead and of does the by data the best, maximize This doing maximize remains create backed front, value. returns informed the Shopify returns designed from envelope, is to and leading

and But test every average guardrail. relentlessly here's where we within XX-month our well channel, truly excel: single keeping data-driven We decision-making. optimize

so provide to quicker Our faster and and iterative models These more us are to emerging analysis, enable can deliver feedback, to ever, technologies tools loops. patterns more not our signals, our identify just AI feedback respond. than enhance letting excel, swiftly tools and adapt operate crafted precise leveraging we but sharper,

our Now This and discipline, substantial while platform, platform leading acquisition this social QX, guardrails. of QX. in our staying digital financial consider increase growth, a quarter-over-quarter in this and that this. on in After a led all give in efforts some observing experimenting emerging within to intensified XX% a new to agility we examples channel, merchant

testing over boost New uncover time, merchants in with same it and scaled of Ireland, our XX% Zealand. channels coming the on English-speaking our focusing to also back Australia the U.S., the markets of joined opportunities. QX that saw experimentation platform We At and the growth other high-return further in new core from outside we U.K., internationally Canada,

can flexible half efforts, target we support such with growth allocating approach the markets. all as remaining XXXX, point-of-sale drive we of back By of continue our can these and marketing believe portfolio our in for our international dynamically our front By redefine optimizing our investments, playbook, in we areas, better the from across our core Now and of resources and this testing, enterprise, and channels areas and growth will across to especially industry we continue performance standards. performance exploring within guardrails.

some to over in future, event priorities, I Shopify to together it incredible, yet. which is Summit Days, This host a truly products energy, years. want Hack to version best our company the Toronto. thoughts to optimism and our team out of our brought discuss The the coming which Jeff, I of event were before the enthusiasm incredible my to over and as of on entire annual have Now Shopify turn team reconfirm our best produced the briefly that of this and the recent share our align success in Shopify's best

I close, rapidly global entrepreneurship. need I leading feel a enabler to strengthening Before clear. as of really commerce is its something I position make and Shopify

incredibly launch This an scale driving company. serve the long have the We and for durable very inspiring brands entrepreneurs and ability also to are to investing largest in make while term. businesses unique we sustainable Shopify that profitability growth new

commerce We are to years for come. to globally more so the power well positioned

turn Jeff. that, over call with And to let me the

Harley. you, Thank

Our second power was model delivered. metric and strong, we demonstrating ability the incredibly across business our execute to of quarter every our

QX Let's our discuss results.

a was GMV of year-over-year. billion, Plus growth QX QX growth number merchants, the strength was on Europe, GMV merchant this growth our which by merchants new in from same-store acquisition, sales $XX.X strong sales of led being sales XX% quarter. driven continued growth up and globally, same-store both merchants, our slightly The existing by strong with platform grew in XX% in year-over-year contributor from larger our merchant our same-store base, existing

XX%. GMV This we fifth delivered exceeding quarter Europe represents where in straight the quarter have growth

in growth the key Our year-over-year. and strength was France, with the as point last sale, more Spain broad-based, which EMEA larger as our of markets well was Germany, both U.K., Europe broadly. in grew of Italy, XX% And driver

performance verticals beauty and and growth solid saw in across robust We beverages. food with health and

came mixed We Notably, category, GMV of our consumer also a in backdrop in this accessories. apparel saw solid and strength largest growth against spend.

and market the gain U.S. share We e-commerce in to continue market abroad.

to the XX% or QX $X XX% marks where year-over-year excluding revenue the when XX% billion, growth was straight quarter up grown This fifth excluding which businesses. growth, revenue has year-over-year, equates our logistics greater. logistics,

merchant and and and the geographies our merchant stability ability of the consistency of simply, execute. Our our industries, success our of and reflects sizes the breadth quality of to solutions, the that acquisition serve, breadth quite performance engine, software we

the revenue paid discussed; For driver, our the past number to from both in of third and of and degree, the key year, the growth implemented pricing strength revenue were: payments I is as impact growth just a our the key XX% lesser the in subscription QX. growth been solutions and have the Standard, on quarter, penetration, platform; Plus; of trials; increased at drivers the which that the a stemming GMV in changes merchants shortened for

primary and were by as with contributors the outperformance better to from headwinds absence Solutions revenue primarily increasing Plus Payments. Those the expected, penetration Relative our Merchant notably billion, GMV out business the Shopify $X.X GMV lower revenue than partially from outlook, and driven by merchants partnerships. strategic in stronger from were noncash in Europe, logistics the came FX anticipated. largely and QX XX% of continued year-over-year playing in growth of the offset we

of this basis quarter of As to the is the XXX revenue, above, revenue by an of total sat logistics where a logistics business. is Solutions. and final revenue And all year-over-year sale growth reminder, Merchant impacted point absence approximate rate as our the within the had headwind noted the logistics

XX% Shopify more volume, utilizing on a the of are than of were GMV, compared where processed of XXXX. including: by merchants an Payments The in which which Shop higher in Shopify gross in of Payments North penetration percentage items the Shopify last our payments; across Several the XX%, percentage adopting Payments, of those GPV greater GPV a higher and factors was but of which XX% penetration America. of year. GMV globe have GMV larger percentage Plus; of partially performance powered a Pay, was continued Europe, of as quarter's strength the we was increasing payments strong billion These business merchants $XX was the of lower QX offset XX% penetration QX, quarter. Shopify in than rate to

Standard of up source of offering the our Subscription by shortening over plans in months change was from for on QX the on of Solutions increase The was pricing platform, plans our X and to by $XXX driven paid year. complemented an marketing last strong to and revenue million, X XX% standard growth number X growth month; Plus. internationally; of initiatives. in primary of our This was the the the our items: trial number merchants merchants growth work the

our Two changes. reminders regarding plan pricing

April had to pricing a until rights end merchants to move or the plan. Plus commit to of new existing Our existing

QX change. subscription revenue our the of impact included quarterly of So X/X Plus pricing

are our our from change as as on pricing on stated we benefit we did Standard Plus a of call, from not pricing As last the the anticipating much on plans. change

went April changes pricing the end Standard Our of year. effect last into of at

So purposes pricing year-over-year had of growth last quarter. the had X Standard overall impact quarter's pricing a QX change, in quarter number though, QX a a of the of year subscription of smaller this versus to merchants. of of for whereas contributor X/X these year full changes, this comparison, the revenue The growth of was only

year-over-year. largest each being our our year-over-year on of Plus to growth QX both plans. was and in in driver key $XXX internationally X saw We segments point-of-sale. in up of MRR merchants with million, number quarter-over-quarter growth a was The our growth contributing for and component platform, Standard, the the XX% all growth Standard off-line

have discussed. which the benefited marketing shortening first and paid trials, went quarter of into initiatives we the near Standard the end of effect and off-line point-of-sale the that from

increase merchants, acquisition Plus some in MRR, with change Plus providing well. the the For pricing of of largest benefit new as the the year-over-year was driver

was rate attach our QX, X.XX%. In

our back and we an input that consider Day, reminder, metric we at Investor drives output discussed activity, a as not an growth of platform our attach strategy. rates or As

attach shipping from when The the subscription and revenues basis, business. lower our gains strategic noncash by noncash offset key was strategic partnerships. drivers penetration a gains the quarter slightly offset of was this GPV revenues revenue, the penetration lower in were were rate rate sequential QX Our continued lower On attach GPV partnerships from higher logistics by down and in up excluding revenue. year-over-year increase as

growth faster Moving to $X the quarter, gross year-over-year, profit. growing XX% revenue Gross was for profit billion our than up rate.

Our QX bit impact QX Breaking to margin increase more, growth subscription a merchant of in is the plans compared by the well as XX.X% The down to gross was was gross XX.X% XX.X%, for from driven trials. margin in year. it prior compared solutions of XX.X%, shortened primarily as pricing on changes the Standard XXXX. paid

compared for Gross to XX.X% of Solutions was QX XXXX. margin Merchant XX.X%, in

Our gross in the Solutions certain from revenues absence for in down including of primarily our When gross of Solutions was margin improvement logistics. impact and the noncash from partnerships business. our payments primarily lower margin from margin lower year-over-year, [ ] was logistics, Merchant Merchant growth

expenses of million accrual litigation includes the been this or which we million that revenues. of benefit $XX for in a a expenses quarter, of million $XXX QX operating reversal, $XXX have established a XX% of were Operating reversal would XXXX. Without

to platform, joining, point-of-sale the a And only $XX incremental these year-over-year, our onetime upon enterprise primarily increase in were QX in items. a adding year more payouts both Compared a year-over-year and to and merchants driven operating payouts. to there's in X% the and Increases new businesses. up marketing. support prior periods, X marketing items our excluding happen by partner million sign clear had We affiliate merchant or of growing since expenses

payments in-person our dollar these Secondly, our event both growth absolute offsetting from absence a loans the losses, volumes And Higher reminder, was result capital as higher business. since which, losses a of on simply of of as was XXXX. Summit event, these first and the businesses. Summit logistics

came expenses in operating by driven primarily than QX expectations, Our better items. X

First, lower marketing expenses.

of largely of enterprise was decided X QX we year, into end we campaign of the related QX. that second marketing to from towards stemming Some shifted out the will the launch half

We also channels QX. couple cut spending back in of in a

of returns in spend. tests, some We the it spending and where given can quarter, further consistently scaling marketing that enhance the spending in to approach from these marketing and a can recognize run spend, in tests back areas. of our prioritizes efficacy any to our the implementing cause however, quality we returns-based assess learnings fluctuations We

period. successful this component better-than-expected And second expense. The contrast stands year-over-year of in noting over under impressive compensation to lower thirdly, growth that event budget. Summit the revenue in same was executed OpEx we Worth X% growth extremely OpEx our that

Moving to operating income.

For businesses $XXX for or $XXX was quarter year. operating of were consecutive our of the of capital since expenditures and million our million QX for quarter. XX% last our in the income sale head fourth operating QX revenue, reduction profit marking compensation logistics was and count the quarter, million $X Stock-based of

XX% million revenue, margin GMV operating $XXX QX in and more cash came than a the cash XXXX better free a of free as revenue resulting lower or than as of expenses. our and of our percentage X%. flow was of flow QX result largely flow-through versus to revenues doubling stronger This expectations

can of continue and internally-built GSD and impact and systems, support and the we smartly AI and disciplined leveraging and continuing growth head count we long-term size productivity; have marketing drive our strategic operating efficiency. things: flat allow we us which growth; use and which We leverage to internal to X work we Shopify essentially and headcount, development revenue the below for returns-based to product drive for kept in where revenue growth automation enhance expect growth; maximum aim our quarters OS X sustain through key to team keep well can believe that to

platform businesses. brings enhance enterprise team early-stage greater inventory our visibility the do to on to our customizations One will earnings second our X process; acquisition move a before the and allow the small Since easier that to multiple enhancements third into to of abilities first to some last checkout made we channels; their Plus and success other call, mid-market across item their added cover acquisitions: merchants The merchants gives stores ramp of outlook. we and get merchants the

small quality to our amount financials, our terms existing here enhancing All additions immaterial to of these the acquisitions of great X our bring specifically in were important were by who but of merchant Moreover, some founders are and team. us acquisitions dollar efforts. drawn these

Let's impact to will business. our we of sale outlook, as the have QX now the quarter which no where longer of is on a first turn our reminder, the logistics

First, revenue. on

growth year-over-year at growth is a to grow QX of margin to expect by We QX percentage expected mix contributed XXXX, to low mid-XXs the higher subscription a factors approximately have the XX stemming the of throughout QX be driven revenue to solutions. of first our same up rate, year. gross that half basis points from from

Turning expenses. to operating

our GAAP We XX%. expenses at operating revenues, last be improvement QX point XXX to representing to a XX% expect to of year QX over XX% of basis XXX

last aligns deliver profitability lap time. As considering as with goal we leverage of logistics the of we our a operational especially expenses percentage over our balance sale striking as stated we improving an to between our operating believe revenue, better and businesses, growth of quarter, optimal

our payback earlier. opportunities mentioned marketing support to and point of average our expenses. key efforts growth of largest to spending expense QX opportunities marketing, the that our to fall This international on we compensation are operating an enterprise including continue period marketing within drivers the enterprise XX-month increased The markets, support spend growth On to compared year prior includes and sale. and initiatives, that I plan

is to by X primarily Higher year-over-year compensation items. be expense driven expected

our similar across review single-digit increase employee cycle, discussed a This low overall in in percentage biannual base. First, X on part we our what implemented we to pay resulted of increases QX. July as

count flat the X,XXX our year end still to while in has X XXXX. additions, these within end at Additionally, we that past key the to had QX, head we and essentially Even some with count for head with the roles employees hire remained do expect compared sales to we the plan quarters, minimal growth R&D. of

million, following that SBC CapEx not to that longer be stock-based expect On $XXX averaged materially. $X guide do CapEx million. that quarters Moving no to note we to expected the sale CapEx, to past has we logistics, separately the only will compensation. over of X is and QX change given

on Finally, flow. cash free

For XXXX. QX, free to of margin to our similar we cash be expect flow QX

to for of double-digit continue We margin year. to free cash the deliver flow rest the expect

line consistently past Over each logistics and cash more or have of cash and reaching top free improving margins X digits over free our the delivered past excluding positive growth, quarters. double over flow, we with the quarters, that of time flow X XX%

team as The deliver this steady these This business creating us even size all investments ramped leading can opportunities margins up we future accomplish and of allows and We the margins; accomplished X: growth have have our into enhance margins, accomplished business to growth. and all keeping this growth investments. strength that concurrently while future. for while and our growth;

incredibly In closing, we we we is with business are that plenty showing quarter executing runway compelling and that plans the are against our model out that after quarter of laid have ahead.

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

Bank. question [Operator Bhavin Shah from Deutsche Instructions] comes Our at first

quarter, bringing growth, of is spend to that of strength lot the What MRR it of it bear the really from just merchant came seen impressive much success? in seeing of type it you like how that function marketing the kind the fruit? now on of merchants you're and platform? where looks just lot on And maybe was the Can a elaborate a Jeff, of a are you've you adds.

a Yes. really lot a and of the We're seeing in that merchants strength spectrum. on board, terms full types bringing we're of of it's

been impressive out. it's it's terms And is been of seeing. you point a combination, very very what as It in so strong, we're

terms -- shortening the trials, paid the Some I is marketing it think too, trials. of of paid some in also is and the but of it

for been very, But healthy. I seeing think strength additions in is the very the message board. we're us key It's terms across of merchant

to in terms any call and been spot there's And So really well very it's sizes particular general, don't all very, geographies merchants. of other it's received. think all I than, out in

will Our come from Wong Oppenheimer. you at next there, question Ken Are Ken?

you me? Can was I hear on Sorry, mute.

Yes.

you My take question some this was Okay. have mentioned rate. Great. just pieces that of Jeff, might moving it the on pressured quarter.

that Just of from wanted we've accounted partner going levels it move for forward. thinking attach the Is take sense now going how to rate about kind the to a rate, in deferred? up get for you're current

Yes.

attach I driving do to terms terms to of things drive right of in things continue I'd perspective, increased of strongly talked those helping the move lot general, adoption that in All which terms headwinds direction attach rate, in in overall Investor a up attach of We rate of of this about the given terms in think seeing to will are things general things back of penetration, help things we're of the rate. which, the the on all Day new in I are payments go in terms products, and pricing. some attach the at feel rates.

will, of more We attach will some those do we rates bit in a little lower. Europe, be as

As more merchants, to which right the much for of some us will attach in direction. this rate. be variability still there But metric some while we go with a a is be high-volume quarter-to-quarter, do some may enterprises, larger continues headwind that to

would earnings though, an I not us, the call, about I input. output this and an say, on a this it's little bit talked is for

can, value up more want metric run business, we we drive daily reflected about will think rate? not solutions. have our obviously drive basis rate. But as attach we we where in to is our merchants we take do on of be to and attach our we a as and say, As We're much how that and a more track to the trying how merchants this

at America. next will of come question Sills from Brad? Bank Our Brad

okay? Can me you hear

can. Yes, we

Wonderful.

alluded exploring the some and some testing you're that with with to Just the spend. in earlier a to of the you question efforts performance areas of regard here call on marketing

just I'd testing the Harley. to you're guardrails, marketing optimize on some some thinking effort to color love you from how alluded get to spend. You on philosophically

And very approach question. a have really we want results long that time. Look, is these how need, highly they're analytical which marketing customers we find for new we now producing to over the new Thanks systems areas. built the we to data-driven and

world. in not or The that's at is changed Shopify, U.S. just other Shopify thing it's course America, on-ramp the not small years there's North of just over the the English-speaking in businesses to one

on the Now planet. enterprise. whole it's now, and we every to across it's us swath customers of sale, or it's come different merchants have geography of of It's whether types point that BXB a

allow out every channel. So single existing systems we've marketing get of these built us to the to most

want do are times Now experiment that have now. channels, when be to a But to also place successful new of to double guardrails to they turn down XX-month trying with, we and are mentioned out find that an both we us. do important payback, also to I in channels couple We on.

tested, The the saw that a I illustrative emerging in way gave to into important, which example marketing QX. we We a channels, run on merchants exactly which the outside that it's and a XX% for it's right like new second saw now, platform is we I'll call, of spend XX% we we English social result, our international leaned The a in over in growth channel, quarter-over-quarter that good In QX, down. of countries result it merchant same actually doubled also grow our QX. we in that then was that joined QX. acquisition was increase of --

the of returns important So it's at about to where stay ahead we but the it's for we looking push us, maximize curve. that can envelope,

on marketing Shopify on And so And performance to to very curve less focus us from compelling term. But pull particular, idea that where think to have the marketing, our industry. most and fluid, back near we're bit we're else long places to a opportunities, double what see our things very return, optimize across, down is little of dynamic marketing seeing the everyone frankly, stay ahead and going a in allow the going this from we're is both perspective, I and to spend also in you'll in that. sophistication to

comes question next from Gabriela Our Sachs. with Goldman Borges

would ask outside? be into from half just take enterprise investments a I progress the of can And watching to the milestones if little your tend to love I market. the you that longer, the we your some clarify, to those bit year? given wanted one what drove could hear, the of back are especially campaign that to about push in decision what

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

about ask business as factors expanding and I push established? that is Shopify that about that into time the wanted how enterprise already yield you grow it drag internationally, considering upmarket think what's in you on as over changing we X against a business, while and play how to should also those margins Payments

we're To clear, also in seeing as larger We're off-line Yes. well. adopting we enterprise payments monetize our side, Shopify be the expansion Payments. seeing on which enterprise and primarily grow business, through high-volume merchants

necessarily Shopify merchants migrating were of us was and take Payments. some larger that the that to didn't historically So it true always brands

but came adopted mean, their happening alone, they less I quarter Shopify, more were Payments Greens, these own. Shopify Sometimes, Athletic with That's already merchants Grove, less. recently. on and this have now were SodaStream, Tonal, that

that. I you're of seeing So more think

The functionality Pay that like these is, Pay, on Balance, product, platform with the of other you things thing are remember Shopify to Audiences features all Payments. require Shop Shop the that be Installments, incredible and

I so continue to see across merchant to think And region channel. and healthy penetration you're type, going

anything Jeff, I don't to know on if you that else have add one.

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that over a we North in time, of available are that Europe. have available will become in will those So products America lot

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merchants profiles them the similar. North America, we see in we the and very, Europe when cohorts, very look at we compare what When in to we look of at

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Keith next Morgan Our will question come Stanley. Weiss at from

to are I that an you through macro know solid when backdrop. Congratulations any us you you worried getting it that. Do in How really hoping on see it to I an environment said getting a the getting say would particularly increasingly did it's probably comes Do I you guys? see it for was investors any you Jeff, better? still it some that quarter spending. quarter, could consumer uneven about, give directionality worse? trend

and are consistent we've vantage what there talking I there in Yes. Keith, of know a of from was terms pretty spend, hear our seen. people lot softening out that, do point, consumer about that the we too. quarter

key is this working in be very merchants point us, are environment. with I think successful our them the from help we to

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last talked out may quarter. little we the of terms FX what On we of played we terms It in exactly bit a call, about a expected about, into we talked we essentially from what going bit perspective, as headwinds, see a European little consumer in the spend. and saw

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merchant to I'll very set verticals thing a The is keep add we only mind, that, have merchants in of and across types. and Keith, diverse geos

from about have like we razors we products from You have BarkBox; Flamingo. pet and scrubs think FIGS; from

Nestlé Staples. We and Heinz and have Mattel and

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to merchants and We X geography. have merchants for particular coming direct-to-consumer us in BXB doing

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than be reason of of of others might across a ton a big same merchants is because outperforming think that thing a do to others. better the are merchants seeing think I I our geos. ton so that have And and and that seem verticals part we simply And the not we across doing

RBC question from at will Treiber next Our Paul Capital. come

that then The You're the share market would view seeing you changes you why question and very gains? Considerably, after over to threshold? the as performance faster made you return to good and change rise? in And payback success scale the XX-month margins marketing. is, the right could period payback time drive continue growth lower that operating is

talked the use Paul. obviously my the From XX-month about that guardrails we've Yes. we payback vantage as point, here,

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adding as of on the success trials. of we're some paid But the side. new some platform So as I the more. in doing shortening the and alluded hear of to questions we're terms a on the could of you, that of I is the theory, already function the even one earlier MRR, seeing some of it But that some movements from in that shorten marketing in merchants of has we in what been of

vantage like mix. the right this So from feels point, our

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Tim will Our at are Tim, next come UBS. question there? Chiodo from you

of with the believe I success of is more bit on that, many of it that that mentioned App that in quarter, context much how And a mix. overall maybe campaigns? Shop a some little give sense how that you large bit overall of App had GMV. Shop within I was this of hoping am. of you volume was past is the a I QX in little could that you merchants Shop terms and GMV penetration benefiting I then gave your know shop from App

Yes.

month. So as a you million QX, $XXX alluded nearly to in in talked GMV App, in reached has about we single about Shop

other online or the year small We also were Shopify's of past via devices. made phones XX% about in talked over checkouts

we channel. this incredible the merchants to week about Shopify and is neat consumers reintroduce power how App, and was on who allowed this been while, app helps the they their to this it. But is main obviously, first-party owned the for their but that this a as ever them using prefer like Shop that the it Shop we was and from Week have know traffic. Shop Shop posted drive incredibly interesting App, to buy So App What do tool that for the best own Shop fact merchants, so the on know GMV use them a that channel merchants App merchants of XX,XXX and us

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Tyler question Investment. Citi Radke next comes Our at from

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Yes.

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unpack of the second thinking Question be some talked pricing But growth the revenue Awesome. of you're the actions on third just QX. Obviously, just kind in quarter I'm MRR you the about guidance. of in year pieces moving of what given should on how to the the in curious just how seeing Plus about we of terms MRR the SKU. half

thoughts an we of should incremental into those us accelerant model. expect in give coming uplift the or the And still, then investments revenue paybacks your thought and the revenue performance terms marketing be you latest is into of to an incremental kind all XXXX? when timing streams that Just of these see

a marketing couple drives reverse do, XXXX I periods, apart it does about we there, different payback spend, this based in pull something but from Yes, the more lot of which me XXXX. as think in XX-month about Tyler, mean maybe average do, it the we order. a think than on we as pieces, let

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revenue when the look QX revenue about forma too past that's QX you think maybe logistics the things in some look ex on pulling that, over in other I when without to this growth you much, numbers. the delivery I seen the around X stable And and quarters, and pro the very guidance, you changes the this reflective what's you -- you've basis pricing past at do it reflected a on impact is growth an X that apart over think had at consistent, revenue growth. think some

we the earlier in But I we're -- folded that's what dynamics mentioned there, Keith in we a really macro about to feel terms the of to of good from are more merchants seeing So too. some we perspective, are platform. adding where

pricing a too, this piece the as change, of in change marketing. that think and QX -- reflected pricing and revenues, the done pricing is Standard know, little a They change of changes guess Obviously, you think bit as more that's about perspective, to incremental be you is some the I MRR. in from -- I because in the is well was will And -- reflected course, other Plus mid-quarter. The pricing there. obviously the MRR things

not we gave. fully the in of quarter. it's in we see terms captured tailwinds getting guidance to that's that that the But revenue the So

and the performing you well, in reflected saw. simply is business Our numbers that's

Tse question National And Richard our final will Bank. come at from

some respect be sales a in of without I'm enterprises? you vendors point momentum getting to newer are they're meaning just these displacing Are market? to With incumbents Yes. there. to of the service sale, the sort seem provider, you curious, good

also very that the use legacy a better but that a for frankly, Two consumers And time that's of look future-proof, far that to incumbent delight it has that that retailers use of is lot a have. good, solution is more sides. for both One way staff systems is of it. that, their a more functionality, are not there's lot high they

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Mejuri that time. of winning is online has now across for very ours we're existing The But reason for seeing. stores regions. over locations, both long they're with we the XXX example, locations, Mejuri, with I mentioned fact and of winning brands lot And merchants larger replacing are off-line is a what had many We're merchants. their like a physical indicative systems

We compelling provides rather pitch systems We're have really point-of-sale terminal place, now very running in to additional have that to X completely a and the countries you launched system into commerce online there's that is this APAC. is and unified disconnected, business which single separate reason across for your helpful. centralizing one say Shopify also it off-line be EU but to that finding are no

now really for sort us, multipliers other like to from the force them. And and other have and growth get key Home, GMV, it in Oak, for & that then becoming amazing are are but I QX retailers And then these locations Republic get brands will tons we'll mean, just of for of year, And not we results be Banana and future. that off-line. obviously, using themselves. Cherry Frank us Republic example, a expect wonderful continue XX% driver like brands also the brands to speak of this certainly

it's a and well. really it's of our part growing important business, really So

it All comments. right. to Harley for question. I'll now you back closing for Thank that turn

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all executing that I the last are laid that combination continue think these is to out meaningful We you incredibly be achieve can in we an seeing in we particular, which it a and trend, both on growth profitability, of results, will and we seriously future. the in But plan areas meaningful that year, demonstrate for we invest think and our of important results. in you're

You're hopefully seeing this.

few merchants planet And of size. businesses If you're is This times for on far and impactful on the joining not, on know I said I'm but this I've most this a every please the say going us double-click on do call. the call, to this, of are it you but building we for best this products And by thank again. Shopify. a version

our concludes That call. you. Thank