Shopify's Q1 2025 conference call featured updates from the president and CFO, discussing financial results, forward-looking statements, and non-GAAP measures, with a reminder about associated risks and uncertainties.

Despite market uncertainty, Shopify continues to show consistent quarterly growth, with data through April showing little evidence of a slowdown. The company emphasizes its agility and commitment to helping merchants of all sizes adapt rapidly to changes. Shopify's business model allows for quick adaptation, prioritizing tools and support needed for merchants to thrive. Key growth areas include offline and B2B GMV, which increased by 23% and 109% respectively, and international GMV, which grew by 31%. The company has introduced various enhancements, including improved cross-border trade capabilities, easier local buying options, duty calculation at checkout, and simplified international shipping. These innovations demonstrate Shopify's unmatched pace and dedication to unlocking opportunities for merchant success.

Shopify has significantly expanded its Shopify Payments service, nearly doubling its global reach to 39 countries, including launches in 16 new markets. This growth simplifies onboarding for merchants, reduces fees, enhances security, and improves conversion rates with features like Shop Pay. Additionally, multi-currency payouts were introduced in 20 European countries to facilitate global operations and mitigate exchange rate impacts.

Shopify Payments, particularly Shop Pay, drives significant growth for large merchants, with notable brands integrating the solution. The Shop app also sees accelerated growth, and Shop Pay Installments expand to Canada, marking global progress.

Shopify emphasizes AI integration, requiring teams to explore AI solutions before requesting additional resources. Recent developments include building servers for internal efficiency and re-architecting the AI engine for better merchant support, doubling monthly average users of Psychic since 2025 began.

Highlighting significant growth in European, Asian, and Latin American markets, the dialogue emphasizes Shopify's increasing market penetration, driven by product enhancements, marketing investments, and strategic partnerships. Notable successes include a 36% year-over-year GMV growth in Europe and innovative solutions like same-day delivery through collaborations with delivery partners, showcasing Shopify's commitment to supporting merchants' growth and adapting to evolving retail landscapes.

Highlighting Shopify's agility, scalability, and merchant-centric approach, the dialogue emphasizes the platform's unique position in the market, attracting global brands across diverse industries due to its ability to swiftly navigate market changes and challenges. With a focus on cutting costs and modernizing technology, Shopify stands out against legacy platforms, offering a durable business model centered on supporting merchants' success. The discussion underscores the platform's growth opportunities, resilience, and commitment to delivering unmatched value while balancing profitability and long-term growth.

The company reports its eighth consecutive quarter of at least 25% pro forma revenue growth, driven by expanding merchant base, innovation, and strong GMV performance exceeding US e-commerce growth rates.

In Q1 2025, Shopify reported a 23% increase in GMV to 74.8 billion, driven by same-store sales growth, new merchant acquisitions, and expansion in Europe. Revenue rose 27%, with merchant solutions revenue growing 29% due to increased penetration of Shopify Payments. Strong growth was seen in various categories including health and beauty, home and garden, and food and beverage.

Shopify reports a 21% growth in subscription solutions revenue, driven by an increase in merchants on its platform and higher variable platform fees. The company also highlights the benefits of its longer paid trials, the expansion of payments into more countries, and the acquisition of Vantage Discovery to enhance AI-powered search capabilities. Despite higher operating expenses, Shopify maintains strong operating leverage and free cash flow margins, emphasizing continued investment in key growth areas.

In Q1, cross-border GMV constituted 15% of total GMV, with half involving US trade balance and the rest inter-regional within Europe. The expiration of the de minimis exemption for goods from China is not expected to significantly impact Shopify, given only 1% of GMV relates to imports from China under the exemption. Shopify's diverse merchant base across various industries ensures resilience against economic shifts. Higher-income consumers, comprising over half of US buyers, provide insulation from pricing swings. Q2 revenue growth is forecasted in the mid-20s year-over-year, driven by strong revenue growth factors from Q1. Gross profit dollars are expected to grow in the high teens, primarily from merchant solutions and payments. Operating expenses are anticipated to be 39%-40% of revenues, reflecting expense leverage and high-return investments. Free cash flow margin for Q2 is projected to be in the mid-teens, maintaining a focus on growth over near-term margin optimization.

Despite global trade uncertainties and potential consumer spending shifts, Shopify reports strong Q1 performance with no significant impact on GMV. The company attributes its resilience to its diverse merchant base and broad customer income range, noting continued strength into May 2025.

The company reports strong GMV performance in April and May, despite the early stages of tariff escalations affecting China-specific merchants. Meanwhile, SMB merchant acquisition remains consistently strong, showing no signs of hesitation despite market uncertainties.

Many large retailers are moving to Shopify due to the restrictive and slow nature of their legacy commerce platforms, seeking improved execution speed, reduced complexity, and lower cost of ownership.

The discussion highlights the significant integration of AI into Shopify's internal operations, enhancing efficiency and access to information. The company emphasizes its commitment to maintaining discipline in expenses and marketing spend, adjusting as necessary based on market dynamics and the effectiveness of AI in improving margins and merchant acquisition.

The company emphasizes long-term focus, adapting to early signals, and maintaining strict marketing and profitability guidelines, with a core philosophy centered around attracting and serving merchants effectively.

The speaker emphasizes Shopify's unique advantage in rapidly analyzing growth engine performance and LTV changes, enabling swift decision-making for market share adjustments.

The discussion covers Shopify's marketing strategy, emphasizing no specific shift in targeting but focusing on disciplined, return-based marketing across various segments. Additionally, it explores the potential of AI shopping, highlighting Shopify's commitment to being present wherever commerce occurs and the company's ongoing partnerships and opportunities in AI-driven commerce.

In a period of economic stress, Shopify demonstrates its quality and resilience, positioning itself to gain market share even when macro conditions are not favorable.

Investors are concerned about the persistence of gross margin pressures and the impact of a PayPal accounting change on revenues and margins, seeking clarity on when margins will stabilize.

The discussion highlights Shopify's stable subscription solution margins around 80%, with expectations for consistency. On the merchant solutions side, PayPal integration and larger merchant GMVs introduce gross margin headwinds, balanced by margin-accretive products like tax, capital, and Shopify FX. The impact of non-cash revenue from partnerships and the effect of paid trial changes on subscription solutions growth are also addressed, with an outlook for these factors to normalize by next year.

Shopify is experiencing significant growth in its point of sale (POS) business, particularly among large, multi-location brands, due to its robust feature set, rapid product expansion, and unified commerce system. The company differentiates itself from competitors like Clover, Square, and LightSpeed by offering a single platform for viewing online and offline business operations, supporting various channels including AI and social media. Shopify's partnerships with major Sis and its ability to quickly integrate new services, such as same-day delivery, are key factors in winning over legacy brands.

Shopify views the rise of AI agents as a significant opportunity, not a threat, as it increases complexity for merchants, highlighting Shopify's value in managing multiple channels.

Approaching its 10-year IPO anniversary, Shopify emphasizes its strength in navigating uncertain times, highlighting its ability to manage expenses, deliver profitability, and support merchants through complexity.