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    SHOP
    Earnings call· Dec 2025(Q4 FY25)

    SHOPIFY INC. SHOP

    Feb 11, 2026 Source

    Executive summary

    Shopify Q4 FY25 — AI-Powered Commerce and Record Revenue

    Shopify delivered a record Q4 and strong FY25, driven by robust GMV growth, international expansion, and increased adoption of its payment solutions. The company is positioning itself at the forefront of AI-powered commerce, launching new protocols and tools to enable Agentic Commerce and enhance merchant operations, aiming to redefine the future of online retail.

    Highlights

    7

    • Full-year 2025 revenue topped $11.5 billion, up 30%, accelerating from 26% in 2024.

    • Q4 FY25 revenue was the first ever quarter above $3 billion.

    • Free cash flow exceeded $2 billion in 2025, achieving a 17% margin.

    • Q4 FY25 GMV was $124 billion, up 31% (29% constant currency), marking the first quarter over $100 billion.

    • International revenue grew 36% year-over-year, with Europe GMV up 45% (35% constant currency) in Q4 FY25.

    • B2B GMV increased 84% in Q4 FY25 and 96% in full-year 2025.

    • Shop Pay processed $43 billion of GMV in Q4 FY25, powering over 50% of Shopify's U.S. GPV.

    Concerns

    3

    • Geopolitical and trade challenges

    • Comparability headwinds for MRR growth

    • Slightly higher effective tax rate

    Guidance & targets

    4
    CategoryTargetConfidence
    Revenue growth
    low 30s year-over-year
    high materiality
    High
    Gross profit dollars growth
    high 20s
    medium materiality
    High
    Operating expenses as percentage of revenue
    37% to 38%
    medium materiality
    High
    Free cash flow margin
    low to mid-teens
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    North America
    Revenue growth was strong, and Shopify now powers more than 14% of the U.S. e-commerce market.
    U.S. e-commerce market share: >14%
    		—28%——
    International
    Revenue grew faster than North America, with nearly half the merchant base located outside North America. Europe showed exceptional GMV growth in Q4.
    Merchant base outside North America: nearly halfEurope GMV growth (Q4 FY25): 45% (35% constant currency)
    		—36%——
    Offline Channel
    Offline channel revenue grew significantly, with strong Q4 GMV growth, expanding access points into the ecosystem.
    Q4 GMV growth: 29%
    		$748 million27%——
    B2B
    B2B GMV showed very strong growth in both Q4 and the full year, indicating a significant growth area for Shopify.
    		—96%84%—

    Operational metrics

    27
    Free cash flow margin
    17%
    FY25

    Achieved a free cash flow margin of 17% for the full year.

    Free cash flow margin
    19%
    Q4 FY25

    Q4 free cash flow was $715 million or 19% of revenue.

    Gross profit growth
    25%
    Q4 FY25

    Q4 gross profit grew 25%, coming in slightly ahead of expectations.

    Gross profit growth
    24%
    FY25

    For the year, gross profit was up 24%.

    Subscription Solutions gross margin
    81%
    Q4 FY25

    Subscription Solutions gross margin coming in at 81%, mainly due to a reduction in support costs.

    Merchant Solutions gross margin
    36.8%
    Q4 FY25

    Merchant Solutions gross margin coming in at 36.8%, with year-over-year decrease driven by mix shift and fee changes.

    Operating expenses as percentage of revenue
    29%3-point improvement over 2024 levels
    Q4 FY25

    Operating expenses were 29% of revenue for Q4, a 3-point improvement over 2024 levels.

    Operating expenses as percentage of revenue
    35%3-point improvement over 2024 levels
    FY25

    Full year operating expenses were 35% of revenue, a 3-point improvement over 2024 levels.

    Transaction loans and losses as percentage of revenue
    approximately 3%
    Q4 FY25

    Transaction loans and losses returned to a consistent historical trend of approximately 3% of revenue in Q4.

    Share repurchase program authorization
    up to $2 billion
    ongoing

    The Board approved a share repurchase program of up to $2 billion.

    Sidekick custom apps generated
    4,000
    3 weeks

    Sidekick generated almost 4,000 custom apps in 3 weeks after the latest edition drop.

    Sidekick automations created with Shopify Flow
    29,000
    3 weeks

    Sidekick created over 29,000 automations with Shopify Flow in 3 weeks.

    Sidekick task lists built
    355,000
    3 weeks

    Sidekick built almost 355,000 task lists in 3 weeks.

    Sidekick photos edited
    1.2 million
    3 weeks

    Sidekick edited over 1.2 million photos in 3 weeks.

    AI-created custom elements in online store editor
    6.5 million
    ongoing

    More than 0.5 million merchants have used AI to create 6.5 million custom elements in the online store editor.

    Shop Campaigns revenue growth
    doubled
    2025

    Shop Campaigns revenue doubled in 2025.

    Shop Campaigns merchant adoption growth
    tripled
    2025

    Shop Campaigns merchant adoption tripled in 2025.

    Shopify Payments countries
    60
    ongoing

    Shopify Payments is now available in 60 new countries.

    Shopify Capital countries
    8
    ongoing

    Shopify Capital is now available in 8 countries.

    Shop tracking countries
    20
    ongoing

    Shop tracking is available in more than 20 countries.

    AI-powered translations languages
    8
    ongoing

    AI-powered translations are available in 8 additional languages.

    Shop Pay GMV processed
    $43 billion
    Q4 FY25

    Shop Pay processed $43 billion of GMV in Q4.

    Shop Pay U.S. GPV penetration
    over 50%
    Q4 FY25

    Shop Pay powered over 50% of Shopify's U.S. GPV.

    Shopify Payments GMV processed
    $84 billion38% higher than prior year
    Q4 FY25

    $84 billion of GMV was processed on Shopify Payments in Q4.

    Shopify Payments GMV penetration
    68%4 points higher than Q4 2024
    Q4 FY25

    Shopify Payments processed 68% of GMV, 4 points higher than Q4 of 2024.

    Marketing spend international allocation
    roughly 40%
    2025

    Roughly 40% of marketing spend in 2025 targeted markets outside of North America.

    Cash and investments balance
    —
    Q4 FY25

    The company reported a strong balance sheet with no debt.

    Industry KPIs

    3
    MetricValueDetails
    GMV take rate payments$378 billionUSD
    Software recurring arrup 15%%
    Ai agentic channel product adoption15x

    Product announcements

    7
    ProductTypeDetails
    Universal Commerce Protocol (UCP)launch
    Shopify Agentic Storefrontslaunch
    Agentic planlaunch
    Sidekick Pulselaunch
    SimGymlaunch
    Managed Markets 2.0launch
    Shopify Product Networklaunch

    Deals & partnerships

    2
    GoogleCo-development of Universal Commerce Protocol (UCP)

    Shopify co-developed the Universal Commerce Protocol (UCP) with Google, an open standard for Agentic commerce that covers the full commerce journey end-to-end, from search to cart, checkout to post order, and is payment agnostic.

    VerifoneIntegration of Shopify software with Verifone payment hardware

    Partnership with Verifone to make Shopify software available on their industry-leading payment hardware, including bringing subscription products to in-store to drive recurring orders.

    Risks & headwinds

    3
    Geopolitical and trade challenges2025 (past)

    Unquantified

    Mitigation: Shopify offered new products targeting customs and duties, made previously plan-gated products available to all merchants, and expanded many products internationally.

    Comparability headwinds for MRR growthUntil Q2 FY26

    Unquantified, but impacts YoY growth rate

    Slightly higher effective tax rateQ1 FY26

    Unquantified

    Mitigation: Expected to be mitigated on an annual basis.

    What to watch in Q1 FY26

    4

    AI-powered commerce adoption

    Next quarter (Q1 FY26) and beyond.
    CurrentOrders from AI search up 15x (small base); major brands signed up for Agentic Storefronts.
    TargetContinued acceleration of AI search orders; increased merchant adoption of Agentic Storefronts and Agentic plan.

    Why it matters

    AI is framed as a significant growth driver and a 'new normal' for commerce, impacting future revenue and market positioning.

    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.

    Q&A highlights

    5

    Will Shopify's ability to monetize transactions be consistent on AI surfaces, and how does it compare to other standards?

    Harley Finkelstein clarified that LLMs do not bypass Shopify's checkout, and the complex backend (shipping, payments, inventory) still flows through Shopify. Monetization for Shopify merchants is the same as if the transaction happened in the online store, especially with Shopify Payments.

    “LLMs 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.”

    asked by Colin Sebastian · answered by Harley Finkelstein

    2 min read6 chapters

    Detailed Narrative

    01

    AI-Powered Agentic Commerce Leadership

    Shopify is positioning itself as a leader in the AI era of commerce, having co-developed the Universal Commerce Protocol (UCP) with Google to standardize how AI agents interact with merchants. The company launched Agentic Storefronts to syndicate products to major AI platforms like Google AI Mode, Gemini, ChatGPT, and Microsoft Copilot. Furthermore, an 'Agentic plan' has been introduced to allow non-Shopify brands to sell through these same AI platforms and the Shop app, aiming to expand Shopify's ecosystem and initiate relationships with new merchants.

    02

    Strong Financial Performance and Profitable Growth

    Shopify achieved record financial results in Q4 FY25, with revenue exceeding $3 billion for the first time in a single quarter, contributing to a full-year 2025 revenue of $11.5 billion, representing a 30% increase. The company demonstrated disciplined growth, with free cash flow surpassing $2 billion in 2025 and achieving a 17% free cash flow margin. This performance highlights Shopify's ability to scale profitably while investing in future growth initiatives.

    03

    Global Expansion and Diversified Merchant Base

    The company experienced robust growth across geographies and merchant types. North America revenue was up 28%, with Shopify now powering over 14% of the U.S. e-commerce market. International revenue grew even faster at 36% year-over-year, and nearly half of Shopify's merchant base is now outside North America, with Europe's Q4 GMV up 45%. Significant traction was also seen in the B2B space, with GMV from B2B merchants increasing 96% in 2025, attracting large industrial and consumer brands.

    04

    Shop Ecosystem Driving Demand and Conversion

    Shopify's consumer-facing ecosystem, centered around the Shop App, is gaining momentum in driving demand and conversion. The Shop App is reimagining discovery with tailored content, while Shop Campaigns, the advertising product, saw its revenue double and merchant adoption triple in 2025. Shop Pay continues to be a critical trust marker, processing $43 billion of GMV in Q4 FY25 and powering over 50% of Shopify's U.S. GPV, indicating strong adoption and conversion benefits for merchants.

    05

    AI Tools for Smarter Merchant Operations

    Beyond commerce surfaces, AI is enabling merchants to operate smarter and achieve greater leverage. Shopify's on-platform AI assistant, Sidekick, has significantly advanced, generating thousands of custom apps, automations, and task lists, and editing over a million photos in just three weeks. New features like Sidekick Pulse offer proactive, data-driven advice, and the SimGym app simulates buyer behavior, allowing merchants to optimize their stores without technical skills, accelerating their path from first sale to full scale.

    06

    Share Repurchase Program Approved

    The Board of Directors approved a share repurchase program of up to $2 billion, underscoring the company's confidence in its long-term value and financial strength. This decision follows the prior quarter's move to settle convertible notes primarily in cash, reflecting a strong balance sheet with no debt and a proven track record of delivering consistent free cash flow, with 10 consecutive quarters of double-digit free cash flow margin.

    AI-generated summary of the company’s earnings call. Not investment advice.