Q1 2025 Shopify Inc Earnings Call
Good morning, and thank you for joining Shopify's first quarter 2025 conference call. I am Carrie Gillard, head of investor relations, and joining us today are Harley Finkelstein, Shopify's president and Jeff Hoffmeister, RCFO. 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 in their first subject to risks and uncertainties that could cause actual results to differ materially from those projected. Undyreliant should not be placed on these forward-looking statements [inaudible]
We undertake no obligation to update or revise these statements, except as required by law, you can read about these assumptions, risks and uncertainties in our press release this morning, as well as in our filings with US and Canadian regulators.
We'll also speak to adjusted financial measures which are non-GAAP and not a substitute for GAAP financial measures Reconciliation between the two are provided in our press release and finally we report in US dollars so all amounts discussed today are in US dollars unless otherwise indicated with that I will turn the call over to Harley
Harley Finkelstein: Thanks, Carrie, and thanks to everyone for being here today. Let's start with the obvious. Today's market is uncertain. As the platform that powers global commerce were of course monitoring for potential slowdowns.
Speaker Change: But, our data through April shows a little evidence of that. It's still early to assess the full impact of the current trade environment. However, Q1 saw our trend for consistent quarterly growth continue and more on that in a minute. It's still early to assess the full impact of the current trade environment.
Speaker Change: First, I want to say this, Shopify is built for agility and in many ways these days are just like any other We're here to help merchants of all sizes absorb change rapidly and it's still This strategy does not change as the landscape underneath us continues to shift We're here to help merchants of all sizes, we're here to help merchants of all sizes, we're here to help merchants of all sizes
Speaker Change: So as we sit here today, we cannot predict what administrations around the world will do. But what Shopify can do is, can you be the guardians of our merchants? We show up, we build, we ship, and we make commerce better for everyone, from entrepreneurs to the largest of enterprises. [inaudible]
Speaker Change: Now it is not hyperbole to say that businesses do better on Shopify, it is a fact since 2015 growth rates for 38th at a 39 of reportedly merchant cohorts have outperformed the overall e-commerce market. I want to repeat that.
Speaker Change: Simply put, businesses on Shopify are more resilient than businesses that are not on Shopify.
Speaker Change: That merchant resiliency, combined with our operational excellence, will continue to set us apart as we navigate market uncertainties ahead
Speaker Change: I need to remind everyone of this. This is where Shopify's agility really comes into play. We've built a business model that allows us to adapt very quickly and pull the right levers to manage through challenges. [inaudible]
Speaker Change: Those levers mean we can prioritize tools and support needed for merchants to thrive in any environment.
Speaker Change: We power adaptation at lightning speed, whether that means season new opportunities for growth, or responding to changes like we're seeing today. Again, those building on Shopify are better prepared than those who are not.
Speaker Change: And with that, the Q1 numbers speak for themselves, so I'll keep it brief.
Speaker Change: Coming off of a very strong 2024, in Q1 of 2025, Rebue was up 27% and Free Castro margin hit 15%
Speaker Change: We saw real strength and key growth areas with offline GMV increasing 23% and B2B GMV delivering another triple digit quarter of growth up 109% from last year.
Speaker Change: International GMV grew 31% and cross-border held study at 15% of GMV and we saw continued growth across from Entrepreneur through Enterprise.
Speaker Change: Balanced across both existing and new merchants to deliver a seventh consecutive quarter of GMV growth above 20%.
Speaker Change: This is what we mean when we say our business model is built for this [inaudible]
Speaker Change: Our formula for growth remains the same. Operational discipline, plus a real commitment to innovation.
Speaker Change: Look at our free cash or profitability. Look at our operational efficiencies. We can be both disciplined and innovative. This is the operating model you've come to expect from us and should continue to expect to see from us moving forward. This is our free cash or profitability. This is our free cash or profitability. This is our free cash or profitability.
Speaker Change: Okay, now with that out of the way, let's dive into what we've built to help our merchants adapt. We've shipped a lot and we've focused on areas that we can have a more immediate impact.
cross-border trade.
making it easier to buy local
Deuties calculations and shipping.
Speaker Change: It is incredible what our team has done in just a few short months and this is just the beginning.
Speaker Change: Next, let's talk about making it easier to buy locally. On the shop app, we introduced a feature that allows buyers to filter products by country. This promotes local businesses and enhances the shopping experience that's generated hundreds of thousands of unique sessions since its role at alone. [inaudible]
Speaker Change: Moving on to Duty's Calculation. In February , we made our Duty's Calculation available at Checo for all merchants and reduced its price to just 50 basis points.
Speaker Change: Moving on to duty's calculation. In February , we made our duty's calculation available at checkout for all merchants and reduce its price to just 0.5% making one of the most affordable options in the market.
Speaker Change: By the end of March, the number of shops actively using this feature nearly doubled since January . [inaudible]
Speaker Change: and later this month will introduce duty-inclusive pricing, allowing merchants to set international prices that include duties in the product price.
Speaker Change: This ensures transparent pricing from the start and helps customers avoid surprise fees at check out. And just this past week we launched TariffGuide.ai. This AI-driven tool provides duty rates based on just a product description and the country of origin. This AI-driven tool provides a product description and the country of origin. And just this past week we launched a product description and the country of origin.
Speaker Change: Sources in the right products from the right country can mean the difference between a 0% and a 15% duty rate for hire and Terrificide.ai allows merchants to do this in minutes, not days. [inaudible]
Finally, shipping and fulfillment.
Speaker Change: We are simplifying international shipping for merchants by enabling them to purchase prepaid shipping labels known as delivered duty paid or DDP directly from our platform and expect on board several carriers soon
Speaker Change: Additionally, we've expanded our network of three pale providers through the Shopify fulfillment network app, enabling merchants to access more local warehouses for order fulfillment, utilizing local warehouses' speeds of fulfillment times reduces shipping costs and simplifies returns for buyers in those markets.
Speaker Change: What all this should tell you is that Shopify moves at a pace unlike anybody else.
Speaker Change: Truly. Our reaction time to uncertainty is unmatched with the best engineers on the planet rated to tackle whatever lies ahead. Our obsession with unlocking every opportunity and filling every important gap in the system to give our merchants the best chance of success is one of our superpowers.
Speaker Change: Shopify is a different company, moving rapidly towards what is next. [inaudible]
Speaker Change: We rolled out the shop app filter in less than a week, and the duties calculation a chocolate update over a weekend literally the weekend after the tire of changes were announced the team got to work and by Sunday evening we were testing it for production
Speaker Change: This is who we are, a company that obsesses over our merchants by thriving on change and living at the cutting edge. This is why our merchants consistently outperform the market, and this is why they trust us. Before handing over to Jeff, I want to touch on some other products that are foundational to our long-term success. This is why our merchants consistently outperform the market, and this is why our merchants consistently outperform the market, and this is why our merchants consistently outperform
Jeff Hoffmeister: Let's quickly take a closer look at how we're continuing to capitalize on these opportunities, starting with payments.
Jeff Hoffmeister: We launched Shopify payments in 16 new markets, Mexico, Lithuania, Poland, Norway, Latvia, Hungary, Estonia, Malta, Croatia, Greece, Slovenia, Cyprus, Bulgaria, Lichtenstein, Luxembourg, and Gibraltar [inaudible]
Jeff Hoffmeister: Now, I know that's a lot of names, but that's the point. At the end of 2024 and after a decade of offering payments, it was in 23 countries
Jeff Hoffmeister: With our Q1 expansion, we nearly doubled that, bringing the total to 39 countries now supported by Shopify payments
Jeff Hoffmeister: Adding more products in more markets remains a key driver of our international growth, and with these country launches even more merchants can process payments seamlessly in their home countries which is crucial as tariffs and economic factors may complicate cross-border trade.
Jeff Hoffmeister: But we did not stop there. We also launched multi currency pales in 20 countries across Europe , allowing merchants to receive payments in their preferred currencies, essential for operating globally and minimizing the impact of fluctuating exchange rates. [inaudible]
Jeff Hoffmeister: Now, as we look at the success of Shopify payments, it is clear how foundational it is to our shop products, the buyer facing side of Shopify that is all about making shopping simpler.
Jeff Hoffmeister: One of the biggest advantages to our merchants is access to shop pay. And in Q1, shop pay GMV was a 57% from last year, processing over $22 billion in GMV.
Speaker Change: <unk> momentum in Q1, hitting over 94% year over year growth in native Jim V. An impressive acceleration from 84% growth last quarter, especially considering the seasonality of Q4.
Speaker Change: Sharpie installments launch an early access to Canada, marking another important milestone in our global expansion with more countries on the horizon for later this year.
Speaker Change: Let's talk quickly about AI.
Speaker Change: AI is at the core of how we operate and is transforming our work processes for those who have not seen it I encourage you to check out toby's recent companywide email on AI that has now been shared publicly.
Speaker Change: At Shopify, we take AI seriously in fact, it's becoming second nature to how we work by fostering a culture of reflexive AI usage, our teams default to using AI first reflexive being the key term here. This also means that before requesting additional headcount or resources teams are required to start with assessing how they.
Speaker Change: Meet their goals using AI first this approach is sparking some really fascinating explorations and discussions around the company challenging the way, we think there will be operate and pushing us to look ahead as we redefine our decision making processes in.
Speaker Change: In the past couple of weeks, we built a dozen M. C. P servers that makes shopify is work legible and accessible and now anyone within shopify can ask questions find resources and leverage those tools for greater efficiency. This reflects abusive AI goes well beyond internal improvements, it's super charges, our team's capabilities and drives operational efficiencies.
Speaker Change: Give me as agile and as we continue to innovate AI will remain a cornerstone of how we deliver value across the board on the merchant facing side of AI in Q1 key developments for psychic included a complete re architecture of the AI engine for deeper reasoning capabilities enhancing processing of larger business datasets and accessibility.
Speaker Change: All sort of languages, allowing every shopify merchant to use sidekick in their preferred language and these changes will they are working in fact, our monthly average users of psychic can you climb more than doubling since the start of 2025. Now. This is still really early days, but the progress we are making is already yielding some really strong results for merchants both large.
Speaker Change: And small sidekick is yet another reason that merchants on shopify will have an unfair advantage for whatever lies ahead, okay switching gears, a little let's talk about the progress we're making in some of our key growth drivers starting with international we see the opportunity to capture market share in every European market as well as in Asia, and Latin America in Q.
Speaker Change: One we saw Europe's GMB grew 36% year over year, which clearly shows that we're gaining traction and expanding our presence in this key region led by the U K, Netherlands, and Germany now I already mentioned some of the product features we are rolling up to merchants to navigate the current landscape, but we also continue to strengthen our foundation for international specific features with.
Speaker Change: Improvements to AI powered translations and new privacy compliance functionality that these enhancements to the product combined with our continued investments in marketing are helping to further grow our reach and market penetration in these really important countries.
Speaker Change: In our offline business <unk> was up 23%. This quarter. Thanks to continued strong growth for mid market and Multilocation merchants. We're also bringing on more established brands onto the platform like F. O Schwartz, just cozy and the iconic Japanese watch company Grant CECO now while this flexibility is really important.
Speaker Change: Our true value goes beyond simply enabling these offline features it lies in building trust and partnerships through our merchants a unified commerce journey online offline and everywhere in between and a perfect example of this is our recent partnership with Allo The athletic apparel brand that's absolutely crushing it now they wanted to implement the same day.
Speaker Change: So they approach us with this idea and we obviously were onboard to make it happen by integrating with partners like Uber and door Dash Allo can now offer quick same day delivery options, allowing customers near the retail stores to receive their gear really really fast. This is exactly how we support our merchants in staying ahead of the game and seizing every opportunity to grow.
Speaker Change: No matter, what you want to do in your retail business, we default to yes on shopify, our efforts to move up market are paying off fueled by strong growth from high volume brands like vre, along with more recent additions like bark Bucks brilliant Earth and toys R. US this evolving landscape paired with our powerful go to market strategy creates a significant opportunity for us.
Speaker Change: To attract even more brands to shopify. Our platform is designed to handle changes like navigating tariffs quickly and efficiently, making us the go to choice for merchants of all sizes facing today's challenges agility and ease of use are now prerequisite for any modern commerce team and Shopify is positioned not just as a tool, but it is a strategic.
Speaker Change: Vantage in an unpredictable market and that is why more global brands are choosing us they value our ability to move swiftly to deliver incredible value and to provide scalable infrastructure, especially right. Now we are in constant conversations with leadership teams and Ceos, who recognize that the global economy is fluid and they are seeking solutions that in.
Speaker Change: Hence their agility across various industries. There's this renewed focus on cutting costs by eliminating inefficiencies and modernizing technology and that is where shopify really shines. Many legacy platforms are struggling they're slow and restrictive lacking consistent investment unable to efficiently handle basic task like pricing updates are.
Speaker Change: Two changes and custom built systems, often prove just as brittle under pressure as businesses faced these challenges shopify is becoming the preferred choice for those looking to thrive at scale.
Speaker Change: The diversity of businesses, we are signing from computer and gaining Giants to household appliance brands sporting goods and iconic fashion labels demonstrates the strength and resilience of our merchant base and the power of our platform. Additionally in Q1, one of the largest apparel and footwear conglomerates VF Corp sign up to bring eight of their well known brands to shop.
Speaker Change: Including Dickies, ultra running Kipling, and ice breaker and two of their brands Jan Sporting Eastpac have already launched and we cannot wait to bring the others onto our platform and in the past two weeks alone even after the tariff announcements brands continue to sign and one of those is fall at higher Education group. The multibillion dollar company managing campus book.
Speaker Change: Stores at over 1000 colleges and universities across North America and in Europe, We signed carrying beauty the beauty brand division of luxury fashion houses like Alexander Mcqueen, Balenciaga and Creed, we're incredibly proud to support a world renowned group as the unify their customer experience across channels by leveraging shopify is b to b.
Speaker Change: B to C and point of sale solutions now this broad spectrum of verticals not only strengthens our platform, but also reduces our reliance on any single market vertical or customer, allowing us to navigate market fluctuations and see multiple growth opportunities with confidence. We've also seen a really impressive lineup of brands launching incredible online businesses.
Speaker Change: On Shopify, so far this year, including stationary company from Barnes and noble paper source luxury fashion brand from Lv M. H J W. Anderson luggage and travel business away wellness technology company thorough body auto supply store and manufacturer, Kent automotive and apparel and accessory retailer life is good.
Speaker Change: So to close Q1 was a testament to the sustainable business model. We've built a model that's founded on supporting our merchants their success drives our success. This is who we are and this is why we exist shopify thrives on change it's in our DNA and it does position us uniquely to overcome obstacles and adapt to new climates.
Speaker Change: It is quite simple our success boils down to three key principles and I can assure you that our priorities will remain just as clear in the future as they are right now first everything we do is merchant first their needs strive every product enhancement and every decision we make.
Speaker Change: Second we've demonstrated an incredible ability to pivot when merchants need us most adapting swiftly to challenges are resilient and turn insures, our merchants remain resilient too.
Speaker Change: And third our operating discipline provides the flexibility we need to deliver unmatched value, while balancing profitability and long term growth.
Speaker Change: This is a very durable business model and it is also how the very best companies are built by staying grounded in our purpose and committed to our mission and we look forward to sharing our journey with you in the course to come and with that I'll turn the call over to Jeff.
Jeff Hoffmeister: Thanks, Harley another very strong quarter for US Q1 marks our eighth straight quarter of delivering pro forma revenue growth of 25% or greater seventh consecutive quarter of GMB growth rate exceeding 20% and seventh consecutive quarter of double digit free cash flow margins.
Jeff Hoffmeister: Before I dive into the Q1 results I want to build on Harley's comments regarding our key principles and linked them to the growth framework that I laid out at our Investor day, and the strong <unk> results that we've been posting.
Jeff Hoffmeister: At that time, we talked about growing our merchant base.
Jeff Hoffmeister: Expanding the breadth of merchants, we serve and helping our merchants grow by giving them the tools they need to connect with and convert more buyers and run and grow their businesses all of which are underpinned by continuous innovation are consistent GMB performance demonstrates that we are delivering on all of these vectors.
Jeff Hoffmeister: If you recall from our Investor day, I highlighted that we have seen our U S. E Commerce GMB grow approximately two times overall U S e-commerce quarter in quarter out.
Jeff Hoffmeister: That trend has continued and strengthened in fact exceeding to ask each of the past five quarters.
Jeff Hoffmeister: Another demonstration of our success is that every quarterly cohort.
Jeff Hoffmeister: Other than one over the past 10 years has outpaced U S e-commerce since joining shopify.
Jeff Hoffmeister: Within Europe, we are outperforming the market by an even wider margin and even higher multiples of ecommerce growth.
Jeff Hoffmeister: We've seen robust greater than 30% GMB growth now for eight consecutive quarters with that strength being broad based across countries and merchant sizes.
Jeff Hoffmeister: We are executing exceptionally well and our Q1 results reflect that.
Jeff Hoffmeister: With that backdrop, let's discuss Q1 results than some perspectives on tariffs and finally, our Q2 outlook.
Jeff Hoffmeister: All growth rates mentioned, our year over year, unless specifically stated otherwise.
Jeff Hoffmeister: G N V. In Q1 was $74 8 billion up 23%.
Jeff Hoffmeister: This strong Q1 <unk> was driven by.
Jeff Hoffmeister: Same store sales growth of our existing merchants.
Jeff Hoffmeister: Growth in our merchant base globally.
Jeff Hoffmeister: Continued strength in Europe, which grew 36% from both strong same store sales growth and new merchant acquisition with same store sales growth being a larger contributor this quarter.
Jeff Hoffmeister: And finally, I'll find growth of 23% driven primarily by larger retailers joining the platform.
Jeff Hoffmeister: As we build a wider array of commerce solutions, our platform has become more attractive to merchants across various industries.
Jeff Hoffmeister: Apparel and accessories remains our largest category and that continues to perform well, but we are also experiencing strong growth in health and beauty home and garden and food and beverage.
Jeff Hoffmeister: Additionally, smaller yet rapidly growing categories like animals, and pet supplies and arts and entertainment showed particularly strong growth rates in Q1.
Jeff Hoffmeister: Revenue for the first quarter was up 27%.
Jeff Hoffmeister: Looking at the two components of revenue.
Harley Finkelstein: Q1 merchant solutions revenue increased 29% driven by the same factors as Q4, including continued strength in G. M B and increased penetration of shopify payments, which reached 64% for the quarter.
Harley Finkelstein: Several factors powered the quarter's higher G. P V penetration, including the strong performance of those merchants utilizing shopify payments and increasing percentage of which our shopify plus.
Harley Finkelstein: More merchants across the globe adopting payments and.
Harley Finkelstein: An expansion of payments both into more countries and through the partnerships with Paypal and Cornell.
Harley Finkelstein: These items were partially offset by the continued strength of our business in Europe, which was a larger percentage of DMV, but where we have a lower G PV penetration in North America.
Harley Finkelstein: It should become less of a headwind the payments penetration going forward given the launch of payments in more countries in Europe.
Harley Finkelstein: Subscription solutions revenue grew 21% with the three largest drivers being an increase in the number of merchants on our platform.
Harley Finkelstein: And to a lesser degree the benefit from the plus pricing change and higher variable platform fees.
Harley Finkelstein: As a reminder, the changes to plus pricing took effect in February last year for new merchants and a few months later for existing merchants given that the significant majority of the existing plus merchants chose to lock in three year contracts at their existing rates.
Harley Finkelstein: Something that highlights the exceptional value we offer in their trust our merchants have in us the majority of the benefit in Q1 came from new plus merchants.
Harley Finkelstein: Q1, 2025, therefore benefited from two months of year over year comparability tail winds.
Harley Finkelstein: As I mentioned on our last call, we expect our subscription solutions growth to normalize to a rate lower than merchant solutions in 2025, given the benefits from the plus pricing changes tapering off and a lengthening of the paid trials.
Harley Finkelstein: Q1, <unk> was up 21% year over year with continued growth in each of standard plus.
Harley Finkelstein: Plus an offline with all three categories seen an increase in the number of merchants.
Harley Finkelstein: Plus plans represented 34% of MRO for the quarter.
Harley Finkelstein: As I mentioned during our last call in Q4 of last year, we started shifting to a three month paid trial in certain markets moving away from our predominantly one month's trials.
Harley Finkelstein: The adjustment in trial lengths will make the quarter over quarter and year over year MLR comparisons tougher for you to assess from the outside and these comparability issues will persist throughout 2025, but it is important to point out that we continue to see the benefits of moving to the longer trial period.
Harley Finkelstein: Some comparability issues aside the trend is a good thing.
Harley Finkelstein: Our testing has indicated that giving merchants a little more time to experiment with our platform increases the likelihood that they are setting themselves up for greater GMB success over the longer term.
Harley Finkelstein: At this point became clear through the testing that we did regarding how quickly merchants from various trialing achieves certain G. M V milestones.
Harley Finkelstein: As a reminder, paid trials are just one of our merchant acquisition tools.
Harley Finkelstein: Gross profit was up 22%.
Harley Finkelstein: Gross profit for subscription solutions grew 19% slightly less than the 21% revenue growth for subscription solutions.
Harley Finkelstein: The lower rate was driven primarily by higher cloud and infrastructure hosting cost needed to support higher volumes and geographic expansion.
Harley Finkelstein: Although we are investing more in AI. It is not a significant factor in this increase over the past five years. The gross margin for subscription solutions has centered around 80% plus or minus a couple of hundred basis points in any given quarter and we do not anticipate that trend changing in the near term.
Harley Finkelstein: Gross profit for merchant solutions grew 24% with gross margin coming in at 38, 6% compared to 41% in Q1 of 'twenty 'twenty four.
Harley Finkelstein: The decrease was primarily driven by the same factors that we saw in Q4, including lower noncash revenues from certain partnerships, which carry a high gross margin and the impact from the expanded partnership with Paypal.
Harley Finkelstein: Partially offsetting these headwinds was strong growth in our FX and tax products.
Harley Finkelstein: This brings our overall Q1 gross margin to 49, 5% compared to 51.4% in the prior year.
Harley Finkelstein: Operating expenses were at 966 million for the quarter or 41% of revenue in line with our guidance.
Harley Finkelstein: This 41% compares to 47% in Q1, 'twenty 'twenty, four and 60% in Q1 2023.
Harley Finkelstein: We continue to make significant strides in building a lean flexible highly efficient team.
Harley Finkelstein: Our continued discipline on head count across all three of R&D sale.
Harley Finkelstein: Sales and marketing and G&A continues to yield strong operating leverage all while helping us move even faster on product development aided by our increasing use of AI and.
Harley Finkelstein: In marketing, we continue to lean in on our returns based approach executing the plan and leveraging the signals and data insights we have to quickly flex up and down our investments based on specific return metrics and payback periods.
Harley Finkelstein: This strategy has not changed and we believe it is continuing to serve as well.
Harley Finkelstein: Our platform has all the capabilities to grow with and accelerate merchant success.
Harley Finkelstein: Marketing helps us get those merchants on our platform, allowing us to then grow with them for years to come.
Harley Finkelstein: Transaction loans and losses, the smallest of the operating expense categories on our income statement was 3% of revenues consistent with Q1 of last year.
Harley Finkelstein: This stability is largely due to higher volumes in our growing capital business. We continue to grow our capital business and have recently introduced several product innovations that give merchants more choice for how they manage their loans and how they choose among various loan options.
Harley Finkelstein: Operating income for the quarter was $203 million or 9% of revenue compared to 5% in Q1 of last year.
Harley Finkelstein: Stock based compensation for Q1 was $123 million.
Harley Finkelstein: And capital expenditures were $4 million for the quarter.
Harley Finkelstein: Q1 free cash flow was 363 million or 15% of revenue in line with our outlook the strength of our business enables us to achieve these attractive free cash flow margins, while still importantly, investing in the future.
Harley Finkelstein: To be clear, while we will continue to drive efficiency. We are ultimately still a growth company. We will continue to prioritize investing in key areas like our core platform International B to B enterprise and offline as opposed to driving for higher free cash flow margins in the near term.
Harley Finkelstein: It's simply the right thing to do with the immense opportunities we see ahead.
Harley Finkelstein: But delivers a profitability level that we are proud of and believe we can maintain without compromising future growth.
Harley Finkelstein: A quick comment regarding a small but important acquisition that we closed in Q1.
Harley Finkelstein: In March we closed the acquisition of vantage discovery, which helps accelerate the development of AI powered multi vector search across our search a P is sharp and storefront search offerings.
Harley Finkelstein: This acquisition is one piece of a broader strategy to ensure that our merchants are able to continue meeting buyers, regardless of where they're shopping or discovering great products.
Harley Finkelstein: Given the dynamic macro and trade environment I'd like to share some observations about our merchants and our business before we turn to our Q2 financial outlook.
Harley Finkelstein: Starting with cross border.
Harley Finkelstein: Cross border <unk> made up 15% of total G. N V. In Q1, consistent with previous quarters approximately half of that involves U S trade balance between inbound and outbound while the rest is largely interregional within Europe.
Harley Finkelstein: Cross border levels have remained consistent throughout April and May to date.
Speaker Change: Turning to de Minimis. The recent expiration of the de minimus exemption for goods from China is not expected to have a meaningful impact on shopify in the near term as only 1% of our overall GMB is related to imports from China that were subject to the exemption.
Speaker Change: That said this expired less than a week ago, and we will continue to monitor its impact on our business.
Speaker Change: The quality and diversity of our merchant base and the buyers. They serve are also two key things to keep in mind in which help ensure resilience in the face of potential economic shifts we support millions of businesses across various industries and verticals addressing every corner of commerce.
Speaker Change: This diverse merchant base gives us a solid foundation to navigate changing market conditions, providing unique stability to our business.
Speaker Change: Certain sectors or segments will require more time to address our supply chains in this environment, but many others also represented on shopify can move more quickly mitigating some of the impact of Shopify from these disruptions.
Speaker Change: Merchants pivots in response to trade concerns are wide, ranging including decisions on inventory strategies pricing changes and sourcing selections.
Speaker Change: Consider pricing as one example, while some merchants have raised prices, we haven't seen broad based price increases yet however.
Speaker Change: However, there remains a mix of strategies in play to navigate tariffs beyond just pricing merged.
Speaker Change: Emergence are considering when to change sourcing countries when to buy inventory or even adjusting product mix and their catalogs.
Speaker Change: From an end buyer perspective in 'twenty 'twenty four we had over 875 million unique online shoppers spanning a broad range of income levels and brand royalties.
Speaker Change: While all merchants proudly serve consumers across all income brackets, there buyer base skews towards higher income consumers with more than half of their buyers in the U S having incomes exceeding $100000.
Speaker Change: We believe this helps insulate our merchants from some of the potential swings in pricing or other market factors as higher income consumers tend to be less price sensitive. We acknowledge the uncertainty ahead and are actively monitoring our data to help us support our margins and adapt to whatever changes may rise.
Speaker Change: Keeping all this in mind, let's now turn to outlook.
Speaker Change: Our <unk> data shows continued strength through April and early may reinforcing our confidence in outperforming the market.
Speaker Change: Our expectations for the second quarter of 2025 factor in the strength of our Q1 and what we are seeing quarter to date for Q2.
Speaker Change: First on revenue.
Speaker Change: We expect Q2 revenue growth in the mid Twenty's year over year, driven by many of the same factors that supported our strong revenue growth in Q1.
Speaker Change: This outlook takes into consideration our best estimates of our performance in the context of today's trade and macroeconomic environment with potential headwinds largely offset by FX tailwind. We expect Q2 gross profit dollars to grow in the high teens, driven by a mix shift with more contribution expected from merchant solutions.
Speaker Change: <unk>, primarily from payments followed by subscription solutions.
Speaker Change: The ongoing strength of our lower margin payment product and the accounting impact from Paypal combined with the impact from changes to the paid trial lengths are key factors in this growth.
Speaker Change: These dynamics in terms of gross profit dollar mix shifts are likely to persist, resulting in gross profit dollar growth at a rate lower than revenue growth.
Speaker Change: We anticipate that our Q2 operating expenses will be 39% to 40% of revenues, which represents a 200 to 300 basis points improvement over Q2 last year when excluding the reversal of the $55 million legal accrual from the prior year.
Speaker Change: The factors contributing to our expense leverage in Q1 are expected to persist into Q2 as we stay vigilant on head count reflective we use AI to multiply our effectiveness and concurrently invest in high return areas like marketing.
Speaker Change: On a dollar basis operating expenses are increasing both year over year and quarter over quarter, primarily driven by expectations around higher marketing spend that I just discussed.
Speaker Change: Moving to stock based compensation Q2 S. P. C is expected to be $120 million.
Speaker Change: Finally on free cash flow.
Speaker Change: For Q2, we expect our free cash flow margin to be in the mid teens similar to Q1 of 2025 as we continue to focus on driving growth not optimizing for near term margin.
Speaker Change: We believe that the free cash flow margin profile that we have achieved over the past several quarters strikes the right balance between profitability and investments in building the best products for our merchants today and into the future.
Speaker Change: Simply too many compelling growth opportunities ahead.
Speaker Change: To close we are delivering growth across multiple products multiple geographies and multiple merchant sizes and types, all while being disciplined on expenses, but thoughtfully investing for shopify is continued growth.
Speaker Change: The more of the environment changes the clearer it becomes the businesses of all sizes that they need a platform that can adapt scale in pivot.
Speaker Change: Shopify is that platform.
Kerry: And with that I'll turn the call back over to Kerry.
Kerry: Thanks, Jeff We will now take your questions. Please use the raise hand, featuring zoom to ask your question Youre dialing in by phone you will need to press star nine to join the queue and star fixed on mute yourself, we ask that you limit yourself to one question. So we can try to get to as many questions as possible. Our first question comes from Samad Samana Jefferies.
Kerry: Yes.
Samad Samana: Hi, good morning, and thanks for taking my question and congrats on a really strong quarter.
Kerry: Tough environment, maybe Jeff or Harley for either one of you one of the things that we're trying to figure out is not just wear.
Speaker Change: What's the GMB mixes for merchants, but maybe.
Speaker Change: Our merchants are sourcing the inventory that they are ultimately selling and I. Appreciate all the disclosures that you gave but how are you do you have any ability to map, where they're currently sourcing from and how much through careful exposure that they have and have you factored that into like how are you bouncing a potential demand destruction versus average order.
Speaker Change: Ali you're going up and I know that's a it's not a precise question, but to the extent that you could help illuminate that for us that'd be very helpful. Thank you. So much yeah, maybe I'll start and then Jeff can Academy has something like I think it's still very early and we're learning as much as is because of our visibility we're learning a ton what I can tell you is that we have merchants everywhere of all size of the crop.
Speaker Change: Pretty much every geography in pretty much every vertical I mean that is the benefit of the shopify business model Theres No. Our merchant base is not concert in one area. So in terms of where they make their products exposure really does vary by merchants some are impacted more than others, but net net we're not seeing any meaningful impact on GM V and again, it's still pretty early one thing I would add also is if you think about the buyer person.
Speaker Change: <unk> and.
Speaker Change: In 2024, we had about 875 million unique buyers purchase from a shopify store and while it does span a broad range of income levels, and certainly brand loyalties, because I think our merchants serve customers across every income bracket more than half of the buyers in the U S have incomes exceeding 100000 hours to our merchants and I think the scale and that does.
Speaker Change: <unk> does help insulate, our our merchants and us by extension, we will continue to monitor that but so far we're not seeing anything any meaningful it back to Jimmy.
Jimmy: Yeah on semi the only thing I would add you alluded to is that incorporated into our views on guidance. It definitely is I put some comments in the prepared remarks around how we're thinking about both overall consumer spend as well as some impact from FX. That's all factored in there so.
Jimmy: And as I also mentioned, we've seen strength through April we've seen strength in the early may so it's a continuation of all the things that we saw in Q1, which was a very good quarter and we feel good as we think about the consistency of performance. When you look at the what we've laid out for Q2 and think about what we did in Q1 as well as we've done over the last couple of years in terms of the consistent revenue growth and the margins in the G&P.
Jimmy: Deliverance, we we put all of that into perspective.
Jimmy: Thank you for your question. Our next question will come from Martin Telenor at a T V.
Jimmy: Okay.
Jimmy: Thank you very much.
Speaker Change: Is it possible for you guys to give us some more commentary around what has happened with your.
Jimmy: China specific merchants in early May.
Jimmy: Yeah, I don't as it relates to we alluded to both I mentioned, just a moment ago that both April and May have been strong in terms of what we've seen in <unk> performance.
Jimmy: It's obviously a dynamic environment its still too early to tell I think in terms of where this is all going to play out both in terms of the quantum and the timing of the tariffs.
Jimmy: But again I would say that we've we're roughly a month into the escalation of tariffs and we continue to see strength in G. M B, but as we look at the guidance. We gave in Q2 and obviously assumes continued strong performance.
Jimmy: In terms of exact detail in China, we don't have anything more to give on that at the moment.
Speaker Change: Thank you Martin our next question comes from Rob Loud Hackett autonomous.
Speaker Change: Hey, guys a question on a new merchant acquisition.
Harley Finkelstone: Harley you highlighted a bunch of new features tariff related another I imagine those serve to further differentiate shopify and the value prop.
Harley Finkelstone: Against that though I could also see a scenario where you know given all the uncertainty out there merchants are reluctant to make any big switch in their systems or their infrastructure. So how is the new merchant pipeline playing out both SMB and enterprise and.
Harley Finkelstone: And how has that changed at all over the last couple of months Yeah. All I mean SMB has been has been consistently very strong, but we haven't seen any any changes there in fact I would actually argue with you on the on the larger merchants side actually I think a lot of what we're seeing at least is that many legacy commerce platforms are actually being exposed is pretty slow in pretty restrictive.
Harley Finkelstone: Some of these older legacy platforms that large retailers are on they can't even handle basic tasks like price updates or.
Harley Finkelstone: Hurts me this week of a loyalty changes being difficult or adjusting inventory in sort of a more you know.
Harley Finkelstone: On a more rapid basis, and it's not just legacy systems actually we're also hearing from us that larger retailers and brands with custom builder and has platforms are realizing that those platforms are just as brittle and slow as you know, especially right now so as a result, I think actually brands are moving to shopify.
Harley Finkelstone: Larger brands are moving to shopify, and even a higher clip than I think you know partially its because they want they want to simplify complexity they want to improve execution speed reduce friction, but they also are looking for lower cost of ownership one of the things that I think we've become well a reputation of being shop like hazardous well deserved is that we are merchants are more resilient.
Harley Finkelstone: And sort of 38 39.
Harley Finkelstone: The merchant cohorts since the IPO 10 years ago have performed better than the broader e-commerce market, but also as a responsibility. We are building tools is incredible clip, whether you know I think as soon as any talks of tariffs came out we created a buy local filter over a weekend in the shop App managed markets is is evolved incredibly.
Harley Finkelstone: Do these calculations pricing transparency. So I think this actually you know one of the things. We're seeing is that a lot of these larger more legacy systems are using this opportunity to reevaluate whether or not they have the right commerce partner long term again, not just because of the flexibility, but also because the total cost of ownership and that's been really great. As I mentioned, we've had some incredible some of the most iconic.
Harley Finkelstone: Retailers and brands on the planet coming to Shopify, the last quarter and that pipeline has not slowed down at all.
Speaker Change: Thank you for your question. Our next question comes from Bob and shop at Deutsche Bank.
Bob: Thanks for taking my question.
Speaker Change: Jeff I'll, let you guys both have alluded to on the call several times about your ability to lean into AI internally and given this additional emphasis that you guys put on this starting this year. How is this impacting your kind of views on overall expenses relative to the prior commentary that you guys talked to that on free cash flow margins.
Speaker Change: And then Jeff how willing are you to maybe adjust your marketing spend if we do see changes in merchant and a consumer behavior.
Speaker Change: And maybe I'll start just on the sort of AI internally and then Jeff can talk a bit about on the financial impacts and and and and opportunities. There. You know I think all of you by now have hopefully saw toby's note AI is being built into the culture and frankly, even built into the DNA of how we operate it is now a reflects that as expected over 8000 people that work with us. So we're really leaning into this.
Speaker Change: Even just in the last couple of weeks, we've built roughly a dozen MCP servers that pretty much make every single corner of shop life's work legible, which means that everyone. At Shopify now has more access to more information at a much more rapid clip obviously the vantage team coming in who are rock stars and AI are going to help take our search capabilities to the next level. So we don't just necessary.
Speaker Change: Talk about AI from the superpowers, we can give with sidekick and magic to our merchants to make them far more effective but even in terms of how we use it internally to make shopify more effective enduring our day to day work, we think shopify is best positioned to leverage that.
Speaker Change: Yeah, and as it relates to the implications on margins, obviously AI will be one of the tailwind is Harley Harley just alluded to the can multiply the effectiveness of the team, but it also dovetails into your question I think Bob and as you're trying to think about how does that in terms of marketing opportunities changes in this dynamic market. How does that all play out I would say nothing's changed in our views on <unk>.
Speaker Change: Cash flow margins in the power of this business, we like the free cash flow margins that we've achieved.
Speaker Change: We think this margin profile strikes the right balance of profitability and investing as we've alluded to.
Speaker Change: And we've obviously been really thoughtful and disciplined in terms of how we've gotten to this point so we will.
Speaker Change: Continued to exercise that discipline, but I would also say that the discipline allows us can lead us to both cut back if the spending returns aren't there for example, some of the things on the marketing front change as a function of the of the market overall, but also lean into and of course, which is the right thing to do if you see compelling opportunities.
Speaker Change: <unk>, which are going to get great merchants on our platform and bring all the long term value that they would bring so I just I think I fundamentally believe the best companies are built on focusing on the long term and seize these opportunities so.
Speaker Change: Again, we worked hard to get here, we take that very seriously we have guardrails on the marketing spend and we also think about guardrails on the profitability, but I think we are very good at finding early signal and adapting in orly allude to that in his comments I think that's something we do exceptionally well. So we're going to remain focused on our merchants getting great Mark merchants on the platform.
Speaker Change: And that's again nothing's changed in our philosophy here, let me just underline that point because I think it is uniquely shopify thing. This is an area, where we have real flexibility. Given these are sort of return based on a returns based approach to marketing I think we are uniquely positioned with incredible visibility and signal to what's working what's not in some parts of our growth engine, we can actually get a sense.
Speaker Change: Of of changes to CAC within a week and on the LTV side. The same type of thing. So that means we can flex up and flex down our spend based on solid data views that we can get back at this incredibly fast rates and I think that that ability to allow us to sort of play with those levers if we see opportunities to gain market share will take them. If we see things are changing we can pull back as well.
Speaker Change: So as it relates to Q2, you know more of that where we're able to really view, what's changing at a very very fast clip and then make very good decisions on either side, whether again things are going one way or the other I think that that is a real advantage to shopify as growth in our funnel and our business model.
Speaker Change: Thanks for your question. Our next question will come from Michael Martin Moffat Nathanson.
Michael Martin: Good morning.
Speaker Change: Maybe a quick one for Jeff on a bigger picture one for Harley than before with the.
Speaker Change: Three month trials and a slight step up in marketing spend just if you could maybe dig a little deeper on who you're targeting.
Speaker Change: With a certain type of merchant.
Speaker Change: A search of a certain product or certain geography that would be great and then for Harley I've asked this before but were seeing it develop more actually a lot of search conversation. This week in the news.
Speaker Change: In Shanghai has some really interesting partnerships with the O M. I was wondering if youre seeing any change in traffic generation sources for your merchant base.
Speaker Change: And then maybe a slight shift of the center of gravity of the legacy ecosystem that goes like feeds people from Google search to Amazon, maybe pointing more consumers to DTC website. Thank you.
Michael Martin: So thanks for your question, Michael I'll start with the.
Michael Martin: Your question on marketing and then I'll hand, it over to Charlie There's no specific in terms of our marketing spend on merchant adds again and I alluded to this in my comments earlier the merchant acquisition engine is working very well, it's executing exactly as we would be hoping.
Michael Martin: And that ties back into the marketing spend but there's been no change in the marketing philosophy in terms of the segments. We're trying to target with obviously the majority of our spend as we've talked about before is performance based marketing is supporting both the areas of growth as well as all the areas that traditionally have been strongholds for us and it's so there's spend in the U S.
Michael Martin: Their spend in Europe I alluded in my comments, how well I think it's working in Europe is a function of both the product market fit we have and how the marketing is dovetailing to that it's supporting point of sale and supporting us and be at supporting the enterprise is supporting all the various elements so I can't.
Michael Martin: Well I'd say, there's no specific segment, where we feel like hey, we really need to focus on this one at the expense of others is disciplined return based marketing to support all the great things, we're doing but we really think as we think about the product S curves the growth curves of all of our solutions. They are performing well and we're supporting them.
Speaker Change: Yeah, Let me just talk quickly about AI and I think the question really is around AI shopping. The first thing is I just don't want to say this because I don't think I'd get a chance to his very often I think shopify is widely recognized as one of the best companies globally for fostering like very long term very beneficial partnerships, you've seen that obviously with what we do with payments or some of the stuff. We're doing with buy now pay later or cross border.
Speaker Change: So you can you know one of the things. We think about is that wherever commerce is taking place shopify will be there and obviously one of the things. We are seeing is that you know that more and more searches are starting on places beyond just you know.
Speaker Change: Somebody does a search engine, that's a huge opportunity whereby more consumers are going to be searching for great products and.
Speaker Change: For us to qualify and re qualify to be the core retail operating system for the millions of sorts of uses and many millions more in the future we have to make sure. They show up everywhere, where square where Congress is happening. So obviously you've talked about some of the partnerships in the past you've seen what we've done with perplexity and open AI. We will continue doing that we're not going to front run our our product roadmap when it comes to when it comes to.
Speaker Change: Anything frankly, but we do think though that AI shopping in particular is a huge opportunity and you can expect that shopify will be wherever consumers are looking to find incredible products.
Speaker Change: Okay.
Speaker Change: Thanks for your question. Our next question will come from Keith Weiss of Morgan Stanley.
Speaker Change: Excellent. Thank you guys for taking the question.
Speaker Change: And really appreciate the way you guys are kind of coming at this period of uncertainty period of stress and highlighting the quality of shopify and how.
Speaker Change: What we've seen historically.
Speaker Change: The high quality companies tend to pull away from the pack in periods of stress.
Speaker Change: And I think you guys are doing a really good job of.
Speaker Change: Showing why shopify is that high quality company and why you have.
Speaker Change: The ability to pull away and gain market share even in times when the macros.
Speaker Change: That's not a tailwind to you guys. So kudos on that debt is great positioning.
Speaker Change: On the other side of the equation, though gross margins is a key metric that software investors definitely look to degradation in gross margins tends to freak out investors use the technical term.
Speaker Change: Can you maybe talk to us a little bit about the durability of these grow or sort of how long. These gross margin pressures are going to persist, particularly.
Speaker Change: Maybe and Numerate, what's happening with the Paypal accounting change.
Speaker Change: Any sense, you could give us like what the top line the revenue impact was there versus what the gross margin impact is in.
Speaker Change: And just fundamentally when will we see overall gross margins start to stabilize or will we see overall gross margins start to stabilize sometime in the not too distant future.
Speaker Change: Yeah, Keith Thanks for your question and thanks for your opening comments, we definitely think about flight to quality and the opportunity for us to continue to differentiate ourselves from the pack here on your gross margin question, Let me break it into the two pieces of one what we're seeing on the subscription solution side and then two on the merchant solutions side and dovetail onto some of your other pieces there I alluded.
Speaker Change: In my comments earlier on the subscription solution side, we've been pretty stable here in terms of how we think about it is it's been 80% plus or minus a couple of hundred basis points generally higher rather than lower than that 80 basis points, but you look back several years now and it's been pretty consistent and I mentioned in my comments earlier.
Speaker Change: We don't see that changing so.
Speaker Change: That's something from that vantage point, which I think we continue to execute on really well as it relates to the gross profit levels of gross margin levels on merchant solutions.
Speaker Change: Paypal is a piece of it we have not quantified it of payments is one of the things of course that it continues to be a larger and larger percentage of revenues that has some headwinds on gross margin.
Speaker Change: And as to the extent that larger merchant G. M. B's that larger GMB merchants come on platform of course that will have some headwinds to it payments, though is obviously a good thing because it brings along a lot of other products that generally fall in the slipstream of what we're doing on that front and we talked about the strength of tax and capital in cross border and all of them.
Speaker Change: Things. So we did have a little bit of impact from the falloff of the noncash revenue as you know we have some partnerships where theres noncash revenue attached to those one of those did roll off in Q4 that would be a I guess I'd call. One time or just Q4 Q1 adjustment. So the margins going forward are going to be a mix.
Obviously, everything we have going on within merchant solutions again, we called out tax capital continues to grow well Shopify F. X continues to go really well those are all margin accretive. So I think we're in this period of time you go back two years, there's a lot of good products, we introduced they're continuing to ramp the ramping really well just given the size.
Speaker Change: Of the overall business. It just takes a while for them to have a meaningful impact.
Speaker Change: Two means.
Speaker Change: Meaningful time to move the needle only just given the size of payments given the size of everything else. So we feel really good about where we are in terms of delivering the gross profit dollars.
Speaker Change: The paid trial change because the last thing I would say the temporary piece for this year for sure is going to be subscription solutions.
Speaker Change: Last couple of years, we've had a little bit of a of an uplift as it relates to the pricing change. The paid trial change is really going to be a headwind for subscription solutions growth. This year, but going into next year that will not be an issue and again, while there is some MRI comparability issues. There's no net merchant add issues at all that's going really well.
Speaker Change: Thank you for your question. Our next question will come from Tim <unk> at UBS.
Speaker Change: Great. Thank you for taking my question I want to touch a little bit on the Shopify point of sale in store business. You mentioned some of the larger brands coming onto the platform I was hoping we could tackle it from two angles first is competitive differentiation, whether it's inventory functionality or multi location.
Speaker Change: Or maybe you could expand upon that particularly as it relative to cover square Lightspeed and maybe some of the other the legacy providers, the Microsoft et cetera.
Speaker Change: And then the second piece is around the distribution side. So colver utilizes isos and bank partners and has direct sales square recently signed its first ISO in the U S and they're hiring salespeople, maybe you could just compare and contrast the distribution.
Speaker Change: Efforts behind the point of sale offering for Shopify, yeah. Thanks for the question. It's a great question. So first of all I think point of sale I think what this is like this incredible multiyear growth initiative for US I think the results for the quarter show that we're making really great traction I mean Q1 offline JV was 23% in the quarter.
Speaker Change: And again getting these brands like just cozy Fao's Schwartz Grand Saco, we're getting a lot of these much larger multilocation ones I mentioned on the enterprise side working with these companies like fall at right. Now that has you know a thousand stores across campus every University campus in America. So I think you'll continue to see a lot of momentum, especially with these large <unk>.
Speaker Change: Complex Multilocation merchants.
Speaker Change: And part of the competitive advantages is just the fact that the feature sets amazing if tap to pay expansion, having ship to store capabilities. I mean, the amount of features that we're rolling out for point of sale by itself just in the last two quarters is more than any of the other companies you mentioned rollout in multiple years. So just the velocity of product expansion is incredible.
Speaker Change: In terms of the go to market. There's a couple of things we are doing here. So obviously, we're looking at new geographies, new verticals new segments, but it's not just necessarily US you know go to market on our own. We also have incredible size, we're working with and I've mentioned this on previous calls working with frankly, the largest size on the planet that are bringing us to market as well.
Speaker Change: And then I think probably the larger piece of why we're winning when it comes to a point of sell in and retail.
Speaker Change: Is that I don't think the future retail is going to be online versus offline, whereas where these incredible businesses think about different segments channel conflict. They want a single place where they can view the entirety of all their business online and offline and potentially through AI and on social media platforms and so this idea of shopify being this unified commerce system that allows you to sell a car.
Speaker Change: Every single channel and as more channels.
Speaker Change: It could come to play again, and we talked about a I live in this call that wasn't around two years ago. Now. It is the fact you can default had that with Shopify. We think is an incredible opportunity. The other thing is like you know allo came to US a couple of weeks ago and said they actually want offer same day delivery on their checkout like their physical checkout and so we worked with Uber and door dash to get that going for them within.
Speaker Change: As a matter of weeks that velocity that confidence that these large and legacy brands are getting to us because they know that we can be a long term partner is allowing us to win this market. So you know I know the companies you mentioned, but I think from a product perspective and from an integration perspective with unified Commerce will continue to win business.
Speaker Change: Thank you our last question will come from Dominick ball at Redburn Atlantic.
Dominick Ball: Hi, everyone, Hey, holiday, maybe a question for yourself.
Dominick Ball: So I'll touch on that earlier, how does show you the emergence of AI agents in terms of do you guys see this as an opportunity or more of a threat because on one hand, they could facilitate direct checkout with it or not their own platforms on the other hand. This may also unlocks a new sales channel for Shopify merchant space similar to what happened with <unk>.
Dominick Ball: Social media Commerce.
Speaker Change: And then one loss of purchases are done automatically through AI agents of this which is the value proposition of Shockwave as well. So how are you guys thinking about this dynamic.
Speaker Change: We think it's a great opportunity look the more channels that exist in the world. The more complexity. It is for for merchants and brands, that's where the value of shopify really shines. So if theres a new surface area, whether it's through AI agents or through just simply <unk> and AI wrappers that that a consumer goes to to look for a new pair of sneakers or a new car.
Speaker Change: Medic or a piece of furniture, they want to have access to the most interesting products from the most important brands and those are all on shopify. So for US we think that all of these new areas, where Congress is happening is a great thing and a lot of shopify to increase its value and we're working with pretty much every single company that that you have in mind.
Speaker Change: To ensure that we are we are surfacing shopify product shopify merchant products. When people are searching for it. So we think it's a huge opportunity one thing I will say also just.
Speaker Change: Before we end because I think it's important in and I know, we're getting to the closing time here.
Speaker Change: I hope on this call presumably all of you have picked up the tone of Jeff in my comments, we believe that that shopify is performing quarter after quarter. Both in terms of topline momentum, but also managing expenses and delivering profitability, but one thing I do want to say just given the nature of the questions on this call.
Speaker Change: And then I wanted to reiterate hopefully most of you already know this but we're about to cross the 10 year Mark since our IPO and one thing that I think most of you have come to understand about all of you is that shopify was absolutely built for times like this times, where things seem uncertain are unclear. This is when we thrive whether it was 2008, whether it was the pandemic or right now shopify.
Speaker Change: Absolutely built with for agility and I think these days for us or just like anything else in.
Speaker Change: Our objective in these times is to shoulder complexities, our merchants don't have to do with how we built so much trust and it's why I think our merchants are so damn resilience, but for us as a company we operate very well in these environments and we have the right leavers to adjust on a dime, but we can also see huge opportunities if and when they arise and grow our business. So I think it's precisely in times like this.
Speaker Change: We can demonstrate that those building on shopify or simply better prepared than those that are not in with that just want to thank you all for joining the call and for US we'll get back to building the future of commerce. So thank you.
Speaker Change: With that this concludes our first quarter 2025 conference call. Thank you.