Shopify Inc. Q2 FY2025 earnings call

• Past investments are paying off with strong Q2 results, including $2.7 billion revenue and 16% free cash flow margin.
• Signed iconic global brands like Starbucks, Canada Goose, and Burton Snowboards.
• Product innovation: AI products like Sidekick, Universal Cart, and Checkout Kit; AI store builder; catalog launch for AI partners.
• Payments expansion: Shopify Payments available in more countries, multi-entity support introduced, USDC stablecoin option added, Shop Pay GMV up 65% to $27 billion.
• Shop App saw 140% year-over-year growth in native GMV, fueled by events like Shop Week.
• International growth: Europe led GMV growth, Shopify Capital available in Germany and Netherlands, Shop Pay Installments GMV up 38%.
• Upmarket strategy success with sign-ups from large enterprises like Boart Longyear, Miele, and Signet Jewelers.

In Q2, Shopify delivered revenue of $2.7 billion, up 31% year-over-year. GMV was $88 billion, up 31% year-over-year. North America and Europe were key drivers of growth. Offline GMV increased by 29%, B2B GMV was up 101%, and international GMV grew 42% year-over-year, with Europe leading. Shopify Payments penetration reached 64% in Q2, up from 61% last year. Merchant Solutions revenue increased 37%, driven by GMV growth, and Subscription Solutions revenue grew 17%, primarily from higher-priced plans.

• Q3 revenue growth expected in the mid- to high 20s year-over-year, driven by Merchant Solutions growth.
• Gross profit expected to grow in the low 20s, trailing revenue growth due to factors like PayPal accounting and paid trial changes.
• Operating expenses expected to be 38%-39% of revenue, with marketing being the largest driver year-over-year.
• Q3 stock-based compensation expected to be $130 million.
• Q3 free cash flow margin expected to be in the mid- to high teens.

Q: How is traffic shifting towards AI assistants and gating factors for commercial use cases?

A: Harley Finkelstein said Shopify is preparing for agentic commerce, with ongoing innovation and partnerships to ensure merchants are front and center, but too early to tell if it's taking market share from other channels.