Shopify (SHOP) Q4 2025 Earnings Call Transcript

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Date

Wednesday, Feb. 11, 2026 at 8:30 a.m. ET

Call participants

• President — Harley Finkelstein
• Chief Financial Officer — Jeff Hoffmeister
• Director of Investor Relations — Carrie Gillard

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Takeaways

• Revenue -- $11.6 billion for fiscal 2025, up 30% year over year, representing the highest annual growth rate since 2021.
• Fiscal Q4 revenue -- Above $3 billion, marking the first single quarter to exceed all revenue generated in 2020.
• Gross merchandise volume (GMV) -- $378 billion in fiscal 2025, growing 29% year over year.
• Fiscal Q4 GMV -- $124 billion, up 31% year over year (29% constant currency), with nearly half of incremental GMV dollars from outside North America.
• North America revenue -- Grew 28% in fiscal 2025, now powering over 14% of U.S. e-commerce market share.
• International revenue -- Up 36% year over year in fiscal 2025; nearly half of the merchant base now outside North America.
• Offline channel revenue -- $748 million in fiscal 2025, a 27% increase year over year, with fiscal Q4 offline GMV up 29%.
• B2B GMV -- Increased 96% for the year and 84% in fiscal Q4.
• Merchant solutions revenue -- Fiscal Q4 grew 35%, driven by GMV strength and greater Shopify Payments penetration.
• Shopify Payments -- Processed $84 billion of GMV in fiscal Q4, up 38% year over year; comprised 68% of total fiscal Q4 GMV, 4 percentage points higher than fiscal Q4 2024.
• Subscription solutions revenue -- Fiscal Q4 increased 17%, with MRR up 15% and Plus plan representing 34% of MRR.
• Fiscal Q4 gross profit -- Increased 25% year over year; Subscription Solutions gross margin reached 81%; Merchant Solutions gross margin was 36.8%.
• Full-year free cash flow -- Exceeded $2 billion in fiscal 2025, a 26% increase, achieving a 17% free cash flow margin.
• Fiscal Q4 free cash flow -- $715 million, representing 19% of revenue.
• Operating expenses -- $1 billion for fiscal Q4 (29% of revenue), $4.1 billion for the year (35% of revenue), both down 3 points from 2024 levels.
• Share repurchase authorization -- Board approved a program of up to $2 billion, reflecting confidence in long-term value and financial momentum.
• Fiscal Q1 2026 revenue outlook -- Management expects revenue growth in the low 30% range year over year, gross profit dollars to grow in the high 20%, and free cash flow margin in the low to mid-teens.
• AI commerce -- Orders from AI search increased 15x since January 2025, albeit from a small base; product integrations enable reach across all major AI platforms.
• Universal Commerce Protocol (UCP) -- Co-developed with Google, described as "the only protocol that covers the full commerce journey, end-to-end," and is payment agnostic.
• Shop Campaigns -- Fiscal 2025 revenue doubled, merchant adoption tripled; expanded advertising reach across eight channels.
• Shop Pay -- Processed $43 billion in fiscal Q4 GMV, exceeding 50% of U.S. GPV for Shopify.
• Shopify Capital -- Now available in eight countries, supporting platform internationalization.
• AI-driven platform features -- Sidekick generated almost 4,000 custom apps, created over 29,000 automations, and edited 1.2 million photos within 3 weeks of its latest update.

Summary

Management described fiscal 2025 as a pivotal year, highlighting a record pace of profitable, compounding growth in revenue and free cash flow. Executives emphasized market leadership in the transition to AI-driven commerce, reporting expanded AI-driven product adoption and establishing the Universal Commerce Protocol as a standard for agentic commerce across the industry. Large enterprise merchants and global brands joined the platform, reflecting a deliberate push into higher-value customer segments and a broadening geographic footprint, with nearly half of new merchant additions from international markets. Product initiatives such as Shop Campaigns, Sidekick, and channel expansions were presented as engines to drive merchant success, buyer discovery, and ecosystem retention.

• Shopify (NASDAQ:SHOP)'s leadership directly stated that, "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."
• Executives described the platform's durability, noting, "since we IPO-ed in 2015, we've grown our revenue over 20% every single year," regardless of scale and market cycles.
• Jeff Hoffmeister pointed out, "Q4 is a quarter which traditionally sees the highest percentage of revenue from payments," informing the seasonal nature of merchant solutions revenue composition.
• A newly launched $2 billion share repurchase program was framed as a demonstration of management's long-term confidence, following the cash-based settlement of convertible notes in the prior quarter.
• Harley Finkelstein highlighted, "I think one of the advantages for every merchant on Shopify is that everywhere commerce is happening -- to use maybe a racing term here, we are in pole position, I think, on agentic commerce," underscoring Shopify's centrality in emerging AI-commerce standards.

Industry glossary

• GMV (Gross merchandise volume): Total dollar value of orders processed on Shopify's platform across all channels within a reporting period.
• MRR (Monthly recurring revenue): Subscription-based revenue expected on a recurring monthly basis from active merchant accounts.
• GPV (Gross payments volume): Value of merchant payments processed through Shopify Payments.
• Shop Pay: Shopify's proprietary digital wallet, optimizing checkout speed and trust for consumers transacting on Shopify-powered stores.
• Universal Commerce Protocol (UCP): An open, payment-agnostic industry standard co-developed by Shopify and Google for connecting AI agents to any merchant's commerce platform, enabling end-to-end transaction experiences.
• Agentic commerce: Commerce facilitated by AI-driven agent interfaces, including personalized shopping, discovery, and order processing across multiple conversational and search platforms.
• Sidekick: Shopify's AI-powered assistant designed to automate and optimize merchant workflows, product management, and analytics on the platform.
• Shop Campaigns: A risk-free advertising product for Shopify merchants, using conversion-based pricing and multi-channel ad distribution to drive discovery and sales.

Full Conference Call Transcript

Harley Finkelstein: 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'Oreal to the Benetton Group, to Keurig Dr. Pepper, to Amer Sports, who owns incredible brands like Wilson, Solomon 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 market inflection point in that goal. Empires are now being built every single day on Shopify. Brands like FIGs and Jim Shark 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 comfort that have done it in less than 5 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 of 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-ed 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 from to sell on, and we attract more buyers for them to sell to. And 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 welcome huge names like Estee Lauder Companies, Starbucks, Coach, Michael Kors, Burton snowboards, e.l.f. Cosmetics, Toys "R" Us and Goop and new merchants continue to come from all corners of commerce from [indiscernible] education who manages campus bookstores across America to the iconic snack brand Welshes 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 of our merchant base is now located outside of North America.

We welcome huge global brand names like Caring Beauty, which is the Beauty division of Alexander McQueen, Balenciaga and Creed, Karl Lagerfeld, Mila, JW Anderson, Stoka and UGG Australia plus new signings from names like L'Oreal and Topshop in Q4 alone. Our off-line 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 B2B space. GMV from B2B merchants was up 84% in Q4 and 96% in 2025.

We signed B2B giants like Century old industrial manufacturer Sunin and we grew our existing merchants like [indiscernible], who brought their B2B side of the business over to join the D2C side, now all powered by a single platform, Shopify. And we're not just seeing growth from new merchants during 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 a 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 3 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 service area, AI shopping.

And 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 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, servicing smaller merchants to the right buyers who might otherwise have never discovered them. This is a 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 Borough offering white glove delivery or a nutrition brand like Butcher box offering subscriptions. It is critical that shopping in an AI conversation is at least as good as shopping at the merchants online store. And no one, and I mean no one understands this like Shopify because we spent 2 decades mastering this complexity. So this is a lot more than this new surface area for us. This is a transitional moment in Shopify's history. We are now designing the new normal, just like Tobi 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 AI mode in 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 [indiscernible], Galasier, Steve Madden and Spank sign up and start selling plus through the catalog, our partners get the most accurate up-to-date data for billions of products for 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. And 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 a universal Commerce protocol, or UCP's 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 merchants 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 late 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 sand 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 what's 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 off-line 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 merchant reach buyers everywhere, whether that's online, an AI chat 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, shops 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 casualty 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 0 risk across 8 channels, including the Shop app and Shopify store fronts. And finally, the Shopify Product Network. The 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 site, widening selection with an 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. So all that creates demand. And as I said, we also have 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 flow through Shop Pay. That is serious adoption.

In 2026, we expect to see Shop Pay earn more services across the Internet, delivering better checked conversion rates and a great post-purchase experience as well as driving repeat purchase through the shop out. 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 1. Heading into 2026, we now have Shopify Payments in 60 new countries, a host of additional payment methods from shopping installments in the U.K. and Canada to expansion of local payment methods in Europe, U.S. DC 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.

And just recently, we launched Managed Markets 2.0, which is fully integrated to 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 not 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 the 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 addition to show what I mean. Our on-platform AI assistant, Sidekick has come a long lane year. Sidekick is effectively a co-founder for our merchants.

It uses everything it knows about your business, and it proactively tells you which task to prioritize, and we will even help you execute those tasks. Because Shopify powers the store, check out data and apps, Sidekick can see the entire picture and do the work in one place. That is entrepreneurship leverage. And in just 3 weeks after our latest addition 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. So 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 [indiscernible] in each merchant's business, powered by over 2 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 4 separate products and selling them together as a stack. Why? Because it knew that those 4 products were already best sellers, and it also knew that bundles tend to convert better and drive up [indiscernible] value. Personalized data analysis paired with intelligence gained from hundreds of millions of other transactions. This is where our AI system really becomes the AI co-founder.

It's bespoke, it's intuitive and it's unmistakenly Shopify. Here's another example. Our new app, simgym, simulates real buyer behavior to give you feedback on changes to your store before you even ship them. And within our online store editor, more than 0.5 million 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 build 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 what I said earlier that our merchants are about to break the Commerce sand barrier. What here's what that looks like. In 2026, a solo entrepreneur on Shopify, who might be launching a business from their moms kitchen table can access 2 things. Uncapped REITs through our agentic 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: 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 seems simple, the magnitude and intensity of that hard stuff can get lost along the way. Shopify Power's 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 services 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 that 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 continue to deliver strong growth.

Our platform is uniquely scalable for businesses of all sizes and industries, from auto parts to luggage, the 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 2 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 off-line.

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 3-month trials, particularly in our largest markets, did not occur 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 supply 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 planes 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 have 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 the 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 4 of those metrics were the strongest that we have 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 a 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, an improving 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% to 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. 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 intra-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: [Operator Instructions] Our first question comes from Colin Sebastian at Baird.

Colin Sebastian: 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.

Harley Finkelstein: Colin, it's Harley. I'll take that first question. Just to be clear, I mean, we think that the -- 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 and otherwise they may not be interacting with. But just to be clear, I mean, LLM do not bypass Shopify's checkout. And in fact, I think this is really where Shopify shines. The complex 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 merchant, 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 than on a pretty small base still, but it's a really interesting area for us.

And it's important for us to Shopify that we are really at the center of everything happening when it comes to agentic Commerce.

Carrie Gillard: Our next question comes from Ken Gawrelski at Wells Fargo.

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

Harley Finkelstein: Yes. 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 early days. But the idea for us was in 2025, laid the rails for agentic that then allows us to scale them in 2026. And I said this in the previous comment, but we had 2 decades of mastering this complexity of commerce, I don't think anyone is better positioned there. We already have merchants live. I mentioned Glacier and Spanks and [indiscernible] and Stanley is live.

Steve Madden is live. So 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 everywhere commerce is happening -- to use maybe a racing term here, we are in pole position, I think, on agentic commerce. Now in terms of what we've done even just since the last call, we codeveloped UCP with Google, which now standardizes how these AI agents transact with any merchant. We launched that in early January. We also launched the agentic storefronts, which allows these merchants to very simply syndicate their products to Google AI mode, Gemini, ChatGPT and Microsoft Copilot.

And we also have the 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 in their board -- around their Board table, around their executive team saying, we need to participate in this.

Shopify seems to be at the center of all of it, we need to begin a relationship with them. So that's kind of 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 the revenue opportunities, I think you mentioned in 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 questions around how the agentic commerce is going to evolve relative to e-commerce penetration of total retail. Does it have an opportunity to pull more people into modern commerce or digital commerce or 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 that is -- I think so far, we're doing a really good job of that.

Operator: The next question comes from Shweta Khajuria at Wolfe Research.

Shweta Khajuria: Let me try two, please. One for Harley and one 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'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.

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

So I said this earlier, but I'm going to repeat this, LLMs do not bypass Shopify's checkout. Checkout is really 2 parts. Think of it this way. You have a front end that's a user interface that buyers interact with. And the back end processing everything server to server. So if you think about a Shopify store today, Shopify runs both the front end and the back end. And 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, open AI 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. 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, the retail operating system that we've built here. And again, the idea that we can help them find and access new customers on a new service area that, we think, is an incredible thing. And we're going to make that really simple for them. The key though is that it's really done well. And [indiscernible] back to the UCP point for a second.

UCP is the protocol that covers the full commerce jury end-to-end. And it goes from discovery to checkout to fulfillment even to returns. And so commerce is complex, and it's easy to get wrong. And one of the reasons that we wanted to create the standard with Google is because we want to make sure that it's done in the right way to give the merchant experience, the consumer experience that the merchant really wants to do and we think UCP does a really great job of that.

Jeff Hoffmeister: Yes. 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 2 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 2 years ago. We've had Sidekick for 2 years.

So there's things that we -- and 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 '26, but again, philosophically, we're in the exact same spot we've been for a couple of years now.

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

Martin Toner: Congrats under great quarter. Is agentic AI and UCP and on-ramp that will accelerate enterprise adoption of Shopify.

Harley Finkelstein: Look, great question. We announced it at NRF, National Retail Federation, which is the largest enterprise retail show, the agentic plant opens our infrastructure to all brands. And I think this idea that we're bringing it into commerce 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 the brands who might not be ready to migrate or have not anticipated a full forklift migration just yet, but they don't want to miss out on this incredible opportunity that might be this agentic commerce.

And so in a similar vein to how we 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 Tobi 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 going to be spent surface based on relevance and sort of this merit-based discovery is going to happen. I think that every retailer and every merchant on the planet is thinking about how they can get in front of as many buyers and consumers on agentic.

If they continue down that path to do the math, more and more, they realize that Shopify is the company that is front and center. It's not necessarily just about the agentic storefronts, it's also about protocol, it's about the UCP that we built. So I think the agentic plan is another way for us to help merchants on Shopify, access it. We think the more brands that are selling on agentic, the better, and we want to play the role there in sort of setting that standard. I think we laid the rails there, and now we are at the epicenter of it.

Carrie Gillard: Our next question comes from Keith Weiss at Morgan Stanley.

Keith Weiss: Harley, you're definitely right, all the focus is on commerce for this conference call, and I'm going to continue on that vein. Can you help us understand the 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 of that. It has to be resolved first before you have mainstream adoption?

Harley Finkelstein: Yes. 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 merchants essential checkout logic intact. It doesn't force them to rebuild customization over and over again. It's payment-agnostic by design. It's built to flex in the many ways. I mentioned a couple of examples in my prepared remarks.

I mean if you think about Butcher Box or you think of AG1, for example, those -- that subscription logic is really complex because sometimes you want to skip, sometimes you want to double up, if you're on vacation, you want to do a hold some of the larger furniture companies on Shopify that do this incredible white club delivery where you can set the exact time and date for your couch being delivered. These things 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 we think -- we have 20 years of doing this. Commerce is very complex.

It is easy to get it wrong. And I think that it's more than just a transaction. It's an entire experience and UCP covers all of that. And we're really proud of what we do. We did with our friends at Google. It was an incredible experience to work on it with them, but it works, and we think we're already seeing incredible adoption from some of the largest retailers on the planet.

Operator: Our next question is from Paul Treiber at RBC Capital.

Paul Treiber: Just a follow-up on Harley's earlier comments, just about the feedback from merchants having discussions at the board level about moving to Shop. Specifically, AI, are you -- the feedback that you're getting from companies in terms of the AI road map, is that -- 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 what influence or what impact does your product road map count or the ability of what companies can do internally?

Harley Finkelstein: Yes. I mean, I said this earlier, sort of half jokingly, but I think Shopify, we sort of have a 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 a fully all-in-one platform. I mean, I think a lot of the largest retailers, certainly ones I'm meeting with, I mentioned brands like General Motors or L'Oreal or Suit Supplier, Amer Sports who runs Wilson and Salomon, what we hear from them is they're looking -- if they're not on Shopify already, usually they come to us with a particular problem.

In some cases, we want to make sure we don't miss out on agentic. In other cases, they're coming to us because they want to replace their homegrown system that they built many years ago for e-commerce. They don't want to have 400 engineers anymore. They want to effectively come to Shopify because they want to go back to what they do best, which is they want to build furniture or they want to be a cosmetics company. They don't necessarily want to 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, something 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 the 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 of that a very modern retailer and brand is thinking about unified commerce.

They don't want to have a bunch of different systems that don't talk to each other. They want to 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 the days of let's just build everything ourselves in-house is long gone. And I think that gives Shopify incredible opportunity.

And I think one of the messages we hear from certainly merchants that have been on shopping for a while is that they feel like they are better positioned than those that are not. And I think that narrative is leaking into the enterprise, and it's allowing us to win a lot more deals at a lot faster clip.

Operator: Our next question comes from Tim Chiodo of UBS.

Timothy Chiodo: Great. I want to shift gears a little bit to Shop Campaigns. So you talked a little bit about the revenue doubling, the merchant adoption, tripling. And you also talked about some of the new services that Shop campaigns are supporting X, Snapchat being 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?

Harley Finkelstein: Yes. Let me start with advertising in general because I think we are making really great progress on this 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 generally, when -- 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 scale to 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 -- we added new surface areas, shop 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 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 when you combine that with what we're doing with Shop, the Shop App and also the product network, which helps merchants sell more by effectively turning the merchant ecosystem into our 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: That was our final question. So I will hand it back to you, Harley.

Harley Finkelstein: Yes. Thanks. I appreciate that, Carrie. Obviously, a lot of questions on agentic, which is great. Obviously, something work [indiscernible], but I just kind of want to say this before we close up. 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 -- 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.

And 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 in the center of it. And I think from -- for this year, for 2026, you're going to see us kick into an even higher gear. I think 2026 will ultimately be a landmark year for us. It will be for Shopify, it will be for our merchants, and I think it's going to be for all of commerce.

So I just want to say thank you all for listening and for all of us at Shopify as the toolmakers, we will continue to keep building 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: With that, this concludes our fourth quarter 2025 conference call. Thank you for joining us.

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