Shopify Inc. Q4 FY2025 earnings call

• 2025 was a year of durable growth, with Q4 being the highest revenue quarter in Shopify's history, featuring new merchants like General Motors, Sonos, etc. • AI era impact: Shopify co-developed the Universal Commerce Protocol (UCP) with Google, set to standardize AI shopping. Agentic storefronts allow merchants to syndicate products to major AI platforms. • Off-line retail: Continues to grow with focus on speed and simplicity, aligned with unified commerce philosophy. • Shop app: Reimagines discovery with tailored content. Shop Campaigns revenue doubled and merchant adoption tripled in 2025. Shop Pay processed $43 billion of GMV in Q4 2025. • AI tools: Sidekick AI assistant generates custom apps, automations, etc. AI-powered tools used by over 0.5 million merchants to create 6.5 million custom elements.

In 2025, GMV was up 29% to $378 billion and revenue topped $11.5 billion, up 30%. Q4 2025 was the first quarter with revenue above $3 billion. North America revenue was up 28%, powering over 14% of the U.S. e-commerce market. International merchant base revenue grew 36% year-over-year, with nearly half of merchants outside North America. Off-line channel revenue grew 27% to $748 million. B2B GMV in Q4 2025 was up 84% and 96% for the full year.

• Q1 2026 revenue growth expected in the low 30s year-over-year, driven by robust payments growth, merchant acquisition, international growth, etc. • Gross profit expected to grow in the high 20s. • Operating expenses expected to be 37%-38% of revenue, an improvement from prior years. • Free cash flow margin in the low to mid-teens for Q1. • Board approved a $2 billion share repurchase program.

No specific risks discussed in detail during the call, though forward-looking statements are subject to risks and uncertainties as mentioned in the opening remarks.

Q: Colin Sebastian at Baird asked about Shopify's ability to monetize transactions through AI surfaces.

A: Harley Finkelstein responded that monetization through AI surfaces is similar to online store transactions, with Shopify Payments being the channel, and economics are the same as online store transactions.

Q: Ken Gawrelski at Wells Fargo asked about ecosystem development for agentic commerce and monetization opportunities.

A: Harley Finkelstein talked about UCP, agentic storefronts, and how merchant success drives Shopify's revenue, with the business model tied to merchant growth.

Q: Shweta Khajuria at Wolfe Research asked about economics, competitive dynamics, and free cash flow margins.

A: Harley Finkelstein discussed UCP's role in covering full commerce journey, and Jeff Hoffmeister spoke about free cash flow margin philosophy remaining consistent with prior years.

Q: Martin Toner at ATB Capital Markets asked about agentic AI and UCP accelerating enterprise adoption.

A: Harley Finkelstein stated that the agentic plan is an on-ramp for brands not on Shopify, helping start conversations and potentially leading to full platform adoption.

Q: Keith Weiss at Morgan Stanley asked about UCP vs ACP standards.

A: Harley Finkelstein explained UCP covers the full commerce journey end-to-end, from discovery to checkout to fulfillment, and is built to maintain merchant checkout logic.

Q: Paul Treiber at RBC Capital asked about merchant feedback on AI road map and custom solutions.

A: Harley Finkelstein discussed merchants moving to Shopify to simplify their operations, as they prefer focusing on core business over maintaining complex in-house systems.

Q: Tim Chiodo of UBS asked about Shop Campaigns.

A: Harley Finkelstein talked about Shop Campaigns' growth, new surface areas like X, Snapchat, etc., and how it's a risk-free customer acquisition tool where merchants pay only on conversion.