Shopify (SHOP) 12 Nov 242024 Q3 Earnings call transcript

Good morning, and thank you for joining Shopify's Third 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.

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. Undue reliance should not be placed on these forward-looking statements. to law. revise obligation as statements, no by required undertake update these or except We

press read these as can We'll release with You about U.S. substitute in also which in this our uncertainties the at the the a financial morning financial release. finally, Reconciliations report for our we press And are speak dollars. in to non-GAAP and as between measures, measures. U.S. Canadian tables end GAAP not well and the in adjusted are of X filings assumptions, our regulators. risks and

So dollars all amounts discussed otherwise today are in unless U.S. indicated.

I over to that, Harley. turn With the will call

Thanks, Carrie, joining today. and for us you thank all

we As the Shopify for building long each term. say quarter, is

QX was amazing the quarter across results another quarter board. consistent our after well. strategy that quarter Our incredibly confirm is working

They our and is up into Operating opportunities not up our was fifth quarter and simultaneously leaning are XX%. where greater doubled cash and These XX%. year, on expanded free leader, creating was flow growth. was XX%, margins, all that from consecutive growth GMV than growth an reinforce GMV just last Revenue than that income XX%. both delivering industry more while to marking margin numbers. Shopify bolster

growing and if this in, Shopify start of let are before with So dive is we away share by you saying capturing market. increasing vast from it be and me entrepreneurship these commerce one, and this: should walk an anything, call this expanding X things:

all is commerce. choice, just Shopify not for entrepreneurship, Two. the of but for go-to increasingly of platform

products. and across well segments, positioned geographies, merchant channels are extensive growth different We for size,

three. And

does As our better. merchants do Shopify better,

heart easy engine by fueled and that first, everything merchant makes high-velocity a prioritizes possible. model product business else innovation things the Our

heavily work why into quite key really with with together, well. is the and some we packed value This integrated so seamlessly dive Starting that creating building frankly, planet. build We accomplishments platform the on quickly really, in just most off in outstanding platform a is invest the the tools let's that Now the product. quarter. of works

don't and Shopify And it's come they also Shopify. why to why leave merchants

enhancements We products basis. daily and are literal shipping on a

rather quarter. So a to the you walking few the from laundry like I'd list, through than spend some highlights minutes give of now a

about automation. let's First, merchant enhancing talk

Our new run to sales or on be because their for nobody making more time compliance business goal it their easier starts are management. features merchants of inventory let's businesses a with the honest, focusing tax efficiently

These the business selling. make the for stuff are the the foundational they tools started products so on nitty-gritty first merchants in focus automatic they can place reason the

a automations automation much to API Shopify that customer with new automations. workflow A edit based form includes in run as more. a additional a actions trigger completed This powerful merchants so start Flow. admin XXX build empowers them use And newly app much to their Flow low-code custom provides tool, become submissions, their merchant's more data orders merchants automation and the Let's enabling custom more has connector new and that businesses an result, products, process on help and efficiently.

each on product information And to AI easy merchants unique merchant's to making inquiries. accurately customer for and based Shopify quickly suggest inbox, this super uses replies it to within now store respond

more just boost Shopify. conversion are In merchants in not, quickly about which and can this sales half turn or of merchants Replying our for how the become. responses, fact, replies suggest for for has edited using on average, feature showing rates, their means effective

of simplifies of most filing one and started compliance. within automate parts remittance of their complex out Shopify time finally, their can sales filing automated returns eligible And Tax, This rolling from the within preparation, saves Shopify tax sales Merchants merchants. the to tax admin. now we and

clear Shopify on. head merchants extended product And a way our QX, in focus to in get tackle borders. sell That's to the And the we across best our opportunity channels, successfully exactly EU. globally not commerce you the because saw make just do Tax we in simpler all as entire cross-border know, why cross Shopify of the complexities we to U.K. and taxes to

We've them for more in VAT insights tax developed accurate. we've make commerce, invoices value-added to We automated automated compliance. tax calculations and regional cross-border compliance introduced liability track that and easy national

their focus of All merchants can ensures our this growing on business.

grow gain Another our merchants product managed helping easily new allows globally countries that by which continues markets, is traction and merchants sell everywhere. enter to to

drive For some our results. to pretty incredible merchants, it's proven

EY recently of of those international that average our adoption to. increase a number found than growth higher of managed of sales countries XX%. merchants and the they they fact, sold their after analyzed was sample In XX% markets And the after on performance adopted merchants,

you Meanwhile, the a greater saw Markets merchants, for yielding an than is incredible. is of of XXX incredible at which XXX%, increase globally. they example if product merchants is result look truly Managed top that our another

Shopify Moving expanded devices, Pay Tap multiple Australia, digital available chips U.K. as countries, Pay processes in and point-of-sale. well off-line Tap like as Tap In we is the wallets and to By devices. Germany the to across Netherlands to merchants payments retail. now to Apple using Pay including the via Payments. Shopify from Pay and to contactless utilizing Android October, NFC cards in

create it in-person actually by powered to delightful this for matter? our So all truly experience why Because a enables consumers, Shopify. does merchants

introduced made sales we and For improvements. payment significant network off-line usability ensures during app, even Notably, we point-of-sale which merchants the support, disruptions. using uninterrupted functionality

and Shopify rate, customer on access to supporting by also among We adoption encouraging seen especially mid-market the personalizing merchants. which enabling experience has bundles, focus customer

screen view introducing We also split optimized the efficiency improved and for operational view. app point-of-sale search tablet a

customer in along build our returns extension reinforce updates, like fast. others second and expanding UI and making these to and commerce every capabilities with And drive in-person loyalty. accepting sales, foster to brand unverified retail, commitment easy affinity detailed In counts

package balance admin pay just dated integrated includes access. financial for have help comprehensive they bill we tools thrive. that a through Finance, sell, merchants like financial Shopify, Shopify the which is At capital, do services quicker Recently, also launched more all we we the than to products ensure our suite, and

of in plus payout flow. flexible and balance Each and unmatched credit like designed and in control Shopify more component suite this features higher better cash to next payment to is manage for with day financial offer efficiency options APY merchants

Payments, XX% highlighting which billion up grew and Pay products power only Payments, GMV, Shopify unlocks a like and Shopify the gateway also the the when product, merchants $XX which to features within was of Now payment available App. other penetration on in Shop Shop for our XX%, facilitated strength and key to leverage our

new of to up help diversity based of experience discover richness brands with new brands and App, they And learning buyers Shop showcasing App Shop love the home quarter, brands machine the the feed, models speaking their preferences. keep a the shop. The the uses merchant-focused this new on launched and on

early drive GPV to XX% a engaged our an ecosystem. higher sessions These with success and changes and with overall buyer increase seamless a recommendation. GMV These integration, have deep where our led in and with helps enhancements, already combined strengthens

On he cloud learning, AI Copilot. to the I spent developed at like CTO, out our engines multiple Shopify over a incredible recently CTO advancements topic of He served the where a machine joined team. give and decade new where want and who he spearheaded to Yandex, as services. products also search Microsoft, shout at

our X going since in brings that just I'm get a products only joined made pushing with wealth is technologies. over on stronger. us, in convinced he forward. search And AI and months experience impact, Shopify board, already a he's and us to enhancing significant

note Building our on bench. of that strengthening

Let's talk ecosystem. about our

We where an course, thrives, are partners, ecosystem of our creating merchants committed Shopify to everybody and our itself.

as the the reputation as is design. a have This result, preferred And collaborative the in earned we by success commerce world. partner

has which through payments This became with and an for million expanded offering average the integrated XX quarter, users. shopping our diversified we We partnership integration first PayPal. Roadblocks, active YouTube on affiliate program, partner daily with product over commerce we

world it's are flows that a increasingly everywhere, of is building. system about what creating of about where ecosystem, providing interconnected a seamlessly isn't thrive, where are working. it's We an and close record tools, all sizes to businesses It just can and we commerce

with our GMV increasingly all across doubled it. Offline our up long-term make past in market, was North combined are the of more got growth. and of developments greater quarters year-over-year to on-ramps years. of over was grew and international are incredible BXB, prove triple-digit XX% in the drivers approximately opportunities our XXX% offline international, GMV the to XX% results and more to BXB efforts we've in us cross-border and just QX X product the unlocking year-over-year Shopify continues QX consecutive GMV X us growth GMV. grow XX% go-to-market has of which business, now for enabling to had headway into multiple America, growth and than to And addressable than growth has and accelerating Our outpace

offline driving our dive let's what's So really success segment. the deeper in into

our in complex multi-location large in off, Our saw really go-to-market are XX% year-over-year This really efforts highlighting a strong locations increase especially with momentum. paying merchants. segment QX,

retailers quarter, yet. and in established our our point-of-sale X XXX women's retailers, Shopify, over point-of-sale their Akira stores fashion This the solution. systems retailer bringing like legendary Canada, omnichannel Billy fashion of store Clothing migrated footwear Lora, British and point-of-sale Reed Company to largest In migrations adopted

continue are on of established right an believe As brands, power being multi-location that to we increasing built of we number Shopify. brands now tomorrow favorite consumer also firmly

Take for on a brand into very modern a that example, grown furniture has quickly direct-to-consumer maker Shopify. large

truly and everywhere Shopify. was as New trust staying off-line This our and offline with choice. it Shopify their are in do York they an ensuring online, what for in City, our as sets between, us they that merchants apart, expansion launched flagship store stickiness their platform in Now obvious expand with

new September GMV BXB, set ever. we continue largest our In with highs records month single monthly to for marking

breaking tracking. enhancements collection to positioning Flow earlier, automation records, that I streamline these and Shopify keep tax ourselves are workflows the new improvements especially mentioned and BXB including ones We templates conversion to with like

While in sectors much also parts QX, industrial, hasn't and merchant we existing to automotive historically base, new considered stems of hardware date in territories Shopify. growth from broken that and our vehicles our

us. not us, they're considering just they're committing to Now

North We with pairing market increasing localization, We've marketing it's that efforts to international growth, to outpace key focus are which we're continuing on where France, and and continues America, made countries, to in especially Europe, intensified compliance and and enhancements working. our like share. shipping Germany also are

In top the Shop merchants like the quarter. QX, watch in signing brands Shopify international of cosmetics with company, XX% with Body year-over-year by increased Watches Switzerland, and retailer,

QX was about coming to of that Shopify. so in exceptional how now focus Okay, new an level quarter up product terms on waves brands market. enterprise and we're we've making channels, talked let's

File; designer, Brilliant For Counter; few. Entertainment fashion Offwhite; Reebok; brand, to example, company, a signed and we handbag brand, footwear a Beauty apparel cosmetics company, quarter, jewelry this name luxury Earth; Fashion Lionsgate

now powering apparel brands, and iconic Vera some We including are Bradley also Necessities. Haynes,

modular commerce brands who recently adopted flexibility gives component. Our components checkers like Onrunning, choose platform's composability large to the our

modular things integration happen is components best about the that can of One fast.

X incredible than API, a In fact, an Shop also Seriously, company go had had gear in up out, of showcasing we outdoor in handshake less under to recently button the ability but the robustness our happen not check full team's faster. Pay things and in weeks. make from our to running we their implementation only month,

not Shop Pay And also growth does and working. the Shu Conival Commerce stop really pathway that component, Victoria's coming the momentum is this Secret, to are to proof there. soon Stores further

Enterprise speed to brands flexibility, complex platform's all make are easier to from is switch. sets companies making our what Shopify. move the more And it are apart. larger, working to really verticals and We're it make constantly value us the clear for that

tool. new Take data migration our

to X data Shopify used merchants than merchant little as clicks. New take if import one can Picture products recently SKUs this, essential task days. as in that to hours, X not a over brought in minutes, less like XX,XXX now

to enterprise it data move significant a to looking reduction not to short-term deal a is massive for long play. the is to is friction Shopify. a it we migration as on for point are to the This ourselves a today in continue well To in major term, clear, and future. and big be merchants positioning opportunity build hassle It removes capitalize

push launches with With just XX in into QX enterprise started we enterprise getting market. the are truly alone, our commerce

back I we to how started. up, wrap circle let As me

top XX% a cash and another XX% was with line free margin. standout flow quarter QX growth

the I Shopify of in to yet. truly We best of version after believe the some results this the continue quarter industry is quarter. strongest deliver

it We increasingly This our are platform because size Shopify in sizes. and profile the with to us how is our commerce ability gives for really the cash the operating all we're and grow our pleased and overall especially making the of invest shape, business future. go-to merchants free flow

they needed year, As that our shopping busiest sale. for equipped can the the gear up merchants every of the Shopify with their back confident to reliability capture be season and speed, has tools

business. anyone of can into we a Shopify. future where not This the We are are reality thriving transform running just is the building an a and idea a platform, vision

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

the outstanding and future quarter. had investing cash our to Great. profitability, ability Harley. growth numerous results, business, in and free delivering growth both balance double-digit of We discipline, you, our our flow demonstrate margin. These consistent drivers delivering Thank another the with durability

up dive growth fifth into GMV delivered results. GMV drivers with was QX over as GMV consecutive quarter X same XX% our of again our Let's have we The year-over-year seen In QX, we Starting delivered that consistent this growth quarter. GMV. XX%.

to traction. growth XX% Same-store with U.K., Germany, the greater our by merchants, the gain platform, our GMV America in from and growing number in France markets internationally than sales merchants, merchants continued GMV North grew on our outside the continue growth QX. existing of of XX% led Plus largest European strong our as Netherlands growth

incremental outpaced of and the was delivering a broad we have The that Netherlands strength U.K. strength, only year-over-year behind of and the that GMV Germany and base in Europe. notable was France source demonstrating

off-line, And XX% our GMV had growth fourth, we point-of-sale where year-over-year.

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

a number and the from merchants of our penetration, billion, to QX. for third, the discussed, stemming shortened which the in growth And than greater increased and QX XX%, for year-over-year. revenue excluding pricing were: of Subscription lesser changes. The payments just up the growth QX sixth was key paid consecutive of Solutions the The quarter platform revenue of trials is drivers GMV quarter revenue XX% $X.X Plus revenue logistics. the growth strength hit growth in degree, impact the on XX%

outperformance in the Merchant penetration growth led strength outlook. our the revenue QX by Shopify relative XX% on to GMV business, increased of Stronger GMV drove year-over-year, driven International revenue our the across payments. Solutions and continued by

processed year from and continues throughout XXXX. drivers primary XX% partially headwind These partnerships as was Shopify to XX% which be a higher billion of percentage lower QX, $XX noncash was to of Payments a XX% compared of year. were last in on offset strategic QX by the GMV revenue GMV in than

GPV payments including Shopify of Several an globe merchants volume, gross than utilizing penetration a in of across continued percentage These performance Pay, payments, the Shopify Shop which which and of America. the business adopting factors drove greater the strong were which has of lower was the strength GPV are higher quarter's payments; Europe, Plus; the merchants those more quarter. by offset XX% our penetration of increasing North partially items in

each in number to up for QX was Subscription XX% of Sale pricing platform million, represented Solutions merchants was of QX by Plus with the seeing year. was QX. lesser continued variable on with X an MRR of year-over-year all The and fees merchants. growth Standard, the of XX% $XXX number growth increase change. quarter, in Point last an consistent and with up the was MRR of from driven categories Plus XX% over Plus revenue degree, primarily increase of a benefit the platform higher in our the and

$X.X the XX% for quarter, was profit year-over-year. gross up QX billion

gross XX.X% XX.X% to year. XX.X% for year. was Gross prior Our XX.X% Subscription the in XXXX. margin QX to margin Solutions to in compared similar XX.X%, last margin QX was QX Solutions Merchant gross was of compared

was amortized. The by lower the primarily largest from impacting fully us have from factors have decrease that been that partnerships all impact same now certain was year. noncash driven revenues The

sized equally impacts. with other roughly was X driver Payments the key

mix the a of as strong constituted lower saw usage card. debit payments payments merchants mix second, credit than a First, revenue both quarter, in of of Plus rather growth had higher quarter a and this margins overall and pressure we we the our card larger percentage payments; from on given higher in

other partially payments. margin the products Merchant by a gross have than which growth rate higher in Solutions our headwinds These offset were

expenses expenses. expenses Now QX turning were growth the Compared profit million the operating prior for were year, to or operating $XXX our up well X%, to XX%. operating or of of revenues. below dollar $XX million quarter gross rate XX% QX

to where compensation compared X year review July stemming compensation. higher operating X our increases in our percentage QX January the employee this to of of The appropriate. resulted cycles largest Each biannual merit-based process, increases overall low which single-digit prior and were drivers year were expenses from the compensation pay

sales We within key hired some and also roles R&D.

dollar of losses, important But had absolute a within increases Within on higher The for both range. we both note was transaction loans it's to payments. volume loans that remained businesses. these this our and losses and ratios capital function the consistent of loss

performance continued partner And to marketing finally, including payouts businesses. increases our we in core and in affiliate as marketing continue and to investment our support point-of-sale growing enterprise invest higher spend

of a of QX Partially offsetting in million year. estate real impairment terms $XX in last comparability was these expense year-over-year

expenses primarily brand and overall lower-than-expected much The came the lower operating point our outlook, begin marketing a in our to don't lesser lower for strength lower spend. nonperformance brand. we QX degree, to spend spend in spend Our of with, where and sale advertising, marketing was a than primarily due of enterprise to given

Performance testing bit operate primarily also and managing came We a firmly which of regarding decision driven by Marketing remain to lower was continue our some point to within investments the than run planned, in our little carefully to guardrails. sale. committed

revenue, For to million million from last year. the dollars Stock-based income was operating QX the quarter, compensation of of quarter. income operating was QX XXX $XXX than of XX% points was with free year. flow more cash delivering doubling last revenue, for million an or $XXX of compared QX XX% or expansion of $XXX basis

cash due expenses. with to margin combined expectations, in stronger operating free lower came better revenue, largely high-teens driving flow a This than GMV our

Let's now turn to our QX outlook.

quarter highest year including it the is Monday. Friday, As selling period, seasonally as includes volume holiday key Black the QX of a reminder, our Cyber

quarters. what we than have see We expect QX prior trends seen fourth to seasonality similar in

First, on revenues.

XXs strong that supported the revenue year. around revenue assumptions include expect far merchants so mid- the rate, percentage this of a same year-over-year growth have driven to at our our strength grow GMV. results by QX to continued high We These factors

QX similar gross a dollars are QX. profit to at grow year-over-year expected to rate

years, reminder, a with prior sees from of payments a QX given revenue selling consistent As season. higher the high-volume percentage holiday

expenses. operating to Turning

XX% We last be of dollars the XXX But XXX in operating areas revenues to XX% improvement expect be are down to importantly, absolute to QX expenses to to Compensation representing largest percentage these increases X marketing of basis revenues, a of our year. and GAAP both a expected of year-over-year. year-over-year. compared as point are QX

driven losses on largely dollar also by volume rates. higher We growth, loss payments which is expect not sheer

headcount the impact we year-over-year, discussed merit-based relatively the compensation, of in have to but the Regarding headcount expect in I mix increases and of will earlier flat shift terms keep per department. pay that some call,

Worth we have a expect we while as profit than faster dollars gross much OpEx, revenues, in reiterating percentage increase basis a again, though, we XXX decrease year-over-year to XXX continue to of points a OpEx operating grow that dollar in expenses. and

to stock-based expected million. to be $XXX Moving QX SBC compensation. approximately is

flow. Finally, on cash free

free both free QX to our cash expect margin dollars our to in margin us XX%, would which the of flow in quarter free cash We each flow flow similar QX cash throughout margin year. and result successive be XXXX increasing

margin negative on flow have year free XXXX to on from we outlook. gone year track high-teens in full X% based for our Moreover, being QX cash XX% to deliver to last XXXX

cash proud our and flow margin the all We scale. while expansion consistent and line both are at throughout growth free done top XXXX, XXXX exceptional of delivering growth of

the that flow the margin profile and past now It in profitability the back line strikes growth. The between of have achieved business balance have a is top place free and put to cash we we continue investing deliver outcomes right we decision-making work direct over couple result of These into to one disciplined are the like. years.

flow our have into years. evolution within similar account quarters we flow profile cash Looking that ahead, typical across stay a in free margin margins the X we seen business cash of aim past the yearly taking to

in down very the of that with additional Board. and Colleen will Board want who thank as she she all Thank of the One I leadership is Chair over look provided a before whole. Chair Shopify member has excellent for and closing. step Audit transition. to In into days, given forward Committee counsel Uber Colleen. the all the Shopify Johnston, Prashanth to for a Colleen topic service part planned Board more the on and I the CFO, will X Audit years, Prashant working you has and his coming of expanded Shopify from closely role. Committee step much, me the our has served team Mahendra-Rajah role that as

Internet, In an closing, quarter. of it serving was the increasing of exceptional businesses. millions Shopify continues system a to an for record power portion as of

and go-to share expanding Shopify commerce an entrepreneurship all this of commerce. grow, platform becoming for of market, is As the increasing capturing

and is partner merchants run technology just how other on to order give Our not their with seamless in our businesses. but success way work we scale, companies in also well a to

for of trust. this our merchants results long And these what the Thank and work possible. to quarter done for you thank is come team the Shopify began, to all your before hard to all you making next

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

[Operator Instructions] Our first Raymond James. from Peterson question comes at Brian

really Congrats on strong the results.

the GMV to quarter through thoughts to love comments I'd linearity how on quarter? understand expectations fourth on your any and early the came in the So and relative

as in and to comments Thanks Yes. talk I'm Brian. through was is some and bit your a Harley and outperformance, the comment that. of the key GMV, that both that it happy in the I in about have I we're my comments Europe, the seeing. that strength made relates brief strength terms this to of of some to The for element the little a to question,

it's comment Netherlands. And made about broad-based. pretty the I the

the lot I've -- in it's Spain. not calls, France, So talked a Italy, Germany, about past just of times

us, is of Europe well that's and the for All key outperformance. performing very X of GMV elements of

which strength on really to seeing us. of across this Plus. bunch the had fronts strength lot all the of for in well, We touched a a in It's pockets areas success We're addition of in I core obviously as Harley and and -- both all different we're traditionally have BXB. been

U.S., half have any overall strength quarter, the trends said, to about the in back It about that being it we about Europe. some the out think what merchants. doing strength don't the terms we of good specific just saw But feel say we was now we're quarter in other linearity in was we with and see than call think and Europe especially as right throughout I really we that towards the to the

Colin will question Baird. from at come Sebastian next Our

the appreciate opportunity Really here.

guys have But of going as the online number You is market Shopify. a platforms, marketplaces. positioned e-commerce the occurring Shopify against up levels the including consolidation of arguably, larger to smaller share

your of means things so wonder changing, what and how Shop how And consolidation I if views for the ultimately, App. industry is that influences merchant evolving plans your like that base product or for

One Colin, not Harley all They're when to happening, here, A looking for single-channel the of are unified I'll anymore. take it think, brands retailers. question. system. for couple board looking they're comes across commerce stand-alone that larger and things I products is

And GMV, those metaphor before they tabs. to this have seeing specifically the want high like of to operating compelling. from ones channel the is retail idea having complex very used unified that collapse these is browser future-proofed I've of companies, modern large that And browser tabs X. every and system And this across is we're that a what Shopify X

seeing that brands commerce really And calling mentioned components. in us. commerce are We of have have But product, enterprise we're we it was on larger Plus, really now off sort my we had larger Shopify compelling Shopify Secondly, to focus I our size this in X this historically, of an particular, because is brands, remarks, when came prepared fits have components, but Plus. we brands. now

Shopify's have brands, my of they later, taken. now example, like now Pay commerce on as one component has for weeks Or Shop X they've their checkout that that installed And brands favorite Onrunning, checkout. a

enterprise on-ramps these Shopify of are into there all side. gateways So or Shopify on to the sort new

about to an This on becoming brands checkout. liability. Shopify is are The that don't like would large that still some idea is have next want these a I thing optimized checkout of they competitive talk sophisticated very have

a so things And that's quite bit. driving also

with of large they're the thing have think third the favorite you're lot And transparent and we this they very and in a that thing coming cost combine larger at larger TCO. they're then that very consumers' fourth the enterprise total The brands getting. of -- pricing what makes of clip Shopify come understand a is ones when fact sort ownership, I exactly you And things, sorry, especially they're volumes. those brands, the to coming seeing faster it

I ramped will now think go-to-market that has our up. that especially happen, engine continue to really

you combine right incredible an unified go-to-market that effort, strong the with you pricing a is energy when get and think enterprise product results. very I and these

will next DJ at Hynes Our question Canaccord. come from

mean obviously on can quarter. Harley, the the perspective you nice a on there enterprise? especially what adoption, focused Congrats great BXB in additional that there, is further unlocks to from talk you're about on? product drive you I any you're seeing momentum focused but

talk Yes, recently of seeing come us there's a you're out, around for a couple that have and more BXB our additions, example.

product There's and bundles or conversion X features. tax I collection. like I orders. draft now supported tracking mean think particularly, shipped and new in QX alone, we things X major I think improved

result automation Daily Harvest Life Dermalogica a come and us Flow means BXB new which sign actually Craft you're now the customers, merchant. a well. if templates, to Shopify There's seeing like particular Fitness is can sales you're companies staff you and that to as and that And

So historically, those we that for felt also focused us. we're really rapidly. direct-to-consumer I low-hanging wholesale had of also I strong closing practice, or think think gaps brands like BXB on fruit fairly a that on sort existing that Shopify

We see beginning BXB specifically wholesale our merchants merchants are product. now are BXB to exclusively now for come Shopify to and that

water in as direct-to-consumer begin seen to in their actually them some eventually, well. the toe cases, dip And ongoing we've

my entirety operating begin to in your system. channel, make particular once beauty unified you comment for back about So retail commerce this your that but you're one of The of in to system. you the come earlier Shopify that is -- ecosystem, the

already there's $XX last future quite on specifically getting BXB, to BXB closed think opportunity, a it like and those great gaps since just close gaps billion is a seeing -- think a our these We're I doubled we're and we point, think able TAM. We quickly. But quickly, are GMV pretty your year. that's

from question next Coupland Todd will CIBC. Our come at

impact Can you how the of tariffs much China Is your Trump from about do there election estimation just of with talk can to China GMV wanted of I the whether talk way. to anything your out you merchants? about is the impact will them? and coming help U.S.

do Yes. any need for that to Maybe operating across over armor multiple can't anticipate do. decades what we been we've whatever X start. I But tools presidential to the mean with they we in of people merchants the compete I'll just administrations administration and can is sort Shopify do going now is environment.

for to In there able COVID, pricing. we In to cycles, competitive for we're times were example, online, really everyone tough where economic them. move provide had transparent

job merchants. our to is our So support

a Specifically, huge our provide well. do to is not we've service We matter merchants. It that way for to on us. what China, for Shopify. support the But and years. historically area no back big job not really I our a area them comes been proven it the for again, with tools over has to navigate and them of And last XX it's think

formation in of Trump and Kamala, there overall entrepreneurship. we've heard I'd only And we think nor state just new from from the add, nothing business have thing been which Yes. what the Todd, would there's other anything impacts

change out So there, to to about we merchants still administration. that's going businesses, start all that want obviously entrepreneurs good the all not feel new and really the the with

MoffettNathanson. Our at next question comes from Morton Michael

AI of funnel search you're for first e-commerce overlays I'd then changes thinking This time decades. changes? your and merchants changing could for search some is new e-commerce seeing to discovery and the how what occurred the the for consumers to even the it mean start-ups have days, about for know that love in of as in search the experience early of experience, but years Harley. we're some right? experience, I know it's largest the

matters Look, a little product focus we It's talked that how trying they Yes. more and you for using Thank think support fact is about every get make most. on from great AI I more we're Shopify's call a engineering, way also question. are way about about department I the AI to that what I can question. internally AI entire a build efficient, just talked perspective, easily productive. using bit so the to have across and finance, some tools their jobs in the to internally, sales, on build frankly, merchant

suggested because they focused deal, on mentioned And means focused merchants but their more things it's can be not building our need I inbox, products. seem and Shopify big like to huge the on deal of may a which a that it replies time like spend

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question. Thanks for your

Our come Securities. Mizuho question Panigrahi from Siti will at next

for -- enterprise in big I Help vendors space. some go-to-market. business, displacement a just also dig see and want to of part that's I you're know it's seeing it existing they what us slowly uptake? go-to-market strategy solution? there? And their when total of for how replacement? the your that try market customer trends you what's Is like enterprise like Or replace are -- the penetrate kind you of understand the into mainly or the to

which Shop to I across the or Checkout other the say they cases, begin cases, of or X go-to-market replacement, some work living the on to us commerce on that would it's with is Pay goal. components. board. But execution total In is want In obviously

these a longer businesses for done for have you every have momentum. shifting Victoria's of narrative everywhere no is brands, great Reeboks when of job the Shopify the business, this sized world in brands, coming these it and We're Onrunnings more and incredible that North even we now begins in the America. to the world. create further And iconic really just small the -- us, to And Secret

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us seeing this go-to-market. our support also efforts increase marketing to You're

teams think is here sales has marketing need So bringing the successful architecture I with great really architecture. working. reason been modern assets and commerce companies, the together e-commerce modern unified best brands And modern we're

less I not to over brand them provide the to speed a to commitment than of migrate mentioned SKUs able is those idea we're can do. XX,XXX something that that X minutes, SKUs unified. think in volume to with this The market able of that companies I innovation, to most And XX,XXX being is

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Thank question. for your you

come Our Securities. next at Boone question from will JMP Andrew

X comment guidance. about ask on to wanted I Jeff,

the similar we speak that? cash just you investing And to either margins about think flat? been implications or said it do as of guys seems Can what are flow going has free You how headcount like that you forward. in

Yes.

see of in year at forward, and think I of margins year. have I the terms quarters margins look my in of comments through to is one about this from flow cash year flow cash a both the free just want perspective out last do things of each start terms the how and throughout played going similar the

free in And getting to you flow of can where year QX expectation we year. the last in cash see about margins of again to were comment this us my

business. the dollar the can good of business a the what very especially as everything a gotten gotten where think every X of very we incremental now a where invest over cash we've call, free to last this like think to and years, growth I on flow and flow do balance profitability sustain the spot, mentioned into long-term mentioned, in cash I say we I to we've as free -- want back we've do to to think good good the feels we continuing I I terms struck solid where margin we

as So Andrew, we're we're around going any AI, the continue to to automation, not of that how trying disciplined down do headcount. around we use everything slow you in that in to mean or doesn't, way, shape terms leverage around form alluded to, the

direction of be Day, little in everything team built the at point effective now. and proprietary make We talked Shopify talked at that less year ago to a some more doing. than we're Investor Investor highly Day it's GST, in things ourselves a systems, OS, efficient, I about our we've bit the guess, We internal really the right

So all going of continue to do to that. we're

things durable enterprise, that see right But growth and momentum what sale, in what that we incremental what all we're doing for doing the terms in comments, international. about, of opportunity the to we're supporting elements of this of we the the the we're goes doing in line growth point I on us really now, also dollar opportunity top and and the into a see our to both in Harley also sure talked alluded and make back we've

really not aggressively higher that business. and element continued instead on free to it's push of of So growth flow cash focused the the trying margins

So I that's context can you best really under. give the

Thanks, Andrew.

comes question at Mark Zgutowicz Our from Benchmark. next

first in contribute X next starting of year. I appreciate or of your half it. terms Jeff, you've alluded enterprise to just pipeline the last quarter in to perhaps

the of in can you contribution if that the size or curious of first quantify year? half next Just maybe qualify

and give out. we're of have to a I think this incremental would just and top which on Mark, how Yes, real about made the in terms you moments we numbers some ago to Harley comments enterprise I I the go-to don't playing say of is growth. few where echo seeing market any that's how what line

addition the sometimes the terms from in all in lending space, overall bit we've and the X, order Obviously, well cycle. X, to take things of marketing fuel selling would and this that's a can in covered. we've some cycle XX been I know dollars following order as selling the it the momentum enterprise about just cycle. other in we've little and you say, support to talked in to things then helping the through months enterprise On average, implementation get

an go had of the amount can in talked call a of it not we on because get and take we've and those of faster, Sometimes much couple quickly. running instances our can't very in and terms time terms some how about these of equal implementations last implementation, can up technology Harley

of stack and X on X, of X, been average, making on cycle, say the months months implementation months on selling in really kind we're top -- lot having top of X roughly and of XX really a the other, each X, X But enterprises say, kind with these enterprise of of X XX on know, kind I years working other we're stack we've XX of in taking a volume X, each platform, and us. those into on now. really if you months you months push months kind And cycle, XX it's don't

early Mark. in days think I very of still the this, we're

points, I XXXX. next numbers than and number year's of to to of just have more give it's XXXX is to example, don't growth any add say be phenomenon the you going X going for to basis So it's a exact rate. this

you for Thank question. your

Capital Martin comes question from next Our at Toner ATB Markets.

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announced we should about of with Fantastic. monetization progress anticipate? uplift economics ask back does September? potential that in PayPal guess, I your or unit this kind to over platform? to Any how I time one, enhancements wanted the

why we tabs, it's me for of sort those about want our we get because optionality. make easy merchants browser let mentioned to all it unit conduct did economics -- into we start effectively us, all sort to really of their it mean, Yes, just We want to I I before important. for it's business.

example, after So the now, from PayPal seen can your integration Shopify directly this transactions, Admin. be for all wallet you

reason this they're So think why of think is already what more of effectively, partnerships, is we're And do about when we you trying sort operate using. to so should things what sense. lot can made make a easier about with that's these merchants sort the it of

could biggest around can for else to the sort if Optionality transactions well. of really is will matters to mean recognition really add gross Shopify, Shopify to wallet premium PayPal which to a transactions, not anything revenue be to moving card on that? take at be it the the I as economics you Payments. Jeff, typical just I'm are -- change I X sure want them.

and with a of function of level transactions. integration that's did the we -- PayPal just It's wallet Yes. these on

we're And would back between process the make so we situations into sure this end. really specifically goes PayPal differentiating with on where

that holistic a being use business. I they're their so more of the view using Shopify done, did sake to Wallet, of a admin specific dashboard transactions, run than effectively given that use to these This PayPal chooses button for merchants the really our integration we've is to that the are able which the the situation Harley that from all pay alluding we give to they're consumer and PayPal to

comprehensive a all all payouts, the of have They orders, reporting, those things. chargebacks, the of the through the the view transactions

is of those types of the that revenue Harley on which One specific to. of change the transactions, recognition outcomes alluded

past gross the is now going we're from to those net gross a been in what revenue had -- the on So recognition. going revenue recognition

very uplift headwinds it's to to on a that, dollars profit the and margins at some terms that the going in activity Importantly, be this that incremental But gross of dollars, -- profit some Wallet PayPal will for it's effect September. on agreement end transaction rate, us. of growth we though, revenues, went at gross while there's signed to into

So of a this be will little bit more XXXX a phenomenon.

Young will question next from Barclays. at Our Trevor come

in channels feeling with internal-facing to tools we comfortable at to you Great. might just adjusting ROI Should optimizing about across your year cash spend this run so and on to Jeff, comments marketing back maximize forth. year? next on of lean XX% comments assume us that and the heading put that in about marketing further Help earlier your flow kind high-teens, free margin. room into

in nonperformance focused marketing Shopify I engines; strategy terms think BXB, think and in but performance both -- don't that I marketing we in Trevor, change marketing, do calls, X the et don't free we of topic perspective, no spent have last in there's cash and about a prior flow. our time things obviously, everything cetera. one, more From any the on supporting on obviously we the think that about the or can change remains of, growth two, like the expand enterprise, Well, how terms we point-of-sale, marketing how and in on helping there's core

So terms guardrails. nothing there's vantage from changed nothing our point, changed of payback in marketing a that's

cash free I there's the of a few the obviously, on mean, reason, flow, why think part reasons. -- I

can everything we margins around to headcount, flow these it get cash AI, systems. is before, alluded reasons and I disciplined internal around doing to our the we're free of One why automation,

to So operations. going to going of continue our to terms and more in more We're efficient be those. to internal leverage we're continue

R&D we're is right, a marketing. on decision we're so in is we've cash about impacts development, both that impacts topped clear, whether proactive dollars, think which any we gives making invest those AI, think it out those dollars of terms which maybe think saying, to team, flow not go these the things. us marketing so that be the way that initiative margins, about pump not back It's don't I all in this a "Oh, all -- it how margins, And not the think certain marketing, spots, the maybe in in whether now into we to back free I upgrading say, making product don't case R&D team, adding well, how we be additional marketing." to can specific

for you Thank your question.

Ball [ ] Dominic from Redburn come Atlantic. will question at next Our

shortfall One the evolution changing nature search content. of of question on discovery and the

do How think bit the little is So can color on And how can a the us Shopify to YouTube merchant integration? give this going uptake? more it about big really you you get?

very then likes them sale to it YouTube is We've this cooking creating wants is particular use an a working when for and about one The new started live of whereby that purchase their audience every doing the relation talking Google affiliate long on live a becomes mean, if also their collaboration of with been and realize much content We wants with pretty for product actually eventually us. I realize YouTube, this And Yes. to that idea to what creators a from show, brands program, is with and example, that the of one for sell were isn't selling. YouTube very, guess time. in and we for with partnership originally. a actually we launch comes partner I or Shopify.

also because is audience, YouTube felt across that Shopify creators affiliate can it really a it a these means obviously now merchants like monetize So their which positive. always channel further creators for them allows through we fees, new the through but find thing sales great it think to

mentioned where But channels, or make level, a prepared to purchase, do area these macro they're through any my that remarks, consumers I of YouTube at these Shopify. every other also sure to surface whether able here to want idea it's in is may -- the so Roadblocks

us of things. those to And so you'll do continue more see

there merchants seen, because their that is find of this audience, suspect success in terms other really be is YouTube happen how with In find to they'll affiliate it's particular will to that particular channels a well lot of core remains What going early. still I similar fair, works to their audience our that some pretty dynamic. will

cases, that other otherwise new helpful. point front of And on just not have a make is it on be In effectively we in to audience to that's order in be to want it so that Shopify. get you that, can the may that not. merchant every But point. The they again, may Shopify do

to just is reputation integrations And do see thing partner. actually, that technology, a but when us company and about X of or -- more is sort of got of the One means just more quite great has a at any so great that means years. just not often make, you'll not take usually integration Shopify rapidly. they commercial holistically, in thinking any sort call industry first a months of or the commerce, doesn't size happens is these that it we is this. And of have And partnerships. these commerce what I'll continue and Shopify really good being mention thing It

proud very I'm as so a showing And up great Shopify of partnership company.

you for questions. your Thank

Our question come Mathivanan next Cantor will at Fitzgerald. from Deepak

about How to on what color for or we terms the after of made the Harley, the all can consumer Shop App? your you what X you're give behavior you say, recent seeing in in next think use product additional X on going should enhancements strategy the informs this years? product forward, repeat

which and same, strategy to merchants to create drive new the connection we want customers. Yes. ways I with for remains product is mean to the engage authentic

for traffic sales. Shop them it an help that to is that We and channel make real real also owned want can merchants drive

to -- sort they're enhancements Madden, We're Drake, promotions, but these becoming cultural launching the Beast, And brands, also seeing is are on Shop these Shop. force. working. Mr. come shop to I directly incredible Steve things mean all not incredible do just of

major up way drivers Search compelling. makes think the them. to also the for Shop more do is has the and of these these brands it's time, cash relevant, important big co-marketing, some We with way really one That merchants, for shop of very some become search giveaways And together merchant also personalized. teaming then AI more

the I a cases, of to of an increase in buyer sessions LTV improvements with -- I to it. it's terms where goal continue idea can new a that our new ultimately, we've think App, and merchants So some XX% made, in the home terms so but of you'll in the the change use Shop our here, mean, where recommendation for we led actually see engage in increase is feed, who for have example, going, help

with, the something not help love. otherwise that want Can reengage find my if with earlier, to brands you to Shopify a that and to Shop here to point do consumers we continues they brands and part if key also encountered you really of, this well. App already be engage And you is have is want have to be the on

Thank you Deepak. Financial. question, And Bank question Richard at National your final for come will our from Tse

You talked commerce. about a Shopify record for system being of

or fair opportunity replace say chain? ERP, look that commerce, existing of CRM such we as to out an So is ahead, it records systems so have beyond as supply to you

connecting ones. In we about the really of case with ERP and good best feel actually CRM, the

ERP great us, it cases, an of to easy brands And as make large that a so with integrated their some enterprise well. in coming really these come across integrate. are to CRM we lot company; system a And they already

not on. ERP that we something CRM focus -- So is and is not

about are retail. We commerce company. We care a

that And previous in commerce We very the focused it on really distractions. quest. the systems, we CRM seamlessly to we're of and couple a main we're again, others that calls, connect the like your focused easily made Shopify. Shopify, when don't are However, to last made to company. have the able sort existing easy. is our I -- changes Quest mentioned But function systems you back into ERP a actually over to of come years side critical we've We've

and So it's integrate to it to area you view make we're the is not that into. system go ERP that easy it but Shopify, really going bring an prefer our to

now hand it remarks. Thanks question. for closing to for Harley some back your I'll

call, Shopify following you've of to been time. I those Look, for want say from a and the have but you lot Yes. heard Thanks, for I the Jeff story that just some Carrie. on this, quite

are know You we that that is on laser-focused merchants. company a our

we have we think them help You've long-term could succeed. heard a that that vision very

has continue see leader seize I results to us in Jeff as quarter discipline think deliver, these as establish with this and And enabled results, will some you ourselves opportunities in the as can the to the of to further strongest you see us from described, after industry commerce. quarter. invest,

and operating. We really I grow our how this We season also to crush our business wanted at the want invest and I we're yet. with back think to it finish the gives so this future. the into us in really the point. like to of Shopify our the just to and now merchants helping We shape. future, And holiday us, best well like version for repeat, that size, ability is

So this call. thank on for all us you joining

XXXX third call. joining our Bye-bye. quarter Thank conference concludes us. you for This