• Revenue: $9 billion for the year, with Q4 revenue growth of 31% year-over-year.
• Gross Merchandise Volume (GMV): Nearly $300 billion for the year, with Q4 GMV growth of 26% year-over-year.
• Free Cash Flow Margin: 18% for the year, with Q4 free cash flow margin at 22%.
• Operating Income: Surpassed $1 billion for the year, four times higher than the previous peak in 2021.
• North American Revenue: Up 23%, with the US crossing $5.7 billion in revenue.
• International Revenue Growth: 33% for the year.
• Offline Revenue: Grew 33% to $588 million for the year.
• Shop Pay GPV: 38% of GPV, up from 33% in 2023.
• Merchant Solutions Revenue: Increased 33% year-over-year in Q4.
• Subscription Solutions Revenue: Up 27% over Q4 of last year.
• Gross Profit: $1.4 billion for Q4, up 27% year-over-year.
• Operating Expenses: Reduced to 32% of revenues in Q4.
• Headcount: Approximately 8,100 employees as of December 31, 2024, down from 8,300 at the end of 2023.
• Free Cash Flow: $611 million in Q4, with a full-year free cash flow of $1.6 billion, up 77% year-over-year.

• Warning! GuruFocus has detected 5 Warning Signs with SHOP.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Shopify Inc (NYSE:SHOP) achieved significant growth in 2024, with a 31% revenue increase in Q4 and a 26% annual revenue growth, demonstrating strong financial performance.
• The company expanded its global reach, with international regions outperforming North America, achieving a 33% growth rate for the year.
• Shopify Inc (NYSE:SHOP) surpassed $1 billion in operating income for the year, marking a significant milestone and showcasing its profitability.
• The company continued to innovate, launching new products and features such as Shopify Balancer Plus and expanding Shopify Tax in the UK and EU.
• Shopify Inc (NYSE:SHOP) strengthened its position in the enterprise market, signing major brands like Reebok, Champion, and FC Barcelona, indicating its growing appeal to larger businesses.

Negative Points

• The shift to three-month paid trials is expected to impact Q1 and Q2 MRR growth, posing a potential challenge to short-term revenue.
• Subscription Solutions gross margin decreased due to higher cloud and infrastructure hosting costs, which may affect future profitability.
• Merchant Solutions gross margin also saw a decline, driven by lower noncash revenues from certain partnerships and the impact of the expanded partnership with PayPal.
• Operating expenses, while reduced, still represent a significant portion of revenues, indicating room for further efficiency improvements.
• The company faces challenges in maintaining its growth momentum, particularly in the face of potential economic headwinds and competitive pressures in the e-commerce space.

Q & A Highlights

Q: Can you elaborate on the free cash flow margin expansion for Q1 and the focus of your investments? A: Jeff Hoffmeister, CFO: We are not focusing on quarterly differentials but rather on maintaining a strong free cash flow margin that allows us to invest in future growth. Performance marketing remains a key investment area, and we continue to focus on optimizing marketing spend for the best returns.

Q: How should we think about the Merchant Solutions take rate and gross margins for Q1? A: Jeff Hoffmeister, CFO: The Merchant Solutions take rate is driven by the strength of payments and other products like Capital and Tax. Gross margins will be impacted by the relative growth rates of Merchant Solutions and Subscription Solutions, with some headwinds expected from the shift to three-month trials.

Q: How does the de minimis exemption and potential tariffs impact Shopify's business? A: Harley Finkelstein, President: Tariffs and de minimis exemptions are crucial for small businesses. We have adapted our products to help merchants manage duties and taxes efficiently. Protections like de minimis help keep costs down and allow entrepreneurs to compete on a larger scale.

Q: What are your thoughts on headcount growth and pricing actions moving forward? A: Harley Finkelstein, President: We plan to keep headcount relatively flat while growing the business. Shopify offers high value, and we have room for pricing adjustments, but our focus remains on winning large merchants and maintaining a strong price-to-value ratio.

Q: Can you provide insights into Shopify's international expansion strategy? A: Harley Finkelstein, President: International expansion is a key growth driver, with significant growth in regions like EMEA. We are investing in product localization, compliance improvements, and local partnerships to drive adoption and expand our global presence.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.