Shopify Inc. (SHOP) Earnings Call Transcript & Summary

All right. Great. Welcome, everyone. We're really glad to have with us today 2 members of the leadership team from Shopify. We have Jeffrey Hoffmeister, who is the Chief Financial Officer; and we have Carrie Gillard, who is the Head of Investor Relations. Jeff and Carrie, thank you so much for making the trip to Arizona.

Thank you for having us.

Yes.

All right. We've got a great lineup of topics here that we're going to try and cover with Shopify today. We're going to start off with a little bit of the holiday trends, we saw the press release. We're then going to talk more broadly about some of the stable to accelerating GMV that we've been seeing for the better part of the last 2 years for Shopify and some of the drivers. We'll then get a little bit into the Shopify Payments business. We'll recap some of the mechanics and the benefits associated with the recent PayPal partnership. We'll talk a little bit on Shop Pay. And then we'll get into some of the more call options or growth areas, so enterprise, point-of-sale and B2B. We'll wrap up with a couple of topics around financial topics and free cash flow margins. So let's see if we can cover all of that. Let's start with the holiday trends very conveniently. There was a nice press release this morning, I'm sure everyone saw that. But a couple of things I would highlight before I hand it over to Jeff and Carrie, the 24% growth overall, but then Shop Pay really stood out at about 58% growth. And also, we noticed there was a slight uptick in cross-border mix. So with that, over to you, Jeff.

Yes. Well, certainly to the 24% year-over-year growth, we think this is a strong indication. Again, we've seen this for several years in terms of our merchants having a very successful Black Friday, Cyber Monday. As you know, this holiday shopping period, it's effectively now one big 4-day event as it relates to the combination of those two, but it's also spread out more broadly in terms of what we're seeing across the holiday shopping period. And of course, as our business gets more and more international, there will be a larger international piece that will dampen this a little bit as well. But the punchline remains a 24% growth year-over-year. I think in stark contrast to some of the other numbers you may have seen out there, I think our merchants had a very strong weekend.

Excellent. Good on that one, Carrie, right? All right. Let's move on to broader GMV trends. So Shopify continues to expand the TAM. When I first started looking at the company, it was very much a U.S. SMB e-commerce type of company, and clearly, it's much more than that now. Expanded meaningfully into Point of Sale, international, and more recently, enterprise and B2B. So maybe just talk about some of the drivers of that. As we mentioned, very impressive stat. The GMV has been essentially stable to slightly accelerating for the better part of 2 years. How have the contributors to that growth percentage really changed maybe this year versus maybe the past 3, 4 years?

Yes. Well, I think the beauty of our business, as you alluded to, one of the elements of that is just the numerous multiple growth drivers that we have and how they're all really contributing very well. You talk about the last 3 or 4 years, it's really been the last 2 years that we've made a lot of big pushes. As you know, like Point of Sale really is something that we've put some effort into starting about 2 years ago. Enterprise, we effectively launched 2 years ago. I talked about this a little bit at the Investor Day, which is almost -- in fact, I think it's a couple of days short of exactly a year ago, we talked about just the timing of a bunch of the different products and some of the things that we've released and a lot of those are doing very well. B2B is essentially in the last 2 years an initiative. And so we had a big product push and they're doing exceptionally well. We talked about on any given quarter in terms of some of the success, usually on the enterprise side we're talking more about the logos. So if you haven't listened to the last earnings call on a bunch of the logos that Harley talked about in terms of the success, and you're really starting to see a lot of the momentum in the installations on the enterprise side, and to maybe pick on enterprise for a second, because it's -- in terms of the selling cycles and you stack those on top of the implementation cycles, which generally are a little bit longer just given that these are big organizations and it takes some time, our technology can go much faster. We've talked about that on some calls in terms of the ability to get merchants up and running very quickly. On average, this feels like a 12, 18 month or so when you take those -- the selling cycle and the implementation cycle, you stack those on top of each other. You compare that to the 2 years effectively we've been in enterprise, you can see we're really a couple of quarters in to really getting some of these enterprises up and running and really starting to do some amazing things. So we talk about the growth rates we're seeing in B2B. That's really good for us, not only in terms of the growth rates, but you've heard from us in terms of how it expands some of the margin -- or sorry, some of the industries that we're addressing. So that's excellent. Point of Sale has gone from something, which is essentially the low-hanging fruit of doing the offline piece of business that we already have with the merchants that are online with us. That has evolved and we're starting to win more and more merchants that are coming to us because of Point of Sale. Maybe they're only offline, that's a huge driver. International, we disclosed, obviously, in our annual report the percentage of our revenues and our GMV, which is coming from outside North America. That percentage continues to grow. We talked about the GMV strength in Europe. That's obviously been very, very impressive, especially when you compare that to what some other people are reporting out there. So I think the growth drivers, what's driving GMV, but our business overall, there's a bunch and they're all performing very well.

And I think also from a mix perspective, right, we're seeing a lot of growth from our existing merchants as well as adding new merchants. So it's not just about all these newer growth drivers and adding a lot of newer merchants to the platform, we're also kind of enabling our existing merchant base to continue to grow really well and diversify across more and more verticals, right? We're getting more of the leading apparel brands, more of the beauty and health brands, more of the home goods, right? Our verticals and our diversity of our customer base is growing and that's also helping kind of drive our growth.

Thank you, Carrie. Thank you, Jeff. All right. We're going to move to the next topic, which is around the recent PayPal agreement update, let's call it, that was signed in September. So we'll come back to the mechanics later in terms of the GPV penetration, et cetera. But for now, let's just focus on the 2 kind of main benefits here. One is there's always sort of more generic benefits of adding a second processor for the unbranded portion. And then the second is more of the merchant experience, which is probably more specific to this agreement. Can you just talk about those 2 benefits to Shopify and its merchants?

Well, as you alluded to, there's 2 pieces. And just to make sure we level set with everyone, I think a lot of people know we've been working with PayPal in France for a while now. This was -- this most recent agreement, which we signed at the end of September, was an outgrowth of obviously the relationship we have there. And as you mentioned, there's the kind of consumer-facing piece, which is someone chooses to pay via their PayPal Button, their PayPal Wallet and how that flows into our platform. And then working with PayPal on the back end as a processor and all the things that you alluded to in terms of some of the resiliency that provides us a second source when we get a payment and we can choose a route between Stripe and PayPal. And on the front part, in terms of the branded, this allows us to really deliver to merchants more and more information analytics in their dashboard. So they can look at all the volume they get from PayPal in terms of just the volumes themselves, any charge-backs, refunds, anything that they're doing as part of that in a full dashboard that they look at with all their other payment providers. And so that was the big win in terms of like we did this with Amazon, for example, isn't that right? We work really hard to make sure that we get the merchant as much visibility, as much analytics, as much functionality as they can in that dashboard. So when they open up their laptop and they think about what am I doing today to run my business, that's really what that contract helped us do.

All right. Excellent. I think that's great on the contract. Let's now move to -- and we've spent some time with investors going over some of these mechanics in terms of what the PayPal-branded Button coming into Shopify Payments for Shopify Payments merchants in the U.S. means mechanically. I'll summarize by saying GPV penetration goes higher, gross revenue goes higher and gross profit dollars are a little changed, but slightly higher. So with that backdrop, maybe you could add some additional context on the mechanics of what's happening both from a business perspective, but in the P&L.

No, I think you captured it well. This is the change in accounting going essentially from those streams going from net to gross accounting -- gross revenue recognition on those is a function of the integration we did, the agreement, and just how the dynamics of that relationship changed in terms of, again, how we got them folded into the admin. You're right to say that it's basically gross profit dollar neutral to a little bit accretive, in fact, but I think for all intents and purposes, think about it as a gross profit dollar-neutral event. This is, and I talked about this, we obviously didn't give exact numbers. I talked about this a little bit on the call a couple of weeks ago. And I did that in the context also, I think people are trying to get a sense understandably kind of what's the impact of this. And part of this is I talked about the year-over-year change in Q3 when we talked about the actuals. If you do year-over-year comparisons for the first half of 2024 versus 2023, you see some of the dynamics like logistics and other things in the year-over-year comparison. Q3 is a good sense for how you think about the year-over-year. And I talked about the things that were impacting margins and impacting gross profit dollars. And we -- as we always do, we talk first about the things that have the biggest impact. And the biggest impact for us was Payments, right? In a good way, Payments continues to go very, very well. You talked about -- you've alluded to twice now about some of the penetration levels. The growth of Payments is great in and of itself. It also does a really good job of pulling other products along. So while Payments brings a gross margin headwind, it also brings all these other products that are actually gross margin accretive, right? And so the growth and success of Payments for us is an excellent thing. And so when we looked at Q4, Payments continues to grow. The other thing that we saw was Plus was a larger percentage of Payments. So those are the biggest pieces. And I think the thing to keep in mind as it relates to -- and again, as I know all of you are trying to think about how to ballpark this, think a little bit, too, about -- for -- I think some people are trying to take PayPal market share and say, how does that translate into market share on Shopify merchants. But as you would suspect, for Shopify merchants, they're using the Shop Pay button probably as a primary starting point. So the market share as well as some differences in the market share in terms of the industries we serve versus they serve more broadly. So we're excited to have that integration in place. Again, the feedback from merchants has been excellent, but I know some of you are trying to get a sense for the size of that. So hopefully, that helps.

That helps a lot. We really appreciate that. Thank you, Jeff. Thank you, Carrie. The last point on this and then we'll move on is timing-wise. So yes, the press release came out in September, but I believe that this mechanical change that we'll see in the P&L in terms of the GPV penetration, the gross revenue and a little bit of gross profit, that won't be a full quarter impact in Q4, I believe, just because maybe not all the merchants are being migrated to this experience. Is that correct?

Yes, that's fair. We didn't do -- again, it's only in the U.S. and you made that point, but to reemphasize that. And we did not hit every single merchant on day 1 with it, yes. So there will be a little bit of a rollout period to that.

Perfect. All right. Thank you. I think we covered that topic. Well, let's move on to Shop Pay. So more than 150 million users are using Shop Pay now. The volumes year-to-date, $50 billion as of Q3. That's up 50% year-to-date. We mentioned earlier over the cyber period growth of 58%, so even stronger. So maybe you could just talk a little bit about the Shop Pay offering, what makes it different? And then I know one topic investors are very interested in is the prospects for the button moving off platform.

Yes. Shop Pay has been very, very successful for us and it's one of two areas where effectively we're building brand with the consumer as well. But we're doing this in the interest of helping out the merchant, but the Shop Pay button has real brand recognition among consumers, which is part of the reason of the success. When people get to the checkout page, they know that there's going to be a higher level of efficacy, of resiliency, of just kind of speed in the whole thing. And so that translates back into a lot of the conversations we have with prospective merchants in terms of saying, if you have the Shop Pay button on your platform, there's some amazing things it's going to do in terms of conversion, in terms of uplift as well. And the Shop Pay button has been -- and I alluded to it, it has been successful partly because of the speed, partly because of the design, partly because of how it pre-populates a lot of your information across websites. This is the time of the year, the holiday shopping period, where you can literally -- you can get so much done in terms of shopping so quickly, that you can just go from website to website and it's all there and it's ready to go and it's meant to be a super quick checkout experience as well as all the things you know that it does in terms of tracking of the inventory and just the visibility that it gives a consumer. And so that success we then translate back to the merchants and it's been very, very good for us to say the least, and we're super excited about its future. So to your Shop Pay off-platform question, that's obviously a logical extension, especially on the merchant side, we talk about -- sorry, on the enterprise side, we talk about some of the things we're doing in terms of building our market share there. The Shop Pay button, Shopify Payments is a logical starting point for that. So you'll see more and more of that.

Excellent. All right. Let's move on to the next topic, which is enterprise. So enterprise, we've talked about a lot in terms of you winning more of these deals, showing up in the RFPs. Maybe you could just talk a little bit about some of the reasons that the enterprise merchants are coming more and more to Shopify. There's total cost of ownership, there's future proofing and the list goes on.

Yes. Total cost of ownership is certainly part of it. I think the technology in and of itself has been the shining point and you're starting to see that in terms of third-party validation more and more from both the systems integrators who -- they get hired. Sometimes they're working alongside us in the go-to-market element. A lot of times, more often, they're actually getting hired by the merchant to say, all right, help me evaluate all the platforms out there, which has the best technology, which has the best fit for what I need. And it's the recommendations of the SIs when they're evaluating us versus other platforms, which is really coming through loud and clear. And you're starting to see it more in the third-party reports from the Gartners, the Forresters, et cetera, of the world that I'm sure a lot of you read. So from a technology perspective, it's proving very compelling. And most of the opportunities that we're winning are actually replacing custom stacks that companies themselves, that merchants have built internally. And it's just one of these things where it's obviously such a key part of their business. They have spent a lot of times over multiple years, if not decades, getting this kind of built, supported, customized exactly what they want. And we think part of our success is largely that we're offering them for the first time a level of customization, speed, capability they didn't have before. And so it's proving to be something where it is saying, this is something where I want to go from the stack I have and start to use you. Again, the speed and the quality of the checkout process that we offer is usually the thing that gets people to start. And a lot of times alongside they're doing Point of Sale -- or in addition to taking on Shopify Payments, maybe they're doing Point of Sale, maybe they're doing e-mail marketing, maybe they're doing something else along those lines. And so that's really been -- while we're certainly displacing some competitors, it's mostly getting these companies to say, you know what, I look at what you have and I compare it to what I can do, it's clearly the best choice to make.

Thank you, Jeff. Yes, you hit that quite well in terms of sometimes displacing competitors, sometimes custom stack. I think we tackled that. The last one here is maybe just for those that are maybe newer to the enterprise opportunity. When you do enter the RFP stage, who are some of the players that you're coming up against most in those RFPs?

Yes. I think it's a lot of the names that you would know. Salesforce bought Demandware, Adobe bought Magento. SAP acquired Hybris. A little bit further back, Oracle had ATG. BigCommerce is, for some of you who know the space, since then they have tended to focus a little bit more on larger rather than smaller merchants. Those are the names that you would suspect that we see out there.

All right. Excellent. Let's move on to the next topic. So Point of Sale. So Shopify is now about 12% Point of Sale or in-store. So 88% online, 12% in-store. The number has gotten quite large. The growth has been impressive. On the Q3 call, specific to Point of Sale, you talked about the multi-location merchants seeing about 50% growth. And last year at the Investor Day, you talked about 1/3 of the GMV for in-store was coming from Shopify Plus. So there seems to be a larger merchant growth happening here. Could you talk about that mix within the in-store business?

Yes. We certainly, as I alluded to before, on Point of Sale, we have a lot of excellent merchants that are working with us online that we see an opportunity to work with them offline. And of course, the natural starting point for us is the ones that have multiple locations, 10, 20, 30 more locations. And so we can work with kind of the central team and say, let's make that switch all at once. Let's get your locations, get them on our platform. We really, I think, have an unfair advantage, so to speak, in terms of all the great work we've done on the commerce side, the online commerce side, bringing some of that technology, bringing that understanding of the commerce stack to what we're doing on Point of Sale. Really being the only one out there, I think, that has a bundled commerce solution where you can say, we can run -- we have the best platform online, we have the best technology and we think the best platform offline. Combine those two, one tech stack, one set of analytics, one way to look at your business. So that's bringing more and more people on platform. It's obviously easier for us to work with the Point of Sale customers that have multiple locations rather than 1 or 2, which is really not where we spend a bunch of time. So to your point, Tim, we're seeing a little bit more on the Plus side and we'll see more of that, and we continue to roll it out in more countries. So we're excited about it.

And a lot of this is also due to the kind of efforts we put in place the past 2 years from a go-to-market perspective and organizing teams focused on going after that retail opportunity and looking at that as the on-ramp and saying, okay, who are those retailers out there, and how do we make sure that we're reaching and speaking to them and marketing to them along with marketing to kind of all of the other merchants we're looking at bringing on. So it's also been the result of that, and you're starting to see the fruits of that labor with our -- the way our GMV is growing for retail.

All right. Great. Thank you, Carrie. Thank you, Jeff. I think we covered Point of Sale. Let's go to the next one, which is B2B. So Jeff, you alluded to the growth rates earlier, roughly in the 150% range, albeit off a small base, but still contributing meaningfully to growth. It's a unique offering because it combines for a single merchant the ability to manage their direct-to-consumer efforts and their wholesale efforts in one. Can you just talk about how differentiated that is in the market?

Yes. B2B, it started for us really a couple of years ago, as I alluded to, where we had a lot of merchants who had a portion of their business, which was B2B. And that may seem counterintuitive, at first, to some of you but you'd say, all right, so I sell a lot of my stuff online, but maybe there's a piece of my business, maybe it's 10%, maybe it's 20%, that I'm selling through another retailer. And maybe I'm selling it through Target or Starbucks or whomever, where you have that outlet. And so there's an element of your business, which is B2B. And we -- as we continue to build more and more on the online core platform, we really developed that functionality on B2B, and we spent over the last 2 years a lot of time and effort to really kind of get that to -- completely to another level. And I think that's, one, the technologies. In comparison to a lot of the stuff out there, I think the technology is very compelling. The ease of use, for sure, is very differentiating. And as you point out, it's an opportunity to get into more industries. Industries where, historically, we've had little presence. So yes, it's small numbers, but the feedback has been very, very good. We've talked -- Harley's called out a couple of different merchants we've alluded to in the past, ones that we've won. It's something we feel really good about.

Okay. Excellent. A minor follow-up there is just around the monetization of B2B. How should investors think about that relative to the core, call it, D2C type of offerings?

Yes. Well, we certainly have a belief that there are some things that we want to feature gate, for lack of a better word, in the kind of Plus offering rather than the standard. Merchants will go from -- merchants will come on the Plus platform sometimes from the standard platform. They just get to a level of volume and their business grows to a spot where it makes sense to go to Plus. Some merchants join us for the very first time going straight to the Plus platform. B2B, along with Audiences are the 2 things that you get as differentiating points that you get in Plus that you don't get in standard. And those are 2 very powerful things that pull people on platform. And so in terms of monetization of B2B, it comes through, obviously, the increased payments volume as well as the fact that as you -- as a lot of you know, we raised prices in Plus in April. And so there's a little bit of incremental monetization on that side as well. So there's a balance between having all your products separately versus making sure that they become part of the bundled package, if you will.

All right. That's a great segue into the next topic, which is around pricing philosophy. So investors look at what you've accomplished over the last few years and they see a core or a standard pricing increase. There was a Plus increase. And there were some Payments pricing changes that were also made. So there's 2 parts to this question. One is the overall philosophy on pricing. Should investors think of this as a part of sort of the ongoing growth algorithm and that there could be more pricing down the road? And then the second piece is just more kind of near term for the lapping considerations that investors should have in their models as we get into '25.

Yes, a bunch in there. I guess I'll do the lapping considerations last. I mean, I think this is the overall pricing and monetization philosophy. When we raised prices in April last year for standard, that was the first time we did it in 13 years. When we did it for Plus in April of this year, it was the first time in approximately 7 years. I do think that we're probably, from a monetization perspective, going -- just think more actively about it. That doesn't mean that we're -- I don't see us going to a spot where you as a merchant show up in January, the first Monday of January in a given year, and there's some sort of CPI-driven price escalation clause. That's not how we think about it. I do think we'll probably revisit pricing more frequently than we have in the past. Having said that, on standard, what I don't want to do is get us in a spot in standard nor does Tobi nor do any of us want to get, where as a starting entrepreneur, it becomes a little bit of a price burden, you have to think about it, right? So we focus very, very much on the value to price relationship and we wanted to be heavily tilted in the camp of value. And that's how we think about pricing all of our products and we'll continue to do that. I do think we'll just go through a pricing review every few years for each of our products and say, when was the last time we thought about pricing on this product or that product. And if every couple of years, each of your products are up for review, it means in any given year, you probably have 1 or 2 that are up for consideration. So that's something we'll continue to do. To your lapping comment, we did say, again, essentially, the standard pricing change, which was the more impactful of the two, as we've talked about, that is fully lapped. We've talked a little bit about the impact of Plus. Again, with the April price change, it hit MRR right away. You've got to wait another quarter to have a full year of revenue impact -- a full quarter of revenue impact. So -- but we also made the comment that because we had a lot of Plus merchants that basically opted in for the 3-year contract, we saw a little bit in terms of incremental uplift on pricing from Plus. We saw a little bit less of an increment than we saw on standard, which for us is good in that you have the Plus merchants committing to 3 years, which for us means that you just subconsciously or consciously say to yourself, for at least the next 3 years, I'm on this platform. And so it gets a little bit of nudge of, well, hey, maybe I've been thinking about taking on the Installments products or the Tax product or the Capital product or the Managed Market, kind of those other products that are like I'm on platform, I should think about other stuff on the platform I should be using. So that's one of the other benefits that we see coming out of this.

Excellent. Thank you, Jeff. Let's move on to the core MRR. So Shopify's core pricing, as you mentioned, went into effect in April '23 and we saw that flow through the model last year. When we look at Shop core MRR, though, it actually accelerated this past quarter to 28% year-over-year versus the prior quarter at about 24%. So maybe just talk about that underlying strength in MRR that we saw in the most recent quarter.

Yes. I think we've got -- not only this quarter we talked about 2 weeks ago, but also the one that we talked 3 months ago, I think you had a couple of different things we've talked about. Number one, the merchant acquisition engine just continues to do very, very well. And that's -- I'll talk about marketing in a second. But just kind of what we've been doing for many, many years in terms of the brand we have with merchants, kind of the technology we're providing, everything we're doing, it's just from a merchant perspective it's a platform you want your business to be on. And so that merchant acquisition engine is proving to be as solid as it's ever been. You also have the marketing dynamics that we talked about, and we also last quarter talked about the shortening of the paid trials. I spent some time on that, again, not the quarter 2 weeks ago, but the one a few months ago. So from our vantage point, we've talked a bunch about the marketing. I probably don't have time to do all that justice right now, but we're remaining very vigilant on the payback periods, on the guardrails. You can -- we've talked about how we're spending and kind of the success it's yielding. So it's obviously reflected in MRR.

All right. Great. Thank you. So on the marketing point, we'll just make one last piece and then we'll move on and we'll wrap up with the free cash flow margins. But investors often ask, where is the incremental marketing going? And you've talked about spending a little bit more in Europe. You've talked about spending a little bit more for the in-store, the Point of Sale business. And then there's a smaller component that is over enterprise, but we gather that's hiring some salespeople. It's not maybe a massive part of the incremental marketing. Maybe just expand upon that or maybe add any pieces that I'm missing.

No, I think you captured it well. Some of it is -- some of the increased marketing spend is just a function of the success of all the different products we have and we want to support their growth rates. We want to support their success. I would clarify one thing on the enterprise in terms of adding people versus marketing dollars. We've been building the enterprise sales force for a couple of years. So it's not like all of a sudden, we feel like, oh, now it's time to build a big engine. Will we continue to add qualified people? Absolutely. All the success we're having in enterprise just causes more and more extremely talented salespeople from other organizations seek us out, want to join our platform. So there will be more of that. We'll be smart, just as we are about adding R&D head count, though, really, really high-quality engineers. We've talked about keeping head count flat. That's something which we are still doing. We've got fewer people in support and a few areas in G&A, but that allows us to be head count neutral and still add some people, some people in sales and marketing, more people in R&D. And so that's a discipline we'll keep up. So yes, part of it from a marketing perspective is just all the great products we have and making sure that they're supported, and in addition to what we talked about a couple of quarters ago, just the things we're doing from a technology side on the marketing, so it allows us to even better paybacks, spend some incremental dollars and get success out of that. So that's -- those are some of the dynamics playing into that.

Excellent. All right. We're going to bring it home with the final topic, which is free cash flow margin. So you made some comments on the last earnings call about how investors should think about the free cash flow margins going forward. Can you just talk a little bit about that from 2 angles. One, the annual percentage rate. And then also you made some comments around how we should think about the quarterly cadence throughout the year.

Yes. We talked about Q4 free cash flow margins this quarter being similar to what we had last year. We explicitly, obviously, intentionally did not give guidance for free cash flow margins for all of next year, but we did give the sense that we got to a free cash flow margin level, which we think makes sense for our business for a host of reasons, which I talked about on the call. And so as you think about our free cash flow margin levels, this -- again, it kind of feels like where we are in '24 is a good model. I did -- I made the comment, which I think some people caught, not everyone fully digested, which was kind of the quarterly evolution of free cash flows to your comment. And all I was trying to do there was allude to the fact that within the year of a given free cash flow margin level, there's a natural evolution of the free cash flow margin profile. Q4 is our strongest quarter because of the holiday shopping period. it's very logical that, given our scale, you're going to see those as most likely the strongest free cash flow margins in any given quarter. We saw that last year as well in terms of how it played out. The guidance that we gave for this year -- for this quarter would imply the same thing for this year. Obviously, Q1 is generally our slowest quarter in terms of GMV. It's just a function of the consumer spend patterns. So my comment around that was as you look at the free cash flow evolution by quarter, both this year as well as last year, there are some patterns that you see.

Excellent. Well, I want to say, again, on behalf of everyone at UBS, thank you to Jeff, thank you to Carrie, to the full Shopify team for making the time to come join us here in Arizona. As you can see, there were lots of people who come here to see you guys, and we really appreciate you being here.

Thanks, Tim.

Thanks, Tim.