Shopify Q4 2025 Earnings Call - Lays rails for agentic AI commerce while delivering record growth and cash generation

Carrie Gillard, Director of Investor Relations, Shopify: Good morning, and thank you for joining Shopify’s fourth quarter 2025 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. 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 U.S. and Canadian regulators. We’ll also speak to adjusted financial measures, which are non-GAAP and not a substitute for GAAP financial measures.

Reconciliations between the two are provided in our press release. Finally, we report in U.S. dollars, so all amounts discussed today are in U.S. dollars unless otherwise indicated. With that, I will turn the call over to Harley.

Harley Finkelstein, President, Shopify: Thanks, Carrie, and thanks to everyone here for joining us. We’ve got a lot to talk about today. First, we’ll talk about 2025. It was another year of durable growth, faster product shipping, and disciplined cash generation. We’ll also talk about Q4 in particular, which delivered the highest quarterly revenue in Shopify’s history and saw huge names from across all industries join the platform, from General Motors to Sonos to L’Oréal, to the Benetton Group, to Keurig Dr Pepper, to Amer Sports, who owns incredible brands like Wilson, Salomon, and Peak Performance, all moving to Shopify. And we’ll talk about where Shopify is heading in 2026. But before we get into the details, I want to start by doing something a little bit differently this time, because this year is not like any other year.

I want to repeat something that Tobi said back in May 2015, on the day that Shopify became a publicly traded company. He said this, "Shopify will be the only platform needed to build an empire. By the time we’re done, we will have created the new normal." Well, don’t worry, we are far from done. But this quote perfectly captures both where Shopify is today and what you can expect to see from us next. Let me explain. Tobi said Shopify will be the only platform needed to build an empire. Well, we believe that 2025 marked an inflection point in that goal. Empires are now being built every single day on Shopify. Brands like Figs and Gymshark and Skims, that were all born on the platform, hit over 1 million orders well inside of a decade.

And then there’s some, like Comfrt, that have done it in less than five years. That is remarkable! Tobi’s vision might have sounded bombastic in 2015, but a decade later, it is reality for millions of entrepreneurs. Now, in that same quote, he also said, "By the time we’re done, we will have created the new normal." Well, 2026 is about to show the world what he meant by that. The AI era has now reached commerce, and you’re about to see what that looks like at scale. You’re seeing the start of this new normal, and when Tobi said we would be the ones creating it, he was not exaggerating. Shopify was built for this moment. No one, and I mean no one, is better positioned to lead in this new era. We’ve spent decades building the infrastructure that allows every type of merchant to thrive.

We have trillions of data points from billions of transactions across millions of merchants. Simply put, we believe we have a more diverse commerce data set than almost anyone else on the internet. And of course, data is what AI is fueled by. This is an enormous advantage, and it’s also a real responsibility, and it’s not one we take lightly. You may have seen that we just announced the Universal Commerce Protocol, or UCP, that we co-developed with Google. That means that we are literally setting the standard on how the world will shop with AI. We’ve also added more integrations, so our merchants will be able to sell on every major AI platform. And we’ve launched a product to power AI shopping for brands that aren’t even on Shopify yet.

As you know, Shopify will always bias towards long-term, sustainable growth, and we are not afraid to make big bets where we see opportunity. Well, that’s what we did here, and this year is when those bets show up. More on that in a minute, but first, let’s get into the results we drove in 2025. I’m going to talk a lot about growth here, because first, and most importantly, we are a growth company. And second, growth across all areas of our business in 2025 has been remarkable. But here’s the thing: it was not growth at any cost. We grew profitably, just as we said we would, and we scaled with discipline. Our free cash flow exceeded $2 billion in 2025, delivering another year of consistent free cash flow margin. This is what building a generational company looks like. Now, here’s the headline.

In 2025, GMV was up 29%, hitting $378 billion, and revenue topped $11.5 billion, up 30%, accelerating from 2024’s growth of 26%. Now, let’s pause on that for a moment, because putting up these kinds of top-line growth numbers at our size is incredibly hard, and it is not common, and we have been growing at this rate for as long as I can remember. In fact, since we IPO’d in 2015, we’ve grown our revenue over 20% every single year. That is what durable growth at scale looks like, and that scale is consistently compounding quarter after quarter. Q4 was our first-ever quarter of revenue above $3 billion. That’s more than all of our revenue in 2020. Let me repeat that.

We just did more revenue in a single quarter than the entirety of 2020. Our growth philosophy is simple and effective. We win more merchants to sell for, we build more services for them to sell on, and we attract more buyers for them to sell to. Here’s how that played out in 2025. Revenue in our largest market, North America, was up 28%, and we now power more than 14% of the U.S. e-commerce market. We welcomed huge names like Estée Lauder Companies, Starbucks, Coach, Michael Kors, Burton Snowboards, Elf Cosmetics, Toys R Us, and Goop. New merchants continued to come from all corners of commerce, from Follett Higher Education, who manages campus bookstores across America, to the iconic snack brand Welch’s, and even the sports betting company FanDuel.

That is a seriously diversified mix of brands, and our international merchant base grew even faster. Revenue was up 36% year-over-year, and nearly half our merchant base is now located outside of North America. We welcome huge global brand names like Kering Beauty, which is the beauty division of Alexander McQueen, Balenciaga, and Creed, Karl Lagerfeld, Miele, JW Anderson, Stokke, and UGG Australia, plus new signings from names like L’Oréal and Topshop in Q4 alone. Our offline channel revenue grew 27% to $748 million, with iconic brands like Tom Ford, David’s Bridal, and Aldo choosing Shopify to power their physical retail locations. 2025 also saw serious traction in the B-to-B space. GMV from B-to-B merchants was up 84% in Q4 and 96% in 2025.

We signed B2B giants like century-old industrial manufacturer Sonepar, and we grew our existing merchants like Away, who brought their B2B side of the business over to join the D2C side, now all powered by a single platform, Shopify. We’re not just seeing growth from new merchants joining the platform, we’re also helping our existing merchants continue to sell more. In 2025, GMV grew 29% year-over-year, and that’s not just being driven by a few top performers. We saw huge traction across the entire merchant base. So that’s the story of 2025: bigger, faster, more global, and more durable than ever. Now, let’s move into 2026. You’ll hear me talk more about the future than I usually do on earnings calls, and that’s because we have been quietly building for this moment for years.

Last year, we talked about helping merchants to sell everywhere and to operate smarter. Now, that is still our focus in 2026, but it is now being supercharged by AI. Let’s start with selling everywhere. As I said earlier, when we think about selling, we think about three things: more services to sell on, more buyers to sell to, and more merchants to sell for. Well, as you know, 2026 is unlocking a huge new surface area, AI shopping. What I hope you’ve come to understand about Shopify is that we think in decades, not in quarters. Well, we’ve been building for this new era of AI shopping for a long time, and it’s now here. In fact, since January 2025, orders coming to Shopify stores from AI search are up 15x.

Now, that’s on a small base, but that’s still a really big jump in 12 months, and this matters. For our merchants, it matters because it powers the long tail of commerce, surfacing smaller merchants to the right buyers who might otherwise have never discovered them. This is merit-based discovery at scale. For buyers, it matters because it’s like having a personal shopper in your pocket, someone who really understands them, their taste, their preference, their size. This used to be a luxury, but now it’s available to everyone, 24/7. And for Shopify, it matters because we believe it can bend the curve of e-commerce penetration by stripping out friction, pulling late adopters in, and moving more everyday purchases online. That’s the tide we’re building for, and we’re ready to turn that macro tailwind into share gains for our merchants.

But here’s the thing, commerce is complex, it’s dynamic, and it’s also easy to get wrong. It’s so much more than just a transaction. It’s a leather goods brand like Parker Clay offering monogramming. It’s a furniture brand like Burrow offering white glove delivery, or a nutrition brand like ButcherBox offering subscriptions. It is critical that shopping in an AI conversation is at least as good as shopping at the merchant’s online store. And no one, and I mean no one, understands this like Shopify, because we’ve spent two decades mastering this complexity. So this is a lot more than just a new surface area for us. This is a transitional moment in Shopify’s history. We are now designing the new normal, just like Toby predicted a decade ago, and it will fundamentally change our position in the world.

Now, remember last quarter when I said on this call that we were laying the rails for agentic commerce? Well, here they are. First, Shopify Agentic Storefronts syndicates billions of products through our catalog to all major AI platforms: Google’s AI model, Gemini, ChatGPT, Microsoft Copilot. One click, and our merchants get instant access to millions of potential buyers who are actively looking for their products. We’ve already seen huge brands like Vuori, Glossier, Steve Madden, and Spanx sign up and start selling. Plus, through the catalog, our partners get the most accurate, up-to-date data for billions of products from millions of the best brands on the planet. And this is really important because when they tap into our catalog, they’re not just ingesting another feed, they’re plugging into the best commerce source of truth.

That source of truth means cleaner matching and fresher data, which translates directly into faster and more trustworthy experiences. The new agentic plan means that any brand not already using Shopify will soon be able to sell through the same AI platforms as our merchants, as well as on the Shop App.... Why? Because frankly, when commerce flows freely across agents, everybody wins. And here’s the one that matters most: I just said that commerce is easy to get wrong. We care that the world gets this right, Shopify merchant or not, partner or not. So we built the Universal Commerce Protocol, or UCP. UCP is infrastructure. It’s not a product. It’s the common rails agentic commerce runs on. Shopify co-developed this with Google because we know commerce better than anyone. It’s an open standard for any agent to connect with any brand on the internet.

UCP is built to flex to the many ways commerce happens. It’s payment agnostic by design. It keeps the merchant’s essential checkout logic intact without forcing them to rebuild their customizations over and over again to fit our system. UCP is the only protocol that covers the full commerce journey, end-to-end, from search to cart, then checkout to post order, and it’s already being used by the world’s leading retailers. Put simply, Shopify is foundational in powering the commerce layer of the AI era, and we’re just getting started. If the rails were being laid in 2025, what now? Well, now we scale what runs on them, more merchants selling in AI conversations that run on Shopify infrastructure. In fact, if commerce has a sound barrier, these rails have what it takes to help merchants break through it.

More velocity, less drag, and what could be a faster path to scale than was ever thought possible? Just like Tobi said, this is the new normal, and we are creating it. Now, beyond the world of AI shopping, another service area that we will continue to grow in 2026 is offline retail. This year, we’ll continue to lean hard into speed and simplicity, staying focused on our strength, which is software. Like bringing subscription product to in-store, helping to drive recurring orders, or our partnership with Verifone, making our software available on their industry-leading payment hardware. And this all rolls up to our unified commerce philosophy. One platform, one catalog, one customer record, personalized everywhere a buyer taps or clicks. Here’s the bigger picture: We make it fast, easy, and intuitive for a merchant to reach buyers everywhere, whether that’s online, in AI chats, or in person.

Okay, we’ve talked a lot about new service areas for our merchants to sell on, but we’re also expanding their reach to more buyers. In short, we help merchants drive demand, and then we help them convert it. This is where Shop, our consumer-facing side of the business, comes into play, and where in 2026, you’ll see the Shop flywheel really start to turn. First, demand. In 2026, Shopify will power multiple ways for buyers to discover our merchants, from the Shop App to Shop Campaigns to the new Shopify Product Network. Let’s talk about the Shop App first. With the Shop App, we are completely reimagining how the discovery process works. Instead of having to seek out products, which normally looks like sifting through hundreds of search results, Shop’s home feed delivers tailored content.

Think curated drops, exclusive offers, and interactive experiences from our network of brands, all matched to the shopper’s interest. It meets consumers wherever they are, whether they’re actively browsing or casually scrolling, making Shop the definitive destination for discovery. Next, let’s talk about Shop Campaigns, our advertising product, which is really starting to gain traction. In 2025, Shop Campaigns revenue doubled and merchant adoption tripled, metrics we will look to build on in 2026. Shop Campaigns is a merchant-first, high-intent, network-native approach. We’re giving merchants big platform reach without the risk. They only pay when a customer converts. No sales, no spend. And we’ve now added X, Snapchat, Bing to join Google, Instagram, and Facebook, so our merchants can advertise with zero risk across eight channels, including the Shop app and Shopify storefronts. And finally, the Shopify Product Network.

The Shopify Product Network is an opt-in app that uses Shopify’s data network to automatically surface relevant, clearly branded products from other Shopify stores on a merchant’s site, widening selection without extra inventory or operations. Merchants can choose where recommendations show up, whether that’s collection pages, product detail pages, search results, cart, or the post-purchase page. And if the shopper buys the product, the host merchant earns a commission while connecting another merchant with a new customer. It gives buyers more choice, it helps merchants grow, and ultimately, that fuels a very powerful ecosystem. All that creates demand, and as I said, we also help merchants convert that demand with trust. Enter Shop Pay, which is fast, trusted, and increasingly everywhere. 2025 saw Shop Pay become even more of a trust marker for buyers on the internet.

In Q4 alone, it processed $43 billion of GMV and powered over 50% of Shopify’s U.S. GPV. Think about that. More than half of our U.S. payment volume in Q4 flowed through Shop Pay. That is serious adoption. In 2026, expect to see Shop Pay on more surfaces across the internet, delivering better checkout conversion rates and a great post-purchase experience, as well as driving repeat purchase through the Shop App. That’s the Shop flywheel. Our discovery levers create intent, our trust markers convert it, then the ecosystem sends buyers back to the Shop App, which drives even more discovery. Okay, so we’ve talked about new surface areas to sell on. We’ve talked about more buyers to sell to. We’re also unlocking more merchants to sell for. Our goal is that any merchant on the planet can sell to any customer on the planet with no friction.

To make that possible, we will continue to focus on building products that are global from day one. Heading into 2026, we now have Shopify Payments in 60 new countries, a host of additional payment methods from Shop Pay Installments in the UK and Canada to expansion of local payment methods in Europe. USDC Stablecoin is now live as the first built-in cryptocurrency option for Shopify Payments. We have Shopify Capital now in 8 countries, shop tracking in more than 20 countries, and AI-powered translations in 8 additional languages. Just recently, we launched Managed Markets 2.0, which is fully integrated into Shopify Payments, enabling the same payout speed as domestic payments, along with more payment methods, faster payouts, and more product compliance checks, so that selling globally feels like selling at home.

Global mindset, global design, global traction, and increasingly more ways to give our merchants the tools they need to succeed in any market. Okay, we’ve now talked a lot about selling everywhere, but what gets a lot less attention than it should is how AI is helping merchants operate smarter. With AI, operating smarter is about leverage, making every task from mundane to the highly specialized, faster, lower friction, so teams spend less time on busy work and more on what matters: product, storytelling, and their customers. And because AI is a resource multiplier, we’re going beyond what was thought possible just a few years ago. Put simply, the rules of what’s possible are being rewritten in real time. Let me share just a few highlights from the last edition to show what I mean. Our on-platform AI assistant, Sidekick, has come a long way in a year.

Sidekick is effectively a co-founder for our merchants. It uses everything it knows about your business, and it proactively tells you which tasks to prioritize, and it will even help you execute those tasks. Because Shopify powers the store, checkout data, and apps, Sidekick can see the entire picture and do the work in one place. That is entrepreneurship leverage. In just 3 weeks after our latest edition drop, Sidekick generated almost 4,000 custom apps, created over 29,000 automations with Shopify Flow, built almost 355,000 task lists, and edited over 1.2 million photos. It’s clear that Sidekick is doing real heavy lifting for our merchants, and we’re kicking this into high gear this year. Sidekick Pulse is our new feature that proactively helps merchants grow their business.

It works in the background to surface tailored advice that’s grounded in each merchant’s business, powered by over two decades of data. Let me give you one quick example. Last week, Sidekick Pulse made a recommendation to one of our jewelry brands. It suggested bundling four separate products and selling them together as a stack. Why? Because it knew that those four products were already best sellers, and it also knew that bundles tend to convert better and drive up cart value. Personalized data analysis paired with intelligence gained from hundreds of millions of other transactions. This is where our AI assistant really becomes the AI co-founder. It’s bespoke, it’s intuitive, and it’s unmistakably Shopify. Here’s another example: Our new app, SimJim, simulates real buyer behavior to give you feedback on changes to your store before you even ship them.

Within our online store editor, more than 500,000 merchants have used AI to create 6.5 million custom elements. Now, anyone can design without code. This is really Shopify at its best. Massive complexity transformed into a tool for anyone with imagination, no technical skills required. And all of this is in service of one simple goal: get more of our merchants from first sale to full scale, their empires built their way at their speed. Okay, I know that was a lot, but before I turn the call over to Jeff, let me just leave you with this. Remember when I said earlier that our merchants are about to break the commerce sound barrier? Well, here’s what that looks like.

In 2026, a solo entrepreneur on Shopify, who might be launching a business from their mom’s kitchen table, can access two things: uncapped reach through our agent of commerce rails and uncapped resources through our AI tools. Reach and resources, those have been the limiting factors for new entrepreneurs. Those formed the commerce barrier, and now they have the tools to break straight through it. And when you combine that with the human ambition that I get to see every single day, here’s what I believe to be true. We are about to see more billion-dollar brands born in the next decade than we did in the last century, and our focus is on making sure that we will be the ones powering them. And with that, I’ll turn the call over to Jeff.

Jeff Hoffmeister, CFO, Shopify: Thanks, Harley. We’ve kicked off 2026 with such a burst of product releases that it’s easy to overlook some of the remarkable product and financial achievements of 2025. This is an incredibly exciting time, and our role in commerce makes us uniquely positioned to seize this opportunity. In 2025, our merchants faced daunting challenges. Tariffs, the removal of De Minimis exemptions, trade wars, and the ever-changing geopolitical landscape have forced merchants to adapt faster than they ever thought possible. We worked hard to help them make those necessary pivots. We offered new products targeting customs and duties. We made available to all of our merchants products that were previously plan-gated, and we expanded many of our products internationally, making it easier than ever for merchants all around the world to sell all around the world.

Our financial strength throughout 2025 is a testament to our merchants, with us working to arm them with all the tools they could need to be successful. When your mission is to make the complex seem simple, the magnitude and intensity of that hard stuff can get lost along the way. Shopify powers entire businesses, not just websites, delivering reliable operations across checkout, payments, taxes, shipping, identity, fraud prevention, and more. Our single platform spans online, point-of-sale, social, marketplaces, B2B, cross-border, and now AI-driven interfaces, unified by one inventory and customer record. This reduces complexity and expands selling opportunities for merchants. As AI advances, Shopify becomes even more essential. AI transforms interfaces and accelerates the pace of change, but it doesn’t alter the underlying architecture of commerce. Commerce will always require speed, reliability, and trust at a global scale.

When I say scale, consider the billions of transactions that we facilitate. But it’s not just about the volume, it’s the comprehensive commerce experience we support. When an AI agent surfaces a product in any interface, merchants still need a reliable, secure, and compliant path to purchase and post-purchase. They still need our ecosystem of buyers, developers, and partners. We help merchants be everything, everywhere, all at once, representing over 14% of U.S. e-commerce today and rapidly growing percentages in many geographies across the globe, we have an unparalleled view of commerce. Simply, we are the experts at commerce. AI will be a force multiplier. It will help us achieve our goals of democratizing entrepreneurship, inspiring more merchants, driving more transactions, and creating more commerce channels. We remain committed to investing in speed, quality, and simplification. All the hard stuff that has compounded our success to date.

Now, let’s take a look closer at our GMV from various perspectives. Unless otherwise specified, all growth rates are presented on a year-over-year basis. Q4 GMV was $124 billion, marking our first quarter with GMV over $100 billion, representing growth of 31% or 29% on a constant currency basis. First, let’s look at our cohorts. In Q4, our growth was led by the 2024 and 2025 cohorts, which have proven to be larger and more productive than prior cohorts, outperforming older cohorts in GMV and revenue after similar periods of time on the platform. While these newer cohorts are strong, they are only part of the story. That is what differentiates Shopify, the strength of the continuous growth of our cohorts over time. Any given quarter’s results are a stacking of the successes of our prior cohorts and momentum for future success.

Moving to regions. North America continued to deliver strong GMV growth in the quarter, surpassing our expectations, driven primarily by our Plus merchants. In Q4, nearly half of incremental GMV dollars came from outside North America. Our European merchants, in particular, topped off an exceptional year, with Q4 GMV up 45% or 35% in constant currency. Growth was fairly balanced between new acquisitions and growth from existing merchants, a consistent trend across multiple quarters in all regions. We’ve achieved a scale and global reach that brings us where we now build to be global by default, with so much international opportunity still to capture. In terms of channels, Q4 offline GMV increased 29% and B2B GMV increased 84%. These channels continue to be important growth areas for Shopify, expanding access points into our ecosystem and broadening our addressable market to include more businesses and industries.

The opportunities in both of these areas remain significant. Finally, verticals. Similar to previous quarters, apparel and accessories, health and beauty, home and garden, and food and beverage continued to deliver strong growth. Our platform is uniquely scalable for businesses of all sizes and industries, from auto parts to luggage, to pet supplies and kids’ furniture, covering every commerce surface. Q4 revenue was up 31% or 29% on a constant currency basis. Full year 2025 revenue was up 30% to $11.6 billion, marking the highest annual growth rate that we’ve achieved since the COVID-driven results of 2021. The strong GMV trends I mentioned drove this revenue growth, with these results coming in ahead of expectations, largely from outperformance in North America. Europe continued its strength. Within the Asia-Pacific region, our merchants also delivered above expectations, with Australia and New Zealand being notable standouts.

Looking at the two components of revenue, Q4 Merchant Solutions revenue grew 35%, driven by the strength in GMV and increased penetration of Shopify Payments. $84 billion of GMV was processed on Shopify Payments in Q4. That’s 38% higher than the prior year and 68% of GMV, 4 points higher than Q4 of 2024. As a reminder, Q4 is a quarter which traditionally sees the highest percentage of revenue from payments. Subscription Solutions revenue grew 17%, driven by a larger percentage of subscriptions coming from higher-priced plans and higher variable platform fees. Q4 MRR grew 15% year-over-year, with continued growth in each of standard, plus, and offline.

As a reminder, our year-over-year growth rate in MRR will continue to have comparability headwinds until Q2 of this year, as our rollout of three-month trials, particularly in our largest markets, did not incur until Q1 2025. With respect to Plus MRR, Plus represented 34% of MRR for the quarter, up from 33% a year ago. We continue to add more merchants to Plus from both upgrades of existing merchants and new merchants joining the platform. Plus MRR being relatively consistent as a percentage of MRR, is a function of Plus continuing to grow, but our other plans are also growing comparatively well. We’ve seen the average GMV per merchant in Plus increase, a good proof point that we are both scaling our existing merchants and adding larger new merchants.

Q4 gross profit grew 25%, coming in slightly ahead of our expectations, driven by the outperformance in revenue. For the year, gross profit was up 24%. Gross profit for subscription solutions grew 18%, with subscription solutions gross margin coming in at 81%. The increase in gross margin was mainly due to a reduction in support costs as we continue to operate more efficiently as we scale. Merchant Solutions gross profit grew 30%, with gross margin coming in at 36.8%. The year-over-year decrease in gross margin was primarily driven with roughly equal impact from the mix shift towards payments revenue, decreases in third-party referral and transaction fees, which indicate that more revenue is flowing through our payments rails directly, and the year-over-year impact PayPal had to our gross margin comparability, recognizing that moving forward, we have now normalized for the PayPal impact.

With Q4 now behind us, we have largely moved past the more temporary year-over-year comparability headwinds in our gross profit, like the changes in paid trials. Operating expenses were $1 billion for the fourth quarter, or 29% of revenue, and for the full year they were 35% of revenue. Both of these being 3-point improvements over 2024 levels. Throughout 2025, we achieved operating leverage in each of R&D, sales and marketing, and G&A, largely due to disciplined headcount management. By leveraging AI, automation, and our proprietary project management and talent management systems, we’ve been able to accelerate our product development capabilities without growing the size of the team. On marketing, our approach remains unchanged, results driven within guardrails and focused on performance marketing.

In 2025, we did increase the percentage of marketing spend devoted to our international efforts, with roughly 40% of our marketing spend targeting markets outside of North America. We feel good about the effectiveness of the marketing work that we are doing, based on the size of the merchant cohorts that we are adding. Transaction loans and losses, the smallest of our 4 operating expense categories, returned in Q4 to our more consistent historical trend of equating to approximately 3% of revenue. As a reminder, the dollar amounts here tend to scale with volumes in our payments, capital, and credit products, with the goal, of course, being to lower loss rates while we scale those products.

On last year’s Q4 results call, I called out some significant milestones regarding both our operating expenses and our operating margin for both Q4 and the full year 2024, and noted that all four of those metrics were the strongest that we had achieved since going public over 10 years ago. We sit here a year later, and we have surpassed each of those milestones again. Importantly, we accomplished all of this while accelerating our revenue growth. We increased our revenue growth by 4 points in 2025 and decreased our operating expenses as a percentage of revenue by 3 points. We have delivered significant leverage to this business. Q4 free cash flow was $715 million, or 19% of revenue. For the year, free cash flow was $2 billion, a 26% increase, achieving a free cash flow margin of 17%.

The annual free cash flow margin in the high teens that we achieved for both 2025 and 2024 provides the financial foundation necessary to support our long-term vision and continue to drive the next generation of commerce. Whether it’s laying the groundwork for agentic commerce, enhancing Sidekick with deeper data, insights, and models, investing in marketing to drive merchant acquisition, or expanding products internationally, all while ensuring core platform reliability that merchants trust. As a growth company, we choose to invest in these areas rather than pursue higher free cash flow margins in the near term. Our strength in free cash flow margins brings me to the next topic. As you saw in our press release, our board has approved a share repurchase program of up to $2 billion.

This program builds on our decision last quarter to settle our convertible notes almost entirely in cash, rather than using shares. Both of these decisions reflect our confidence in our long-term value, given the ongoing momentum of this business and the financial results that we can drive. We sit here today with a strong balance sheet and no debt, and a proven track record of delivering free cash flow. We have delivered 10 consecutive quarters of double-digit free cash flow margin, and as you can see by today’s results, the business is performing very well. With that, let’s move to our Q1 outlook. We expect Q1 revenue growth in the low 30s year-over-year, similar to our Q4 2025 growth rate. This growth is expected to be driven by the same factors that we saw in 2025.

Robust growth in payments, led by Shop Pay, continued success of the merchants already on our platform, acquisition of more merchants of all sizes across all channels, strong international growth, especially in Europe, and continued expansion of more of our products into more geographies. Turning to gross profit. We expect our gross profit dollars to grow in the high 20s. The year-over-year gross margin impact versus Q1 of 2025 is driven by the continued mix shift between the growth rates of merchant solutions and subscription solutions, which is expected to narrow compared to 2025, and the continued strength of payments. We expect that our Q1 operating expenses will be 37%-38% of revenues, reflecting a continued improvement of a couple of points from Q1 2025, which was itself down nearly 6 points from Q1 of 2024.

The same factors that help us manage expenses well in Q4 should continue into Q1.

Harley Finkelstein, President, Shopify: ... Finally, free cash flow margin. For Q1, we expect a free cash flow margin in the low to mid-teens, slightly below our Q1 2025 free cash flow margin. Q1 is typically our lowest GMV quarter, affecting both revenue and cash flow, and this year we expect a slightly higher effective tax rate versus what we have seen in prior years. This tax effect will have some slight inter-quarter impacts to free cash flow, but we expect these will be mitigated on an annual basis. With that, I’ll now turn the call back over to Carrie for your questions.

Carrie Gillard, Director of Investor Relations, Shopify: Thanks, Jeff. We will now take your questions before turning the call back to Harley for some final words. Please use the Raise Hand feature in Zoom to ask your question. If you are dialing in by phone, you will need to press star nine to join the queue and star six to unmute 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 Colin Sebastian at Baird.

Colin Sebastian, Analyst, Baird: Great, thanks. Hopefully, you guys can hear me. I know you mentioned it’s still very early for Agentic Commerce, but that it’s largely incremental to merchants and to Shopify. But I guess just to address a common question that we get: Do you foresee any changes in Shopify’s ability to monetize at a consistent rate on transactions that are running through AI surfaces and agents that ultimately run on UCP? Thank you.

Harley Finkelstein, President, Shopify: Hey, Colin, it’s Harley. I’ll take that first question. Just to be clear, I mean, we think that the way we think about agentic is it’s a new surface where merchants can sell to customers. In fact, they may be able to sell to customers that otherwise they may not be interacting with. But just to be clear, I mean, LLMs do not bypass Shopify’s checkout, and in fact, I think this is really where Shopify shines. The back end of commerce will always flow through Shopify. That is really hard to do if you think about shipping or payments or inventory or analytics. I mean, that is really the stuff below the surface that every merchant requires, and that’s where Shopify shows up.

Just in terms of kind of the monetization of agentic, the focus, like any other channel, is driving both merchant and then consumer adoption, and then ensuring it’s done really, really well. Part of the reason that we feel really excited by the UCP, the Universal Commerce Protocol, is that commerce is complicated. We want to make sure that whatever surface, whatever permutation, is the one that actually becomes the mainstay in agentic, that it reflects exactly the experience that the merchants want, similar to what they have in the online store as well. And so the economics, for Shopify merchants, economics are the same as if the transaction happened in the online store as well. There should be no difference there. But from a surface area perspective, it is new, it is emerging.

It’s obviously growing fast on a pretty small base still, but it’s a really interesting area for us, and it’s important for us at Shopify that we are really at the center of everything happening when it comes to Agentic Commerce.

Carrie Gillard, Director of Investor Relations, Shopify: Thank you for your question. Our next question comes from Ken Gawrelski at Wells Fargo. Ken, are you there?

Ken Gawrelski, Analyst, Wells Fargo: Sorry-

Carrie Gillard, Director of Investor Relations, Shopify: Okay.

Ken Gawrelski, Analyst, Wells Fargo: I did unmute. Can you hear me now, please?

Carrie Gillard, Director of Investor Relations, Shopify: Yes.

Ken Gawrelski, Analyst, Wells Fargo: Thank you so much. Two questions, please, first. Well, the first one on the agentic side, could you please speak to how you think the ecosystem will develop, just as you think about... You gave some impressive stats on early adoption here, but could you talk about the key milestones, maybe over the next 12-18 months, to really accelerate adoption? That’s question one. And question two is, as you think about additional opportunities beyond the kind of core subscription and, you know, and merchant checkout, could you talk about opportunities for Shopify to monetize its capabilities in the e-commerce, you know, the agentic commerce enablement that you’re offering? Thank you.

Harley Finkelstein, President, Shopify: Yeah, maybe I’ll take that one as well. So let’s sort of just be clear here. I mean, if you sort of look back 12 months approximately to January 2025, we’ve seen orders from AI searches up about 15x. Now, that’s obviously on a very small base, and it’s still very early days but, you know, the idea for us was, in 2025, lay the rails for agentic, that then allows us to scale them in 2026. And, you know, I said this in the previous comment, but we had two decades of mastering this complexity of commerce, and I don’t think anyone is better positioned there. We already have merchants live. I mentioned Glossier and Spanx and Vuori, and Stanley is live. Steve Madden is live.

So, you know, we’ve been really building for this for a very, very long time. I think one of the advantages for every merchant on Shopify is that we are everywhere commerce is happening, and, you know, to use maybe a racing term here, we are in pole position, I think, on agentic commerce. Now, in terms of, you know, what we’ve done, even just since the last call, we co-developed UCP with Google, which now standardizes how these AI agents transact with any merchant. We launched that in early January. We also launched Agentic Storefronts, which allows these merchants to very simply syndicate their products to Google AI model, Gemini, ChatGPT, and Microsoft Copilot.

And we also have this Agentic plan, which is for merchants who are not even on Shopify, to allow them to syndicate their products as well, which allows us to begin a relationship with merchants, again, that are not currently on Shopify. The key for us, though, is to keep building, to make sure that the products that we’re building become the standard across every single agentic application, that merchants that are on Shopify already look to us as being the key partner as agentic continues to evolve. And then merchants that are not on Shopify yet are having conversations, you know, in their board, around their board table and around their executive team saying, "We need to participate in this. Shopify seems to be at the center of all of it.

You know, we need to begin a relationship with them." So that’s kinda how we think about it, and part of it is just be too good to ignore when it comes to how this is going to evolve. In terms of, you know, the revenue opportunities, I think you mentioned your second question. Look, Shopify’s business model is almost beautiful in its simplicity, which is that we are on the same side as the merchant. When merchants sell more, Shopify makes more. That is the, our business model is predicated on merchant success, and I know there’s some, you know, questions around generally, you know, how the Agentic Commerce is going to evolve, you know, relative to e-commerce penetration of total retail. Does it have an opportunity to pull more people into modern commerce or digital commerce that otherwise not?

Perhaps, but our job is to be best positioned so that whatever permutation happens, whichever agentic application becomes the mainstay, that our merchants are best positioned, and I think so far we’re doing a really good job of that.

Carrie Gillard, Director of Investor Relations, Shopify: Great. Thank you for your question, Ken. The next question comes from Shweta Khajuria at Wolfe Research.

Shweta Khajuria, Analyst, Wolfe Research: Okay, thanks, Carrie, and thanks for taking my questions. Let me try two, please. One’s for Harley and one’s for Jeff. Just a follow-up on your prior comments, Harley, how should we think about the economics evolving and the competitive dynamics evolving as we think about agentic commerce and your role in laying out the infrastructure? And then the second one for Jeff is, you know, you’ve done a great job with the free cash flow margins. When we think out for 2026, how should we think about your margins against the investments that you’re making and the growth that you are generating? Thanks a lot.

Harley Finkelstein, President, Shopify: Yeah. So, I think I covered it, but I’ll just repeat it. I mean, for Shopify merchants, the economics are the same as if the transaction happened on the online store when it comes to agentic. You know, specifically on something like ChatGPT, which requires, you know, Shopify Payments, monetization is through payments, it’s the same as if it occurred in the online store. And, in terms of, you know, some of the other applications as well, you know, if you’re a Shopify merchant, it will default to using Shopify Payments, so that is how monetization occurs. I just wanna sort of go back, ’cause I suspect I’ll get more questions on this around agentic and checkout.

So I said this earlier, but I’m gonna repeat this: LLMs do not bypass Shopify’s checkout. You know, checkout is really two parts. Think of it this way. You have a front end that’s a user interface that buyers interact with and the back end that’s processing everything server to server. So if you think about a Shopify store today, Shopify runs both the front end and the back end. Under UCP, Shopify still powers the overall experience, but the merchant gets to keep their own checkout system on the back end. Now, with something like ChatGPT, for example, OpenAI will run the front end, which is sort of the screens and the forms that the buyer uses, but Shopify still runs the back end, and so things like order processing and payments through Shopify Payments, that all runs through Shopify’s infrastructure.

Which one of the reasons that we’re so excited by this is because we get to help merchants sell across a new surface area, but we get to simplify the complexity through the Shopify, you know, the retail operating system that we’ve built here. Again, the idea that we can help them find and access new customers in a new surface area, that we think is an incredible thing, and we’re gonna make that really simple for them. The key, though, is that it’s really done well. Just going back to the UCP point for a second, you know, UCP is the protocol that covers the full commerce journey end to end, and it goes from discovery to checkout to fulfillment, even to returns.

And so, you know, agentic commerce is, is complex, and, and it’s easy to get wrong. And one of the reasons that we wanted to create this standard with Google is because we wanna make sure that it’s done in the right way to give the merchant experience, the consumer the experience that the merchant really wants to do, and we think UCP does a really great job of that.

Jeff Hoffmeister, CFO, Shopify: Yeah, and Shweta, to your question about how we think about Free Cash Flow margins for 2026 and just kind of our Free Cash Flow margin philosophy overall, I’d say nothing’s changed at all. We’ve been saying, Harley and I have been saying now for, I think it’s, almost two years, about this balance between how we’re delivering the growth on the top line while still investing in everything that we want to build, and obviously delivering the Free Cash Flow margins that we have. And when you think about, we’ve talked about catalog in its original formation, this is something we set in motion two years ago. We’ve had Sidekick for two years, so there’s the things that we...

Obviously, UCP is a little bit more recent, but as you think about the things that we want to build for the next generation of commerce, we’ve been doing that for a period of time now, where the free cash flow margins reflect that. So nothing’s changed. I gave you some guidance, obviously, as it relates to the free cash flow margin, specifically for Q1. Of course, we don’t have guidance for all of 2026, but again, philosophically, we’re in the exact same spot we’ve been for a couple of years now.

Carrie Gillard, Director of Investor Relations, Shopify: All right, thank you for your question. Our next question comes from Martin Toner at ATB Capital Markets. Martin, are you there?

Martin Toner, Analyst, ATB Capital Markets: Hey, sorry about that. Can you guys hear me now?

Carrie Gillard, Director of Investor Relations, Shopify: Yes.

Martin Toner, Analyst, ATB Capital Markets: Congrats on a great quarter. Is Agentic AI and UCP an on-ramp that will accelerate enterprise adoption of Shopify?

Harley Finkelstein, President, Shopify: Well, look, great question. You know, we announced it at NRF, National Retail Federation, which, you know, is the largest enterprise retail show. The Agentic plan opens our infrastructure to all brands, and I think this idea that we’re bringing Agentic Commerce to every brand, whether or not they’re on Shopify, we think will be. I mean, it certainly has already been an incredible way for us to start conversations with brands who might not be ready to migrate or have not anticipated a full, you know, forklift migration just yet, but they don’t wanna miss out on this incredible opportunity that might be this Agentic Commerce.

And so in a similar vein to how we, you know, started, we created commerce components a couple of years ago, where non-Shopify merchants can use things like Shop Pay, or they can simply use Shopify checkout as a component. That allowed us to start conversations with brands that we weren’t otherwise talking to. In some cases, some of those brands who came to us initially just for Shop Pay are now entirely on Shopify. So certainly we think this could be an incredible on-ramp, just like the commerce component play was. But I think generally it is incredibly important that, you know, Toby said something recently about catalog. He said that everyone else has to scrape the internet, but we actually have the source of it.

The fact that we have the structured billions of products so agents can surface the most relevant items in seconds, the fact that products are gonna be then surfaced based on relevance and sort of this merit-based discovery is going to happen, I think that every retailer and every, you know, merchant on the planet is thinking about how they can get in front of as many buyers and consumers on agentic. You know, if, if they continue down that path and do the math, more and more, they realize that Shopify is the company that is, is front and center. It’s not necessarily just about the agentic storefront, it’s also about the protocol. It’s about the UCP that we built. So I think the agentic plan is, is, is another way for us to help merchants not on Shopify access it.

We think the more brands that are selling on agentic, the better, and we wanna play the role there in sort of setting that standard. I think, you know, we laid the rails there, and now we are at the epicenter of it.

Carrie Gillard, Director of Investor Relations, Shopify: Thanks, Martin. Our next question comes from Keith Weiss at Morgan Stanley.

Keith Weiss, Analyst, Morgan Stanley: Excellent. Thank you guys for taking the question. And Harley, you’re definitely right, all the focus is on agentic commerce, for this conference call, and I’m gonna continue on that vein. Can you help us understand, like, UCP versus ACP, the other standard that OpenAI and Stripe are putting forward? Are these overlapping standards? Do they compete? Are they complementary in any way? And what does this do to the timing of adoption of agentic commerce? Does it confuse the market? Is this like a VHS versus Betamax type thing, or that it has to be resolved first before you have mainstream adoption?

Harley Finkelstein, President, Shopify: Yeah. Look, the goal is simple with UCP. It’s one common language for agents and retailers. The idea is that merchants can keep the brand, the attributions, buyers get these incredibly trustworthy experiences, and agentic commerce can scale. UCP is specifically geared towards being a protocol that covers the full commerce journey end to end, from search to cart, then checkout. It includes post-order. It keeps the merchant’s essential checkout logic intact. It doesn’t force them to rebuild customizations over and over again. It’s payment-agnostic by design. It’s built to flex in the many ways. I mentioned, you know, a couple examples in my prepared remarks. I mean, you think about ButcherBox, or you think of AG1, for example. That subscription logic is really complex because sometimes you wanna skip a month, sometimes you wanna double up.

If you’re on vacation, you wanna do a hold. Or some of the larger, you know, furniture companies on Shopify that do this incredible white glove delivery, where you can set the exact time and date for, for, for your, you know, your couch being delivered. These things need to be—they need to be ported over into the agentic world, and UCP does that. So in our view, UCP covers the full commerce journey end to end, and, and we think, you know, we’ve 20 years of doing this. Commerce is very complex. It is easy to get it wrong, and I think that, you know, it’s more than just a transaction. It’s, it’s, it’s an entire experience, and UCP covers all of that. And, we’re really proud of what we did. We did it with our, our, our friends at Google.

It was incredible—you know, it was an incredible experience to work on it with them, but, you know, it works, and we think we’re already seeing incredible adoption from some of the largest retailers on the planet.

Carrie Gillard, Director of Investor Relations, Shopify: Thank you for your question. Our next question is from Paul Treiber at RBC Capital Markets.

Paul Treiber, Analyst, RBC Capital Markets: Yeah, thanks for taking the question, and good morning. Just a follow-up on Harley’s earlier comments about the feedback from merchants having discussions at the board level about moving to Shop. You know, specifically AI. Are the feedback that you’re getting from companies in terms of the AI roadmap? Is that influencing decisions? I imagine it’s influencing decisions. Are you also seeing merchants evaluate custom solutions in light of what they can do with AI tools, and if that’s consideration, and to what influence or what impact does your product roadmap counter the ability of what companies can do internally?

Harley Finkelstein, President, Shopify: Yeah, I mean, you know, I said this earlier, sort of half-jokingly, but I, I think Shopify, we, we sort of have pole position right now with agentic commerce, but we also have sort of this pole position when it comes to things like speed to market, this idea of, you know, a fully all-in-one platform. I mean, I think a lot of the largest retailers, certainly the ones I’m meeting with, I mentioned, you know, brands like General Motors or L’Oréal or SuitSupply or Amer Sports, who runs Wilson and Salomon, what we hear from them is they’re looking... You know, if they’re not on Shopify already, usually they come to us with a particular problem. In some cases, it’s: We wanna make sure we don’t miss out on agentic.

In other cases, they’re coming to us because, you know, they, they wanna replace their, you know, homegrown system that they built many years ago for e-commerce. They don’t wanna have 400 engineers anymore. They want to effectively come to Shopify because they, you know, they wanna go back to what they do best, which is they wanna build furniture, or they wanna be a cosmetics company. They don’t necessarily wanna have this massive engineering team. And so I think one of the reasons you’re seeing this incredible momentum, specifically around the enterprise right now, is because we’re not just doing agentic, although agentic obviously is something we’re, we’re focused on. We’re also helping with point of sale. We’re helping them sell across every channel, whether it’s social channels.

We’re showing them. I mean, Shop Pay in itself is an incredible on-ramp into Shopify. They’re seeing the conversion rates. They’re seeing this as a sort of trust badge on the internet today. And so I think when you bring all these together, and then you sort of add this idea that every modern retailer and brand is thinking about unified commerce. They don’t wanna have a bunch of different systems that don’t talk to each other. They wanna have this modern stack where they have a single source of truth that scales, whether they’re doing massive flash sales for the Super Bowl or they’re doing some very complex logic around B2B or point-of-sale or subscriptions. And ultimately, those roads all lead to Shopify.

So I think Agentic is playing a role there, but I think that, you know, the days of let’s just build everything ourselves in-house is long gone, and I think that gives Shopify an incredible opportunity. And I think, you know, one of the messages we hear from certainly merchants that have been on Shopify for a while is that they feel like they are better positioned for the- than those that are not. And I think that narrative is, is leaking into the enterprise, and, and it’s allowing us to win a lot more deals at a lot, a lot faster clip.

Carrie Gillard, Director of Investor Relations, Shopify: Thank you for your question. Our next question comes from Tim Chiodo at UBS.

Tim Chiodo, Analyst, UBS: Great, thanks a lot. I wanna shift gears a little bit to Shop Campaigns. So you talked a bit, a little bit about the revenue doubling, the merchant adoption tripling, and you also talked about some of the new services that Shop Campaigns is supporting, X, Snapchat, Bing, Google. I was wondering if you could talk a little bit more about that, expand on Shop Campaigns in general and some of the mechanics around it and the monetization vehicle. Thanks a lot.

Harley Finkelstein, President, Shopify: Yeah, let me sort of start with advertising in general, because I think we are making really great progress on building tools that help merchants with customer acquisition. It’s not just Shop Campaigns. I mean, we mentioned obviously the Shop App before. We also introduced this new Shopify Product Network, which we’re really excited about. But, you know, generally, with Shop Campaigns in particular, I mentioned a 3x increase in merchant adoption and a 2x increase in revenue. This thing is starting to gain real traction. What this ultimately is, is the scaled, risk-free customer acquisition tool that brings merchants more buyers and drives brand discovery, and I think we’re set up for an accelerated efficient growth with campaigns in 2026.

In 2025, we obviously, you know, added new surface areas, Shopify stores, Instagram, Facebook, Google, X, Bing, Snapchat. In 2026, really the focus there is to reinvest the gains back into growth. We want to expand our advertising inventory, we want to improve performance, and we also want to scale more efficiently for merchants that use it. And it’s becoming a tool that I think, you know, as merchants begin to experiment with it, it becomes one of their key tools in their toolbox for finding new customers. This idea of building this risk-free customer acquisition product that you only pay for if you actually get a sale, we think is really, really compelling, and I think that’s the reason why you’re seeing so much merchant adoption here.

So you’ll see more of that as well. Now we’re really tweaking it to make it the very best product. But, you know, when you combine that with what we’re doing with Shop, the Shop App, and also the product network, which helps, you know, merchants sell more by effectively turning the merchant ecosystem into a distribution engine, you’re beginning to see that these ads products are really starting to pay off for the merchants who use it.

Carrie Gillard, Director of Investor Relations, Shopify: That was our final question, so I will hand it back to you, Harley.

Harley Finkelstein, President, Shopify: Yeah, thanks. Appreciate that, Carrie. Obviously, a lot of questions on Agentic, which is great. Obviously, something we’re excited about. But I just kinda wanna say this before we close up. You know, we laid out this playbook for all of you listening a few years ago, which I think is really working. We talked about consistent execution, we talked about compounding product engine, and we talked about new durable growth lanes. And I think you’re seeing that. We are doing that now. We are serving more types of businesses on more services and more markets, and I think we’re doing all of that with discipline.

I think 2025, I hope it’s clear that this was Shopify running this playbook at full throttle, just like we said we would. I think you’re also seeing that we also quietly laid the rails for this new era of AI commerce, and whatever permutation is going to be the mainstay, Shopify is deeply embedded at the center of it. And I think for this year, for 2026, you’re gonna see us kick into an even higher gear. I think 2026 will ultimately be a landmark year for us. It’ll be for Shopify, it’ll be for our merchants, and I think it’s gonna be for all of commerce.

So I just wanna say thank you all for listening, and for all of us at Shopify, as the tool makers, we will continue to keep building these, these incredible tools for the amazing merchants and builders that we have the huge honor of serving every single day, and back to building for us. Thank you.

Carrie Gillard, Director of Investor Relations, Shopify: With that, this concludes our fourth quarter 2025 conference call. Thank you for joining us.