Financial Data and Key Metrics Changes - Shopify reported Q2 revenue of $2.7 billion, up 31% year over year, with a free cash flow margin of 16% [5][8][57] - Gross profit grew 25%, exceeding expectations, with overall gross margin at 48.6%, down from 51.1% in the prior year [52][54] - Operating income for the quarter was $291 million, representing an 11% operating income margin, compared to 9% last year [56] Business Line Data and Key Metrics Changes - GMV in Q2 was $88 billion, up 31%, with offline GMV increasing by 29% [46][29] - Merchant solutions revenue increased by 37%, driven primarily by GMV growth, while subscription solutions revenue grew by 17% [49][50] - The Shop app saw a 140% year-over-year growth in native GMV, indicating strong engagement [26] Market Data and Key Metrics Changes - International GMV was up 42% year over year, with Europe leading the growth [5][34] - Cross-border GMV remained consistent at 15% of total GMV in Q2 [60] - Shopify Payments penetration reached 64%, up from 61% last year, indicating strong adoption [22][49] Company Strategy and Development Direction - Shopify is focused on expanding its reach internationally, particularly in Europe, and enhancing its product offerings to support merchants [5][34] - The company is investing in AI-driven commerce solutions, including the launch of Universal Cart and CheckoutKit, to enhance the shopping experience [12][91] - Shopify aims to build a unified commerce platform that integrates online and offline sales channels [4][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of their merchant base amid changing economic conditions, noting strong performance in both North America and Europe [58][59] - The company anticipates continued growth in Q3, with revenue growth expected in the mid to high 20s year over year [61] - Management highlighted the importance of ongoing product innovation and market expansion as key drivers of future growth [85][86] Other Important Information - Shopify has expanded its payments product into 16 new countries this year, nearly doubling its market accessibility [21] - The company has introduced a USDC stablecoin option for payments, enhancing flexibility for merchants [23] - Shopify's capital business continues to grow, with new tools providing merchants more financing options [55] Q&A Session Summary Question: How would you characterize the demand in the US and any potential pull forward due to tariffs? - Management noted no significant pull forward in demand, with consistent performance observed in Q2 and July, indicating strong business health [69][71] Question: What is the status of international growth and localization for merchants? - Management highlighted ongoing product updates and successful expansion into new countries, with significant growth in international GMV, particularly in Europe [74][76] Question: How does the company view long-term growth potential? - Management expressed confidence in maintaining growth rates above 25%, driven by past investments and new product offerings [81][84] Question: Will Universal Cart and Checkout Kit be available for the holiday season? - Management confirmed ongoing development of these products, emphasizing their importance in enhancing the shopping experience through AI integration [89][91]

Financial Data and Key Metrics Changes - The company reported a 9% increase in net revenue year-over-year, reaching $224.6 million [5][8] - Adjusted gross profit grew by 14% to $87.3 million, with an adjusted EBITDA increase of 11% to $51.3 million [5][8] - Adjusted EPS rose by $0.19 compared to the previous year, reaching $0.22 for the quarter [21] Business Segment Data and Key Metrics Changes - The SMB segment generated revenue of $151.7 million, a 5.3% increase from the previous year, with adjusted gross profit of $33.1 million, up 3.9% [13][15] - B2B revenue grew by 12.1% to $23.9 million, with adjusted gross profit increasing by 17.8% to $7.3 million [12][17] - The Enterprise segment saw revenue rise by 22.2% to $50.1 million, with adjusted gross profit also increasing by 22.2% to $46.9 million [18] Market Data and Key Metrics Changes - The company ended the quarter with over 1.3 million total customer accounts on its e-commerce platform, up from 1.2 million at the end of the previous year [5] - Annual transaction volume increased by $5 billion to over $135 billion, and account balances under administration improved to $1.3 billion [6] Company Strategy and Development Direction - The company aims to gain market share in the acquiring segment while strengthening countercyclical assets like automated payables and CFT Pay [25][26] - The focus is on investing in new verticals with large total addressable markets (TAMs) that are still early in the adoption of integrated payment and banking solutions [25][26] - The unified commerce platform is designed to streamline financial operations for businesses, enhancing cash flow and optimizing working capital [8][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging economic environment, citing a 0.3% decline in U.S. GDP and a 1.8% growth in consumer spending [24][25] - Despite economic uncertainties, the company remains confident in achieving 10% to 14% revenue growth for 2025, driven by strong growth trends and a favorable business mix [6][7] - Management noted that the material weakness related to automated controls is being actively remediated, with substantial progress made [22] Other Important Information - The company reported a decline in debt levels to $935.5 million after a $10 million prepayment of the term loan [19] - Adjusted EBITDA for the last twelve months ended March 31 was $209.2 million, with net leverage decreasing to 4.2 times [20] Q&A Session Summary Question: Can you provide details on the increase in SG&A and salaries? - Management explained that SG&A increased due to non-recurring items and costs associated with the migration to the public cloud, with a normalized increase of about 26% year-over-year [32][33] Question: What percentage of gross profit comes from B2B and enterprise? - Management confirmed that over 62% of gross profit now comes from B2B and enterprise segments, with a significant portion also from recurring revenues [34][35] Question: How did the Minnesota Wild contract come about? - Management highlighted the efficiency of their payment and banking solutions as key factors in winning the contract, emphasizing the ability to optimize cash flow and working capital [40][41] Question: What impact did the one less day in Q1 have on revenue? - Management acknowledged that the one less day did impact daily revenue, particularly in the SMB segment, affecting overall volume and income [43][44] Question: How is the company positioned regarding consumer spending and economic uncertainty? - Management noted that while there may be some impact, the company has a resilient portfolio, particularly in sectors less affected by economic downturns [54][56]

Financial Data and Key Metrics Changes - The company reported a 9% increase in net revenue, reaching $224.6 million, with adjusted gross profit growing by 14% to $87.3 million and adjusted EBITDA increasing by 11% to $51.3 million [4][6] - Adjusted EPS rose by $0.19 year over year, reaching $0.22 for the quarter [21][22] - Annual transaction volume increased by $5 billion to over $135 billion, and account balances under administration improved to $1.3 billion [5][6] Business Segment Data and Key Metrics Changes - The SMB segment generated Q1 revenue of $151.7 million, a 5.3% increase year over year, with adjusted gross profit of $33.1 million, up 3.9% [12][13] - B2B revenue grew by 12.1% to $23.9 million, with adjusted gross profit increasing by 17.8% to $7.3 million [15][17] - The Enterprise segment saw revenue of $50.1 million, a 22.2% increase, with adjusted gross profit also rising by 22.2% to $46.9 million [18] Market Data and Key Metrics Changes - The company noted a 0.3% decline in U.S. GDP during Q1, with consumer spending growth slowing to 1.8% from 4% [25][26] - The company reported that its core acquiring channels produced 10% organic revenue growth, while countercyclical segments grew by 12% to 22% [27][28] Company Strategy and Development Direction - The company aims to gain market share in the acquiring segment while strengthening countercyclical assets like automated payables and CFT Pay [26][27] - The focus is on investing efficiently in new verticals with large total addressable markets (TAMs) that are still early in the adoption of integrated payment and banking solutions [26][28] - The company is positioned to benefit from the fallout of less stable banking as a service providers [64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 10% to 14% top-line revenue growth for 2025, despite potential headwinds from lower interest rates and macroeconomic uncertainty [5][22] - The company is actively working to remediate a material weakness related to automated controls, with substantial progress reported [23] Other Important Information - The company ended the quarter with $117.6 million in available liquidity, including $70 million of borrowing capacity under its revolving credit facility [19] - The company has made a $10 million prepayment on its term loan during the quarter, reducing debt levels to $935.5 million [19][20] Q&A Session Summary Question: Can you provide details on the increase in SG&A and salaries? - Management clarified that SG&A increased by 26% year over year when normalizing for non-recurring items, with significant costs related to cloud migration and headcount additions [31][32] Question: What percentage of gross profit comes from B2B and enterprise? - Management confirmed that over 62% of gross profit now comes from B2B and enterprise segments, with a significant portion also from recurring revenues [34][35] Question: Can you elaborate on the Minnesota Wild contract win? - Management highlighted that the contract was won due to the ability to optimize cash flow and provide banking transparency, which is crucial for sports franchises [39][41] Question: How did the one less day in Q1 impact revenue? - Management acknowledged that the one less day did impact daily revenue, particularly in the SMB segment, and noted other unusual influences on volume [43][44] Question: What are the considerations for segment growth in Q2? - Management indicated that shifts in interest rates could impact growth, particularly in high-margin interest income [48] Question: How has consumer behavior changed post-tariffs? - Management noted no material changes in consumer behavior yet, with a resilient portfolio that includes recession-resistant sectors [54][56] Question: What opportunities exist in the embedded finance space? - Management stated that the company is well-positioned to capture opportunities from the fallout of less stable banking service providers [64]