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What changed in SHOPIFY INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SHOPIFY INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+338 added−399 removedSource: 10-K (2026-02-11) vs 10-K (2025-02-11)

Top changes in SHOPIFY INC.'s 2025 10-K

338 paragraphs added · 399 removed · 300 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeItem 1: Business Overview Shopify is a leading global commerce technology company, offering trusted tools to start, scale, market and run a business of any size. Shopify's mission is to make commerce better for everyone with a platform and services that are engineered for simplicity and reliability, while delivering a better shopping experience for consumers everywhere.
Biggest changeShopify's mission is to make commerce better for everyone with a platform and services that are engineered for speed, customization, reliability and security, while delivering a better shopping experience for consumers everywhere. Shopify's business is designed to empower our merchants by offering a comprehensive, multi-channel commerce platform that supports their business as it grows.
In 2019, Shopify launched the Sustainability Fund which is designed to identify and support impactful carbon-removal and reduction technologies and projects. Shopify is also a founding member of Frontier, alongside Stripe, Alphabet and McKinsey, among others, with a goal to collectively purchase over $1 billion of permanent carbon removal by the end of 2030.
In 2019, Shopify launched its Sustainability Fund, which is designed to identify and support impactful carbon-removal and reduction technologies and projects. Shopify is also a founding member of Frontier, alongside Stripe, Alphabet and McKinsey, among others, with a goal to collectively purchase over $1 billion of permanent carbon removal by the end of 2030.
We offer pricing plans designed to meet the needs of our current and prospective merchants. While most merchants subscribe to our Basic and Shopify plans, the majority of our gross merchandise volume ("GMV") has been generated from merchants subscribing to our Shopify Plus plan and enterprise offerings.
We offer pricing plans designed to meet the needs of our current and prospective merchants. While most merchants subscribe to our Basic and Grow plans, the majority of our gross merchandise volume ("GMV") has been generated from merchants subscribing to our Shopify Plus plan and enterprise offerings.
We believe that by deepening and expanding the range of solutions we offer to give merchants and by offering new and better ways to market and sell their products, we will be able to grow our addressable market and meet the needs of merchants in years ahead.
We believe that by deepening and expanding the range of solutions we offer to merchants and by offering new and better ways to market and sell their products, we will be able to grow our addressable market and meet the needs of merchants in years ahead.
We intend to grow our base of merchants by both inspiring entrepreneurship through marketing programs and trial experiences and continuing to improve the ease with which merchants can get a new or existing business up and running with Shopify. 7 Table of C ontents Ecosystem A rich ecosystem of app developers, theme designers and other partners, such as digital and service professionals, marketers, photographers and affiliates has evolved around the Shopify platform.
We intend to grow our base of merchants by both inspiring entrepreneurship through marketing programs and trial experiences and continuing to improve the ease with which merchants can get a new or existing business up and running with Shopify. 7 Table of Contents Ecosystem A rich ecosystem of app developers, theme designers and other partners, such as digital and service professionals, marketers, photographers and affiliates has evolved around the Shopify platform.
Employees also have the opportunity to tackle novel problems and projects through Hack Days, which, in 2024 included in-person collaboration in cross-company teams. We are intentional in building a culture and environment that empowers our talented people. We measure employee engagement through regular pulse checks, including a semi-annual survey.
Employees also have the opportunity to tackle novel problems and projects through Hack Days, which in 2025 included in-person collaboration in cross-company teams. We are intentional about building a culture and environment that empowers our talented people. We measure employee engagement through regular pulse checks, including a semi-annual survey.
Subscription Solutions We generate subscription solutions revenues primarily through the sale of subscriptions to our platform and from variable platform fees, as well as through the sale of subscriptions to our Point of Sale Pro ("POS Pro") offering, the sale of apps, the registration of domain names and the sale of themes.
Subscription Solutions We generate subscription solutions revenues primarily through the sale of subscriptions to our platform, including variable platform fees, as well as through the sale of subscriptions to our Point of Sale Pro ("POS Pro") offering, the sale of apps, the registration of domain names and the sale of themes.
Although, as a foreign private issuer, we are not required to do so, we have chosen to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the SEC instead of filing the reporting forms available to foreign private issuers.
Although, as a foreign private issuer, we are not required to do so, we have chosen to file annual reports on Form 10-K, 12 Table of Contents quarterly reports on Form 10-Q and current reports on Form 8-K with the SEC instead of filing the reporting forms available to foreign private issuers.
Additionally, some merchants may select one or more integrated or standalone offerings from other providers such as: • ecommerce software vendors; • content management systems; • payment processors; • POS providers; • domain registrars; • shipping label providers; • fulfillment service providers; • alternative lenders; • financial services; • cross-border services providers; and • marketplaces.
Additionally, some merchants may select one or more integrated or standalone offerings from other providers such as: • ecommerce software vendors; • content management systems; • payment processors; • point of sale providers; • domain registrars; • shipping label providers; • fulfillment service providers; • alternative lenders; • financial services; • cross-border services providers; and • marketplaces.
We believe our partner ecosystem helps drive the growth of our merchant base by extending the functionality of the Shopify platform through the development of apps, which in turn further accelerates growth of the ecosystem. As of December 31, 2024, more than 16,000 apps were available in the Shopify App Store.
We believe our partner ecosystem helps drive the growth of our merchant base by extending the functionality of the Shopify platform through the development of apps, which in turn further accelerates growth of the ecosystem. As of December 31, 2025, more than 21,000 apps were available in the Shopify App Store.
Seasonality Our business is affected by seasonality due to holiday demand, which historically has resulted in higher GMV and revenue during our fourth quarter, which ends on December 31. We believe that this seasonality has affected and will continue to affect our quarterly results.
Seasonality Our business is affected by seasonality due to holiday demand, which historically has resulted in higher GMV and revenue during our fourth quarter, which ends on December 31. We believe that this 9 Table of Contents seasonality has affected and will continue to affect our quarterly results.
Sustainability Shopify is a company that wants to see the next century and has taken many steps to build a sustainable business, including removing and reducing emissions from building and home office energy usage and business travel and leveraging Google Cloud for platform operations.
Sustainability Shopify is a company that wants to see the next century and has taken many steps to build a sustainable business, including addressing emissions from building and home office energy usage and business travel and leveraging Google Cloud for most platform operations.
Offered at a starting rate that is several times that of our Advanced plan, the Shopify Plus plan solves for the complexity of merchants as they grow and scale globally, offering additional functionality and support, including features like Shopify Audiences for customer acquisition, B2B features for selling wholesale and Launchpad for ecommerce automation.
Offered at a starting rate that is several times that of our Advanced plan, the Shopify Plus plan solves for the complexity of merchants as they grow and scale globally, offering additional functionality and support, including access to features like Shopify Audiences for customer acquisition, B2B features 8 Table of Contents for selling wholesale and Launchpad for ecommerce automation.
Merchants can also choose to address carbon associated with shipping their orders by adding the Shopify Planet app to their store. Competition Our market is transforming, competitive and highly fragmented, and we expect competition to increase in the future.
Merchants can also choose to address the carbon emissions associated with shipping their orders by adding the Shopify Planet app to their store. 10 Table of Contents Competition Our market is transforming, competitive and highly fragmented, and we expect competition to increase in the future.
We believe the principal competitive factors in our market are: • vision for commerce and product strategy; • simplicity and ease of use for merchants and their buyers; • integration of multiple sales channels; 10 Table of C ontents • embedding of commerce functionality onto more surfaces; • cost-effective solutions; • significant app ecosystem; • breadth and depth of functionality; • pace of innovation; • powerful data analytics; • ability to leverage emerging technologies, including AI; • ability to scale; • security and reliability; • support for a merchant’s brand development; and • brand recognition and reputation.
We believe the principal competitive factors in our market are: • vision for commerce and product strategy; • simplicity and ease of use for merchants and their buyers; • integration of multiple sales channels; • embedding of commerce functionality across more surfaces; • interoperability across surfaces; • cost-effective solutions; • significant app ecosystem; • breadth and depth of functionality; • pace of innovation; • powerful data analytics; • ability to leverage emerging technologies, including AI; • ability to scale; • security and reliability; • support for merchant discovery and brand development; and • brand recognition and reputation.
As of December 31, 2024, we had millions of merchants from more than 175 countries using our platform, geographically dispersed as follows: 45% in the United States, 30% in Europe, the Middle East and Africa, 15% in Asia Pacific, Australia and China, 5% in Canada and 5% in Latin America (Mexico and South America).
As of December 31, 2025, we had millions of merchants from more than 175 countries using our platform, geographically dispersed as follows: 44% in the United States, 31% in Europe, the Middle East and Africa, 16% in Asia Pacific, Australia and China, 5% in Canada and 5% in Latin America.
We have also launched localized pricing plans in select countries where we bill in local currency in order to attract more merchants to our platform. Our subscription plans typically have a one-month term, although merchants can elect to make an annual commitment. Merchants who sign on to Shopify Plus initially have annual or multi-year subscription terms.
We also offer localized pricing plans in select countries where we bill in local currency in order to attract more merchants to our platform. Our subscription plans typically have a one-month term, although merchants can elect to make an annual or multi-year commitment.
Similarly, legislation or other governmental action around online platforms that might be used to facilitate, enable or host the distribution of illegal or otherwise harmful content, goods or services, may require changes to our platform.
Similarly, legislation or other governmental action around online platforms that might be used to distribute illegal or otherwise harmful content, goods or services, may require changes to our platform.
In connection with expected continued growth of our merchant solutions offerings, we believe that our business may become more seasonal in the future and that historical patterns in our business may not be a reliable indicator of our future performance. 9 Table of C ontents Human Capital Shopify is a company designed for world-class crafters.
In connection with expected continued growth of our merchant solutions offerings, we believe that our business may become more seasonal in the future and that historical patterns in our business may not be a reliable indicator of our future performance. Human Capital Shopify is a company designed for world-class crafters. We value employees who are merchant-obsessed and thrive on change.
Treasury Department’s Office of Foreign Assets Control, the sanctions regulations administered or enforced by the Office of the Superintendent of Financial Institutions in 11 Table of C ontents Canada, and the export control laws administered by the U.S. Commerce Department’s Bureau of Industry and Security, the U.S.
Treasury Department’s Office of Foreign Assets Control, the sanctions regulations administered or enforced by the Office of the Superintendent of Financial Institutions in Canada, and the export control laws administered by the U.S. Commerce Department’s Bureau of Industry and Security, the U.S. State Department’s Directorate of Defense Trade Controls and the Canadian Export and Import Controls Bureau.
The Shopify platform is "single branch" software, which means that all of our merchants use the latest version of Shopify, which eliminates the need to maintain older versions of the platform and enables us to quickly distribute new versions.
Our platform's cloud-based architecture is designed to support sudden traffic spikes and to provide high reliability to our merchants. The Shopify platform is "single branch" software, which means that all of our merchants use the latest version of Shopify, which eliminates the need to maintain older versions of the platform and enables us to quickly distribute new versions.
Research and development at Shopify is currently focused on product management, product development and product design to accomplish these goals. We also invest in developing the tools to make it easier for our ecosystem partners to build on and for Shopify to extend the functionality and flexibility of the platform.
We also invest in developing the tools to make it easier for our ecosystem partners to build on and for Shopify to extend the functionality and flexibility of the platform.
Open source has played a major role at Shopify from the beginning given our founder's active role on the core team that built Ruby on Rails, the technology that powers much of the Shopify platform. Our platform's cloud-based architecture is designed to support sudden traffic spikes and to provide high reliability to our merchants.
Technology The Shopify platform is a multi-tenant cloud-based system that is engineered for high scalability, reliability and performance. Open source has played a major role at Shopify from the beginning given our founder's active role on the core team that built Ruby on Rails, the technology that powers much of the Shopify platform.
We principally generate merchant solutions revenues from payment processing fees and currency conversion fees from Shopify Payments, our fully integrated payment processing service that allows our merchants to accept and process payment cards online and offline.
We principally generate merchant solutions revenues from payment processing fees and currency conversion fees from Shopify Payments, our fully integrated payment solution.
POS Pro subscriptions fees are charged on a per month and per location basis, with an option to elect an annual commitment. 8 Table of C ontents Merchant Solutions We offer a variety of merchant solutions to augment those provided through our subscriptions and to address the broad array of functionality merchants commonly require, including accepting payments, securing working capital and shipping.
Merchant Solutions We offer a variety of merchant solutions to augment those provided through our subscriptions and to address the broad array of functionality merchants commonly require, including accepting payments, securing working capital and shipping.
Teams align through “Local Access” in certain cities, in-person team events or “Bursts” and key company moments, which in 2024, included a company-wide Summit, held in Toronto, Canada. These in-person moments foster connection and drive mission alignment and impact.
Shopify has a remote-first work environment for employees, gathering in-person periodically during the year to connect and solve complex problems. Teams connect through “Local Access” in certain cities, in-person team events (or “Bursts”) and key company gatherings, which in 2025 included a company-wide summit held in Toronto, Canada. These in-person moments foster connection, drive mission alignment and increase impact.
Government Regulation We are subject to a number of foreign and domestic laws and regulations that may affect companies conducting business on the internet, many of which are still evolving and could be interpreted in ways that could adversely affect our business.
Although we rely, in part, upon these legal and contractual protections, we believe that factors such as the skills and ingenuity of our employees, as well as the functionality and frequent enhancements to our platform, make our intellectual property difficult to replicate. 11 Table of Contents Government Regulation We are subject to a number of foreign and domestic laws and regulations that may affect companies conducting business on the internet, many of which are still evolving and could be interpreted in ways that could adversely affect our business.
We also generate merchant solutions revenue from other product offerings including our lending and financial products (to merchants in eligible geographies), referral fees from partners and the sale of shipping labels. Research and Development Shopify is building products and solutions for commerce that enable merchants of all sizes around the world to successfully start and scale their businesses on Shopify.
Research and Development Shopify is building products and solutions for commerce that enable merchants of all sizes around the world to successfully start and scale their businesses on Shopify.
Depending on how our merchant solutions, including our payments and lending products, evolve, we may be subject to additional laws in Canada and other jurisdictions worldwide. We are also subject to federal, state, provincial and foreign laws that may relate to cybersecurity, privacy and the protection of data.
We are currently subject to a variety of laws and regulations in Canada, the United States, the European Economic Area and elsewhere related to financial services. Depending on how our merchant solutions, including our payments and lending products, evolve, we may be subject to additional laws in Canada and other jurisdictions worldwide.
In a 2024 company-wide employee survey, nine out of ten respondents indicated that they would recommend their team at Shopify to an ambitious and hardworking friend. We offer wellness resources and programs across four pillars: financial, mental, physical and social wellness, including an Employee Assistance Program that provides employees with confidential help for any work, health or life concern.
We offer wellness resources and programs across four pillars: financial, mental, physical and social wellness, including an Employee Assistance Program that provides employees with confidential help for any work, health or life concern. As of December 31, 2025, Shopify had approximately 7,600 employees worldwide.
We expect to continue to leverage emerging technologies including data analytics, machine learning and AI in our products, to help our merchants increase productivity, improve workflows, make smarter decisions and spend less time on operational tasks. For example, Shopify Magic provides a suite of AI-enabled features integrated across the Shopify platform and Sidekick offers merchants an AI-enabled commerce assistant.
We expect to continue to leverage emerging technologies including data analytics, machine learning and AI in our products, to help our merchants increase productivity, improve workflows, make smarter decisions and enhance the reach of their products.
We value employees who are merchant-obsessed and thrive on change. Teams at Shopify experiment, observe and iterate to make commerce better for everyone. In 2024, we launched “~Mastery” in support of talent growth and development.
Teams at Shopify experiment, observe and iterate to make commerce better for everyone. To support and enhance talent growth and development, we created “~Mastery”, Shopify's craft-first talent system, to reward those who show up better to work every day on the continuous journey to improve their craft.
Shopify's business is designed to empower our merchants by offering a comprehensive, multi-channel commerce platform that supports their business as it grows. This platform allows merchants to seamlessly manage, market and sell their products across various sales channels, including online storefronts, physical retail spaces, social media and more.
As owners and operators, merchants set their course, while Shopify offers them the tools to seamlessly manage, market and sell their products across various sales channels, including online storefronts, physical retail spaces, AI platforms, social media and more.
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Subscription terms generally renew automatically unless notice of cancellation is provided in advance.
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Item 1: Business Overview Shopify provides essential internet infrastructure for commerce. Shopify's all-in-one platform makes it easier to start, run and grow a business, powering sales online, in store, and everywhere in between.
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“~Mastery” is a talent system that is built for and rewards those who show up better to work every day on the continuous journey to improve their craft. Shopify has a remote-first work environment for employees, gathering in-person periodically during the year to connect and solve complex problems.
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Merchants who sign on to Shopify Plus or our enterprise offering initially have annual or multi-year subscription terms. Subscription terms generally renew automatically unless notice of cancellation is provided in advance. POS Pro subscriptions fees are charged on a per month and per location basis, with an option to elect an annual commitment.
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As of December 31, 2024, Shopify had approximately 8,100 employees worldwide. Technology The Shopify platform is a multi-tenant cloud-based system that is engineered for high scalability, reliability and performance.
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We also generate merchant solutions revenue from our lending services, referral fees from partners, the sale of shipping labels, the sale of Point of Sale ("POS") hardware, advertising on the Shopify App Store and Shop Campaigns, our buyer acquisition offering.
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Although we rely, in part, upon these legal and contractual protections, we believe that factors such as the skills and ingenuity of our employees, as well as the functionality and frequent enhancements to our platform, make our intellectual property difficult to replicate.
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For example, Shopify provides a suite of AI-enabled features integrated across the Shopify platform, including Sidekick, our AI-enabled commerce assistant, and Agentic Storefronts, which enables agent-assisted product discovery and checkout across a number of AI platforms. Research and development at Shopify is currently focused on product management, product development and product design to accomplish these goals.
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State Department’s Directorate of Defense Trade Controls and the Canadian Export and Import Controls Bureau. We are currently subject to a variety of laws and regulations in Canada, the United States, the European Economic Area and elsewhere related to financial services.
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We are also subject to federal, state, provincial and foreign laws that may relate to cybersecurity, privacy and the protection of data.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSome of the factors that may cause the market price of our Class A subordinate voting shares to fluctuate, many of which are beyond our control, include: • market risk due to changes to interest rates, foreign exchange rates, geopolitical events or recessions; • significant volatility in the market price and trading volume of comparable companies; • actual or anticipated changes or fluctuations in our operating results or in the expectations of market analysts; • adverse market reaction to any indebtedness we may incur or securities we may issue in the future; • short sales, hedging and other derivative transactions in our shares; • announcements of technological innovations, new products, strategic alliances or significant agreements by us or by our competitors; • changes in the prices of our solutions or the prices of our competitors’ solutions; • litigation or regulatory action against us; • breaches of security or privacy incidents, and the costs associated with any such breaches and remediation; • investors’ general perception of us and the public’s reaction to our press releases, our other public announcements and our filings with the U.S.
Biggest changeSome of the factors that may cause the market price of our Class A subordinate voting shares to fluctuate, many of which are beyond our control, include: • market risk due to changes to interest rates, foreign exchange rates, geopolitical events or recessions; • significant volatility in the market price and trading volume of comparable companies; • actual or anticipated changes or fluctuations in our operating results or in the expectations of market analysts; • adverse market reaction to any indebtedness we may incur or securities we may issue in the future; • short sales, hedging and other derivative transactions in our shares; • announcements of technological innovations, new products, strategic alliances or significant agreements by us or by our competitors; • changes in the prices of our solutions or the prices of our competitors' solutions; • litigation or regulatory action against us; • breaches of security or privacy incidents, and the costs associated with any such breaches and remediation; • investors' general perception of us and the public's reaction to our press releases, our other public announcements and our filings with U.S. and Canadian securities regulators; • fluctuations in quarterly results; • publication of research reports or news stories about us, our competitors or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; • changes in general political, economic, industry and market conditions and trends; • sales of our Class A subordinate voting shares and Class B restricted voting shares by our directors, executive officers and existing shareholders; • recruitment or departure of key personnel; and • the other risk factors described in this section of our Annual Report on Form 10-K.
These proceedings or violations could force us to incur significant expenses in defense or settlement of these proceedings, result in the imposition of monetary liability or injunctive relief, divert management’s time and attention, increase our costs of doing business and materially adversely affect our reputation and the demand for our solutions.
These proceedings or violations could force us to incur significant expenses in defense or settlement of these proceedings, result in the imposition of monetary liability or injunctive relief, divert management’s time and attention, increase our costs of doing business and materially and adversely affect our reputation and the demand for our solutions.
In addition, we face the risk that one or more payment card networks or other processors may, at any time, assess penalties against us, against our merchants, or terminate our ability to accept credit card payments or other forms of online payments from buyers, which would have an adverse effect on our business, financial condition and operating results.
In addition, we face the risk that one or more payment card networks or payment processors may, at any time, assess penalties against us, against our merchants, or terminate our ability to accept credit card payments or other forms of online payments from buyers, which would have an adverse effect on our business, financial condition and operating results.
Critics have in the past and may in the future utilize the internet, the press and other means to publish negative views of our industry, our company and our competitors, our employees, or make allegations regarding our business and operations, or the business and operations of our competitors.
Critics have in the past and may in the future utilize the internet, the press and other means to publish negative views of our industry, our company, our competitors, and our employees, or make allegations regarding our business and operations, or the business and operations of our competitors.
Third parties have in the past asserted, and may in the future assert, that our platform, hardware, solutions, technology, methods or practices, or hardware, solutions, technology, methods or practices of third parties we use such as open source software, infringe, misappropriate or otherwise violate their intellectual property or other proprietary rights.
Third parties have in the past asserted, and may in the future assert, that our platform, hardware, solutions, technology, methods or practices, or the hardware, solutions, technology, methods or practices of third parties we use, such as open source software, infringe, misappropriate or otherwise violate their intellectual property or other proprietary rights.
The safeguards we have in place may not be sufficient for us to avoid regulatory action, liability or avoid harm to our brand, especially if such hostile, offensive, inappropriate or illegal use is high profile, which could adversely affect our business and financial results.
The safeguards we have in place may not be sufficient for us to avoid regulatory action or liability or avoid harm to our brand, especially if such hostile, offensive, inappropriate or illegal use is high profile, which could adversely affect our business and financial results.
The market price of our Class A subordinate voting shares may be volatile. The market price of our Class A subordinate voting shares has been, and will likely continue to be, volatile for the foreseeable future, and may decline. In addition, the trading prices of the securities of technology companies have been highly volatile.
The market price of our Class A subordinate voting shares has been, and will likely continue to be, volatile for the foreseeable future, and may decline. In addition, the trading prices of the securities of technology companies have been highly volatile.
These risks are discussed more fully below under the headings "Risks Related to Our Business and Industry" and " Risks Related to Ownership of our Shares" and include, but are not limited to: Risks Related to Our Operations • Our ability to attract and retain merchants, increase sales to both new and existing merchants and sustain and manage our growth effectively; • Our dependence on senior management and other key employees, as well as our ability to retain and motivate qualified personnel, hire key talent and maintain and adapt our corporate culture; • Our reliance on third parties to provide key services for our business, including cloud hosting and Shopify Payments; • Our limited operating history in new and developing markets and new geographic regions, as well as risks associated with international sales and the use of our platform in various countries; • Undetected errors or defects in our software or hardware or issues related to data transmission capacity; Risks Related to Personal Information, Cybersecurity and Intellectual Property • Unauthorized access to personal information, security breaches and cyberattacks; • Our intellectual property rights and proprietary information and the unauthorized use of such rights and information by third parties; • Our use of open source software; Risks Related to our Industry • Failure to maintain, promote and enhance our brand including by failing to meet merchants' evolving needs or due to activities of our merchants or partners; • Our ability to compete successfully against current and future competitors; • The impact of worldwide economic conditions, including measures that effect international trade, such as tariffs, and the resulting impact on spending by merchants and their buyers; • The impact of seasonal fluctuations on our business; • The success of our strategic relationships with third parties and the impact of these relationships impact on our growth; • Our use of AI and machine learning, including associated risks and the developing regulatory environment; • Changes to technologies used in our platform or technologies through which merchants and their buyers interface with our platform; Risks Related to Laws and Regulations • Changing laws and regulations, including those related to data privacy, competition, online liability, consumer protection, financial services, anti-money laundering, sanctions, anti-corruption and securities laws, among others; • Claims by third parties, governmental claims, litigation, disputes or other proceedings, as well as regulatory requirements, fees and other risks that could be costly or result in additional compliance obligations; • Unanticipated changes in tax laws or adverse outcomes from tax examinations; 13 Table of C ontents Financial Risks • Our ability to maintain profitability and our intention to continue to make investments in our business in the future to drive future growth, including with respect to key talent, sales and marketing, research and development, new products and our network infrastructure, among others; • Potential future acquisitions, divestitures and investments; • Risks associated with Shopify Payments, Shopify Capital and our other financing and lending solutions; Risks Related to Ownership of our Securities • Our share capital structure and its effect on the influence of holders of Class A subordinate voting shares, including the Founder Share, which has the effect of concentrating a degree of voting power with our founder and CEO; and • Volatility in the market price of our Class A subordinate voting shares. ***** Risks Related to Our Business and Industry Our growth may not be sustainable and depends on our ability to attract new merchants, retain existing merchants, retain revenue from existing merchants and increase sales to both new and existing merchants.
These risks are discussed more fully below under the headings "Risks Related to Our Business and Industry" and "Risks Related to Ownership of our Shares" and include, but are not limited to: Risks Related to Our Operations • Our ability to attract and retain merchants, increase sales to both new and existing merchants and sustain and manage our growth effectively; • Our dependence on senior management and other key employees, as well as our ability to retain and motivate qualified personnel, hire key talent and maintain and adapt our corporate culture; • Our reliance on third parties to provide key services for our business, including cloud hosting and Shopify Payments; • Our limited operating history in new and developing markets and new geographic regions, as well as risks associated with international sales and the use of our platform in various countries; • Undetected errors or defects in our software or hardware or issues related to data transmission capacity; Risks Related to Personal Information, Cybersecurity and Intellectual Property • Unauthorized access to personal information, security breaches and cyberattacks; • Our intellectual property rights and proprietary information and the unauthorized use of such rights and information by third parties; • Our use of open source software; Risks Related to our Industry • Failure to maintain, promote and enhance our brand including by failing to meet merchants' evolving needs or due to activities of our merchants or partners; • Our ability to compete successfully against current and future competitors; • The impact of worldwide economic conditions, including measures that affect international trade, such as tariffs, and the resulting impact on spending by merchants and their buyers; • The impact of seasonal fluctuations on our business; • The success of our strategic relationships with third parties and the impact of these relationships on our growth; 13 Table of Contents • Our use of AI and machine learning, including associated risks and the developing regulatory environment; • Changes to technologies used in our platform or technologies through which merchants and their buyers interface with our platform; Risks Related to Laws and Regulations • Changing laws and regulations, including those related to data privacy, competition, online liability, consumer protection, financial services, anti-money laundering, sanctions, anti-corruption and securities laws, among others; • Claims by third parties, governmental claims, litigation, disputes or other proceedings, as well as regulatory requirements, fees and other risks that could be costly or result in additional compliance obligations; • Unanticipated changes in tax laws or adverse outcomes from tax examinations; Financial Risks • Our ability to maintain profitability and our intention to continue to make investments in our business in the future to drive future growth, including with respect to key talent, sales and marketing, research and development, new products and our network infrastructure, among others; • Potential future acquisitions, divestitures and investments; • Risks associated with Shopify Payments, Shopify Capital and our other financing and lending solutions; Risks Related to Ownership of our Securities • Our share capital structure and its effect on the influence of holders of Class A subordinate voting shares, including the Founder Share, which has the effect of concentrating a degree of voting power with our founder and CEO; and • Volatility in the market price of our Class A subordinate voting shares. ***** Risks Related to Our Business and Industry Our growth may not be sustainable and depends on our ability to attract new merchants, retain existing merchants, retain revenue from existing merchants and increase sales to both new and existing merchants.
These risks include, but are not limited to: • greater difficulty in enforcing contracts, including our terms of service and other agreements; • burdens, complexity and potential delays involved with compliance with foreign laws and regulations and laws and regulations potentially applicable to international or cross-border operations including tariffs and customs, export controls, taxation, copyright, consumer protection, international trade, anti-money laundering, sanctions laws and data privacy and data localization laws that may require that merchant and buyer data and data of consumers with whom we have a direct relationship be stored and processed in a designated territory; • potentially restrictive actions by foreign governments or regulators, including actions that prevent or limit access to our platform, services, apps or websites and uncertainty regarding liability for services and content; • changes in trade or investment policies, treaties and tariffs (which may affect trade within North America as well as other countries); • difficulties in managing systems integrators and technology partners; • differing technology standards and different strategic priorities for merchants in various jurisdictions and costs and difficulties associated with localizing our platform and solutions including developing products in multiple languages and tailored for local preferences including challenges supporting our merchants as we implement new products and solutions to enable them to sell internationally; 21 Table of C ontents • changes in tax laws, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents or adverse outcomes resulting from tax examinations; • increased financial accounting and reporting burdens and complexities and increased exposure in foreign jurisdictions with growing international operations; • different employee/employer relationships and different legal and statutory regimes, including more restrictive labor laws and regulatory environments and the existence of work councils and labor unions and statutory equity requirements; • difficulties in implementing appropriate systems, policies, benefits and compliance programs; • uncertain political and economic climates and increased exposure to global political, economic and social risks that may impact our operations or our merchants' operations and/or decrease consumer spending, in particular on goods, including the impact of global health emergencies, supply chain disruptions, trade disputes or tariffs, terrorism, war, natural disasters and other events; • lower levels of credit card usage and increased payment risks; • currency exchange rates and restrictions related to foreign exchange controls; • reduced or uncertain protection for intellectual property rights in some countries and risks associated with operating in locations with higher incidence of corruption or fraudulent business practices; • new and different sources of competition; • lower levels of consumer spending; and • restricted access to and/or lower levels of use of the internet.
These risks include, but are not limited to: • greater difficulty in enforcing contracts, including our terms of service and other agreements; • burdens, complexity and potential delays involved with compliance with foreign laws and regulations and laws and regulations potentially applicable to international or cross-border operations including tariffs and customs, export controls, taxation, copyright, consumer protection, international trade, anti-money laundering, sanctions laws and data privacy and data localization laws that may require that merchant and buyer data and data of consumers with whom we have a direct relationship be stored and processed in a designated territory; • potentially restrictive actions by foreign governments or regulators, including actions that prevent or limit access to our platform, services, apps or websites and uncertainty regarding liability for services and content; • changes in trade or investment policies, treaties and tariffs (which may affect trade within North America as well as other countries); • difficulties in managing systems integrators and technology partners; • differing technology standards and different strategic priorities for merchants in various jurisdictions and costs and difficulties associated with localizing our platform and solutions including developing products in multiple languages and tailored for local preferences including challenges supporting our merchants as we implement new products and solutions to enable them to sell internationally; • changes in tax laws, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents or adverse outcomes resulting from tax examinations; • increased financial accounting and reporting burdens and complexities and increased exposure in foreign jurisdictions with growing international operations; • different employee/employer relationships and different legal and statutory regimes, including more restrictive labor laws and regulatory environments and the existence of work councils and labor unions and statutory equity requirements; • difficulties in implementing appropriate systems, policies, benefits and compliance programs; • uncertain political and economic climates and increased exposure to global political, economic and social risks that may impact our operations or our merchants' operations and/or decrease consumer spending, in particular on goods, including the impact of global health emergencies, supply chain disruptions, trade disputes or tariffs, terrorism, war, natural disasters and other events; • lower levels of credit card usage and increased payment risks; • currency exchange rates and restrictions related to foreign exchange controls; • reduced or uncertain protection for intellectual property rights in some countries and risks associated with operating in locations with higher incidence of corruption or fraudulent business practices; • new and different sources of competition; • lower levels of consumer spending; and • restricted access to and/or lower levels of use of the internet.
We are required by our payment processors to comply with payment card network operating rules and we have agreed to reimburse our payment processors for any fees or fines they are assessed by payment card networks as a result of any rule violations by us or our merchants.
We are required by our payment processors to comply with payment card network operating rules and we have agreed to reimburse our payment processors for certain fees or fines they are assessed by payment card networks as a result of any rule violations by us or our merchants.
The application of indirect taxes, such as sales and use taxes, value-added taxes, goods and services taxes, digital service taxes, economic presence taxes and gross receipt taxes, to businesses like ours and to our merchants and their buyers is a complex and evolving issue.
The application of indirect taxes, such as sales and use taxes, value-added taxes, goods and services taxes, digital service taxes, significant economic presence taxes and gross receipt taxes, to businesses like ours and to our merchants and their buyers is a complex and evolving issue.
Such violations may also negatively impact our reputation and brand in ways that could cause additional harm to our business, for example creating a negative consumer or regulatory perception around use of our products.
Such violations may also negatively impact our reputation and brand in ways that could cause additional harm to our business, for example by creating a negative consumer or regulatory perception around use of our products.
For example, large technology platforms have imposed and are considering imposing, or may provide its users the ability to impose, restrictions on the ability of other parties to access or use data from their customers and users.
For example, large technology platforms have imposed and are considering imposing, or may provide their users the ability to impose, restrictions on the ability of other parties to access or use data from their customers and users.
In addition, the ability of employees to choose the allocation of their compensation between cash and equity may result in variability in our cash and stock-based expenses from quarter to quarter, which may introduce some volatility in our reported financial results.
In addition, the ability of employees to choose the allocation of their compensation between cash and equity may result in variability in our cash and stock-based expenses from quarter to quarter, which may introduce volatility in our reported financial results.
Acquisitions, divestitures and investments involve a number of risks, such as: • diversion of management time and focus from operating our business; • use of resources that are needed in other areas of our business; 27 Table of C ontents • in the case of an acquisition: ◦ implementation or remediation of controls, procedures and policies of the acquired company; ◦ difficulty integrating the operations of the acquired company; ◦ coordination of product, engineering and sales and marketing functions, as applicable, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company, as applicable, difficulties associated with supporting new products or services, difficulty converting the customers of the acquired company onto our platform, as applicable, and difficulties associated with contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company; ◦ retention and integration of employees from the acquired company; and ◦ in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries. • unforeseen costs or liabilities; • adverse effects to our existing business relationships with partners and merchants as a result of the acquisition or investment; • the possibility of adverse tax consequences; • the possibility of unforeseen brand or reputational harm; • fluctuations in the value of our strategic investments, impairment to the value of our investments or the failure to realize a return on such investments; and • regulatory risks and litigation or other claims arising in connection with the acquired company or investment.
Acquisitions, divestitures and investments involve a number of risks, such as: • diversion of management time and focus from operating our business; • use of resources that are needed in other areas of our business; • in the case of an acquisition: ◦ implementation or remediation of controls, procedures and policies of the acquired company; ◦ difficulty integrating the operations of the acquired company; ◦ coordination of product, engineering and sales and marketing functions, as applicable, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company, as applicable, difficulties associated with supporting new products or services, difficulties converting the customers of the acquired company onto our platform, as applicable, and difficulties associated with contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company; ◦ retention and integration of employees from the acquired company; and ◦ in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries; • unforeseen costs or liabilities; • adverse effects to our existing business relationships with partners and merchants as a result of the acquisition or investment; • the possibility of adverse tax consequences; • the possibility of unforeseen brand or reputational harm; • fluctuations in the value of our strategic investments, impairment to the value of our investments or the failure to realize a return on such investments; and 28 Table of Contents • regulatory risks and litigation or other claims arising in connection with the acquired company or investment.
These practices may impact our merchants' ability to market and sell their offerings, which could affect the demand for our platform and lead to the loss of current or prospective merchants o r other business relationships. Competitors may also be more established in international markets with a better understanding of local customs, providing them a competitive advantage.
These practices may impact our merchants' ability to market and sell their offerings, which could affect the demand for our platform and lead to the loss of current or prospective merchants or other business relationships. Competitors may also be more established in international markets with a better understanding of local customs, providing them a competitive advantage.
Our merchant solutions revenues are directionally correlated with the level of GMV that merchants facilitate through our platform. Our merchants typically process additional GMV during the fourth quarter holiday season. As a result, we have historically generated higher merchant solutions revenues in our fourth quarter than in other quarters. However, our continued growth has partially masked seasonal trends to date.
Our merchant solutions revenues are directionally correlated with the level of GMV that merchants transact through our platform. Our merchants typically process additional GMV during the fourth quarter holiday season. As a result, we have historically generated higher merchant solutions revenues in our fourth quarter than in other quarters. However, our continued growth has partially masked seasonal trends to date.
Intellectual property ownership and license rights, including copyright, of generative and other AI output, have not been fully interpreted by courts or lawmakers, and we cannot predict how future interpretations may impact our business. Certain jurisdictions have enacted, or are considering the enactment, of comprehensive legal compliance frameworks specifically related to AI.
Intellectual property ownership and license rights, including copyright, of generative and other AI outputs, have not been fully interpreted by courts or lawmakers, and we cannot predict how future interpretations may impact our business. Certain jurisdictions have enacted, or are considering the enactment, of comprehensive legal compliance frameworks specifically related to AI.
Certain matters of procedure will also be governed by Canadian law. As a result of the difficulty associated with enforcing a judgement against us or these persons in Canada, you may be able to collect only limited, or may be unable to collect any, damages awarded by either a U.S. or foreign court.
Certain matters of procedure will also be governed by Canadian law. As a result of the difficulty associated with enforcing a judgment against us or these persons in Canada, you may be able to collect only limited, or may be unable to collect any, damages awarded by either a U.S. or foreign court.
For instance, certain competitors could use strong positions in one or more markets to gain a competitive advantage against us in areas where we operate by, among other things: integrating competing platforms, applications or features into products they control; making acquisitions; or making access to our platform more difficult including by changing the terms of service related to their products, which could impact our and our merchants’ ability to offer services or adversely impact our results of operations and those of our merchant s.
For instance, certain competitors could use strong positions in one or more markets to gain a competitive advantage against us in areas where we operate by, among other things: integrating competing platforms, applications or features into products they control; making acquisitions; or making access to our platform more difficult including by changing the terms of service related to their products, which could impact our and our merchants' ability to offer services or adversely impact our results of operations and those of our merchants.
Wayfair, Inc. that U.S. states may require collection of sales tax by companies that have no physical presence in the taxing state, and since the decision, many states have adopted or started to enforce laws relating to the collection and remittance of sales taxes in their jurisdiction by remote vendors and online marketplaces.
Wayfair, Inc. that U.S. states may require collection of sales tax by companies that have no physical presence in the taxing state, and since the decision, states have adopted and started to enforce laws relating to the collection and remittance of sales or use taxes in their jurisdiction by remote vendors and online marketplaces.
Our restated articles of incorporation permits us to issue an unlimited number of Class A subordinate voting shares and Class B restricted voting shares. Our restated articles of incorporation permit us to issue an unlimited number of Class A subordinate voting shares and Class B restricted voting shares.
Our restated articles of incorporation permit us to issue an unlimited number of Class A subordinate voting shares and Class B restricted voting shares. Our restated articles of incorporation permit us to issue an unlimited number of Class A subordinate voting shares and Class B restricted voting shares.
If an author or other third party that uses or distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of our solutions that contained or are dependent upon the open source software, and required to comply with the foregoing conditions, which could disrupt the distribution and sale of some of our solutions.
If an author or other third party that uses or distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject 35 Table of Contents to significant damages, enjoined from the sale of our solutions that contained or are dependent upon the open source software, and required to comply with the foregoing conditions, which could disrupt the distribution and sale of some of our solutions.
These businesses may be particularly susceptible to changes in economic conditions, including pressure from inflation, declines in consumer spending, international trade risks and/or the imposition of trade protection measures (such as the imposition of or an increase in tariffs or import and export licensing and control requirements), global supply chain disruptions and shortages including events impacting shipping and fulfillment all of which may negatively impact a merchant’s business and in turn, negatively impact our business.
These businesses may be particularly susceptible to changes in economic conditions, including pressure from inflation, declines in consumer spending, international trade risks and/or the imposition of trade protection measures (such as the imposition of or an increase in tariffs or import and export licensing 14 Table of Contents and control requirements), global supply chain disruptions and shortages including events impacting shipping and fulfillment all of which may negatively impact a merchant’s business and in turn, negatively impact our business.
Depending on how Shopify Payments, Shop Pay Installments, Shopify Balance and our other merchant solutions evolve, we may be subject to additional laws, either in existing or new jurisdictions. In some jurisdictions, the application or interpretation of these laws and regulations is not clear.
Depending on how Shopify Payments, Shop Pay Installments, Shopify Balance and our other merchant solutions evolve, we may become subject to additional laws, either in existing or new jurisdictions. In some jurisdictions, the application or interpretation of these laws and regulations is not clear.
We have adopted a forum selection by-law that provides that, unless we consent in writing to the selection of an alternative forum, the Superior Court of Justice of the Province of Ontario, Canada and appellate Courts therefrom (or, failing such Court, any other "court" as defined in the CBCA having jurisdiction, and the appellate Courts therefrom), will be the sole and exclusive forum for (1) any 41 Table of C ontents derivative action or proceeding brought on our behalf; (2) any action or proceeding asserting a breach of fiduciary duty owed by any of our directors, officers or other employees to us; (3) any action or proceeding asserting a claim arising pursuant to any provision of the CBCA or our restated articles or by-laws; or (4) any action or proceeding asserting a claim otherwise related to our "affairs" (as defined in the CBCA).
We have adopted a forum selection by-law that provides that, unless we consent in writing to the selection of an alternative forum, the Superior Court of Justice of the Province of Ontario, Canada and appellate Courts therefrom (or, failing such Court, any other "court" as defined in the CBCA having jurisdiction, and the appellate Courts therefrom), will be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf; (2) any action or proceeding asserting a breach of fiduciary duty owed by any of our directors, officers or other employees to us; (3) any action or proceeding asserting a claim arising pursuant to any provision of the CBCA or our restated articles or by-laws; or (4) any action or proceeding asserting a claim otherwise related to our "affairs" (as defined in the CBCA).
We may not be able to utilize our loss carryforwards and tax credits, which could adversely affect our profitability. As of December 31, 2024, we had loss carryforwards and tax credits in various jurisdictions. These loss carryforwards and tax credits could expire and/or be unavailable to offset future income tax liabilities, which could adversely affect our profitability.
We may not be able to utilize our loss carryforwards and tax credits, which could adversely affect our profitability. As of December 31, 2025, we had loss carryforwards and tax credits in various jurisdictions. These loss carryforwards and tax credits could expire and/or be unavailable to offset future income tax liabilities, which could adversely affect our profitability.
Many of these laws and regulations, including Canada’s Personal Information Protection and Electronic Documents Act, the European Union’s General Data Protection Regulation ("GDPR"), the European Union’s ePrivacy Directive, the United Kingdom’s General Data Protection Regulation, the California Consumer Privacy Act ("CCPA"), the California Consumer Privacy Rights Act, applicable provincial and state laws and regulations, as well as those of other applicable jurisdictions contain detailed requirements regarding collecting and processing personal information, and impose certain limitations on how such information may be used, the length for which it may be stored, with whom it may be shared and the effectiveness of consumer consent.
Many of these laws and regulations, including Canada's Personal Information Protection and Electronic Documents Act, the European Union's General Data Protection Regulation ("GDPR"), the European Union's ePrivacy Directive, the United Kingdom's General Data Protection Regulation, the California Consumer Privacy Act ("CCPA"), as amended by the California Consumer Privacy Rights Act, the California Invasion of Privacy Act ("CIPA"), and other applicable provincial and state laws and regulations, as well as those of other applicable jurisdictions, contain detailed requirements regarding collecting and processing personal information, and impose certain limitations on how such information may be used, the length for which it may be stored, with whom it may be shared and the effectiveness of consumer consent.
These financial products may also increase the risk of fraud and expose Shopify or our merchants to additional costs or liabilities. We are subject to risks related to payments processed through Shopify Payments, Shop Pay Installments and Shopify Balance.
These financial products may also pose the risk of fraud and expose Shopify or our merchants to additional costs or liabilities. We are subject to risks related to payments processed through Shopify Payments, Shop Pay Installments and Shopify Balance.
These third-party apps can be subject to disruptions for reasons beyond our control that could have an adverse effect on us. We are also dependent on the interoperability of our platform with third-party mobile devices and mobile operating systems, as well as web browsers and application stores that we do not control.
These third-party apps can be subject to disruptions for reasons beyond our control 20 Table of Contents that could have an adverse effect on us. We are also dependent on the interoperability of our platform with third-party mobile devices and mobile operating systems, as well as web browsers and application stores that we do not control.
Similar laws are being considered and/or implemented in other jurisdictions, where the application of value-added tax or other indirect taxes on online commerce is complex and evolving. When we believe we are subject to indirect taxes in a particular state or jurisdiction we undertake necessary steps to comply with the applicable rules and regulations.
Similar laws are being considered and/or implemented in other jurisdictions, where the application of value-added tax or other indirect taxes on online commerce is complex and evolving. When we believe we are subject to indirect taxes in a particular state or 33 Table of Contents jurisdiction we undertake necessary steps to comply with the applicable rules and regulations.
Sales of substantial amounts of our shares, or the perception that such sales could occur, may adversely affect prevailing market prices for our Class A subordinate voting shares. If we are unable to maintain an effective system of internal controls over financial reporting, our operations, financial reporting and results of operations could be adversely impacted.
Sales of substantial amounts of our shares, or the 39 Table of Contents perception that such sales could occur, may adversely affect prevailing market prices for our Class A subordinate voting shares. If we are unable to maintain an effective system of internal controls over financial reporting, our operations, financial reporting and results of operations could be adversely impacted.
Consequences of any of the foregoing developments include negative effects on merchant and buyer trust and engagement, harm to our reputation and brands, changes to our business practices in a manner adverse to our business and adverse effects on our business and financial results.
Consequences of any of the foregoing developments include negative effects on merchant and buyer trust and engagement, harm to our reputation and brand, changes to our practices in a manner adverse to our business and adverse effects on our business and financial results.
Pursuant to our restated articles of incorporation, neither holders of our Class A subordinate voting shares nor holders of our Class B restricted voting shares are entitled to vote separately as a class on a proposal to amend our restated 38 Table of C ontents articles of incorporation to effect an exchange, reclassification or cancellation of all or part of the shares of such class pursuant to Section 176(1)(b) of the CBCA unless such exchange, reclassification or cancellation: (a) affects only the holders of that class; or (b) affects the holders of Class A subordinate voting shares and Class B restricted voting shares differently, on a per share basis, and such holders are not already otherwise entitled to vote separately as a class under applicable law or our restated articles of incorporation in respect of such exchange, reclassification or cancellation.
Pursuant to our restated articles of incorporation, neither holders of our Class A subordinate voting shares nor holders of our Class B restricted voting shares are entitled to vote separately as a class on a proposal to amend our restated articles of incorporation to effect an exchange, reclassification or cancellation of all or part of the shares of such class pursuant to Section 176(1)(b) of the CBCA unless such exchange, reclassification or cancellation: (a) affects only the holders of that class; or (b) affects the holders of Class A subordinate voting shares and Class B restricted voting shares differently, on a per share basis, and such holders are not already otherwise entitled to vote separately as a class under applicable law or our restated articles of incorporation in respect of such exchange, reclassification or cancellation.
As a result, we, and third parties we work with, including service providers we use and third-party apps or other services used by our merchants, may be unable to anticipate these techniques, detect the attacks for long periods of time or implement adequate preventative measures.
As a result, we, and third parties we work with, including service providers we use and third-party apps or other services used by our 16 Table of Contents merchants, may be unable to anticipate these techniques, detect the attacks for long periods of time or implement adequate preventative measures.
If we fail to anticipate and address merchants' rapidly changing needs and expectations or adapt to emerging trends, our reputation could be harmed and our business, operating results and financial condition could suffer. Furthermore, we expect adoption of our platform and solutions by Shopify Plus merchants and enterprise-level businesses to increase.
If we fail to anticipate and address merchants' rapidly 18 Table of Contents changing needs and expectations or adapt to emerging trends, our reputation could be harmed and our business, operating results and financial condition could suffer. Furthermore, we expect adoption of our platform and solutions by Shopify Plus merchants and enterprise-level businesses to increase.
We expect to continue to expand internationally and, in some foreign countries, the mechanisms to enforce intellectual property rights may be inadequate to protect our technology, which could harm our business.
We expect to continue to expand internationally and, in some foreign countries, the mechanisms to register or enforce intellectual property rights may be inadequate to protect our technology, which could harm our business.
If the parties with which we partner fail to perform their obligations to the expected standard or our strategic objectives, this could erode merchant trust, damage our reputation, make it more difficult for us to sell our solutions to new or existing merchants, and adversely affect our revenue.
If the parties with which we partner fail to perform their obligations to the expected standard or are unable to advance our strategic objectives, this could erode merchant trust, damage our reputation, make it more difficult for us to sell our solutions to new or existing merchants, and adversely affect our revenue.
In addition, if our security measures fail to protect credit card information adequately, we could be liable to our partners, our merchants, their buyers and consumers with whom we have a direct relationship, for their losses, as well as our payments processing partners under our agreements with them.
In addition, if our security measures fail to protect payment information adequately, we could be liable to our partners, our merchants, their buyers and consumers with whom we have a direct relationship, for their losses, as well as our payments processing partners under our agreements with them.
As a result, as at December 31, 2024, Tobias Lütke owned, directly or indirectly, or exercised control or direction over shares representing 40.03% of the aggregate voting power attached to all of the Shopify's outstanding voting shares and therefore has significant influence over our management and affairs and over all matters requiring shareholder approval, including the election of directors and significant corporate transactions.
As a result, as at December 31, 2025, Tobias Lütke owned, directly or indirectly, or exercised control or direction over shares representing 40.09% of the aggregate voting power attached to all of the Shopify's outstanding voting shares and therefore has significant influence over our management and affairs and over all matters requiring shareholder approval, including the election of directors and significant corporate transactions.
Our efforts to expand into new geographic regions may not be successful, which could limit our ability to grow our business. Our business is susceptible to risks associated with international operations, including international sales and the use of our platform in various countries.
Our efforts to expand into new geographic regions may not be successful, which could limit our ability to grow our business. 21 Table of Contents Our business is susceptible to risks associated with international operations, including international sales and the use of our platform in various countries.
We store personal information, credit card information and other confidential information of our merchants and their buyers, our partners and consumers with whom we have a direct relationship. Mobile applications integrated with Shopify and the third-party apps available for our platform may also store personal information, credit card information and/or other confidential information.
We store personal information, payment information and other confidential information of our merchants and their buyers, our partners and consumers with whom we have a direct relationship. Mobile applications integrated with Shopify and the third-party apps available for our platform may also store personal information, payment information and/or other confidential information.
Provisions of our charter documents, certain Canadian legislation and the indenture governing the Notes could delay or deter a change of control, limit attempts by our shareholders to replace or remove our current senior management and affect the market price of our Class A subordinate voting shares.
Provisions of our charter documents and certain Canadian legislation could delay or deter a change of control, limit attempts by our shareholders to replace or remove our current senior management and affect the market price of our Class A subordinate voting shares.
We may also fail to attract new merchants, retain existing merchants, retain revenue from existing merchants or increase sales to both new and existing merchants as a result of a number of other factors, including: reductions in our current or potential merchants’ spending levels; a decline in consumer spending, including as a result of deteriorating macroeconomic conditions; competitive factors affecting the global market for commerce services, including the introduction of competing platforms, discount pricing and other strategies that may be implemented by our competitors; our ability to execute on our 14 Table of C ontents growth strategy and operating plans including new solutions offerings; concerns relating to actual or perceived data incidents and security breaches; the frequency and severity of any system outages; technological changes or problems; our ability to expand into new markets and internationally; a decline in the number of entrepreneurs globally; a decline in our merchants’ level of satisfaction with our platform and merchants’ usage of our platform; the fact that difficulty and cost to switch to a competitor may not be significant for many of our merchants; changes in our relationships with third parties, including our partners, app developers, theme designers, referral sources, vendors and payment processors; the timeliness and success of new products and services we may offer in the future; our ability to integrate emerging technologies into our products; and our focus on long-term value over short-term results, meaning that we may make strategic decisions that may not maximize our short-term revenue or profitability if we believe that the decisions are consistent with our mission and will improve our financial performance over the long-term.
We may also fail to attract new merchants, retain existing merchants, retain revenue from existing merchants or increase sales to both new and existing merchants as a result of a number of other factors, including: reductions in our current or potential merchants’ spending levels; a decline in consumer spending, including as a result of deteriorating macroeconomic conditions; competitive factors affecting the global market for commerce services, including the introduction of competing platforms, discount pricing and other strategies that may be implemented by our competitors; our ability to execute on our growth strategy and operating plans including new solutions offerings; concerns relating to actual or perceived data incidents and security breaches; the frequency and severity of any system outages; technological changes or problems; our ability to expand into new markets and internationally; the imposition of new or increased tariffs or other trade protection measures; a decline in the number of entrepreneurs globally; a decline in our merchants' level of satisfaction with our platform and merchants' usage of our platform; the fact that difficulty and cost to switch to a competitor may not be significant for many of our merchants; changes in our relationships with third parties, including partners, app developers, theme designers, referral sources, vendors, payment processors and providers of AI technology; the timeliness and success of new products and services we may offer in the future; our ability to integrate emerging technologies into our products; and our focus on long-term value over short-term results, meaning that we may make strategic decisions that may not maximize our short-term revenue or profitability if we believe that the decisions are consistent with our mission and will improve our financial performance over the long-term.
If third-party apps and themes change such that we do not or cannot maintain the compatibility of our platform with these apps and themes, or if we fail to ensure there are third-party apps and themes that our merchants desire to add to their shops, demand for our platform could decline and merchants may see decreased sales, which in turn would impact our operating results.
If third-party apps and themes change such that we do not or cannot maintain the compatibility of our platform with these apps and themes, or if we fail to ensure there are third-party apps and themes that our merchants desire to utilize, demand for our platform could decline and merchants may see decreased sales, which in turn would impact our operating results.
The value of the Canadian dollar relative to the U.S. dollar has varied significantly in the past and investors are cautioned that past and current foreign exchange rates are not indicative of future foreign exchange rates. Foreign exchange rate fluctuations may also affect our merchant solutions.
The value of these foreign currencies relative to the U.S. dollar has varied significantly in the past and investors are cautioned that past and current foreign exchange rates are not indicative of future foreign exchange rates. Foreign exchange rate fluctuations may also affect our merchant solutions.
The improvement and enhancement of the functionality, performance, reliability, design, security and scalability of our platform is expensive and complex, and to the extent we are not 18 Table of C ontents able to execute on these efforts in a manner that responds to our merchants’ evolving needs, our business, operating results and financial condition will be adversely affected.
The improvement and enhancement of the functionality, performance, reliability, design, security and scalability of our platform is expensive and complex, and to the extent we are not able to execute on these efforts in a manner that responds to our merchants’ evolving needs, our business, operating results and financial condition will be adversely affected.
Some of these laws, such as the CCPA, permit individual or class action claims for certain alleged violations, increasing the likelihood of such legal claims.
Some of these laws, such as CIPA and the CCPA, permit individual or class action claims for certain alleged violations, increasing the likelihood of such legal claims.
Additionally, we use dozens of third-party service providers and subprocessors to help us operate our business and deliver services to merchants and their buyers. These service providers and subprocessors may store or access personal information, credit card information and/or other confidential information.
Additionally, we use dozens of third-party service providers and subprocessors to help us operate our business and deliver services to merchants and their buyers. These service providers and subprocessors may store or access personal information, payment information and/or other confidential information.
It may be difficult to enforce judgments of U.S. courts against us or our directors and executive officers in Canada, to assert U.S. securities laws claims in Canada, or to serve process on our directors and officers in Canada. We are incorporated in Canada.
It may be difficult to enforce judgments of U.S. courts against us or our directors and executive officers in Canada, to assert U.S. securities laws claims in Canada, or to serve process on our directors and officers in Canada. 40 Table of Contents We are incorporated in Canada.
Our compensation arrangements may not always be successful in attracting new employees and retaining and motivating our existing employees. Our Flex Comp compensation system provides 22 Table of C ontents employees with a single total compensation amount that is allocated between cash and equity awards at the discretion of the employees, subject to certain restrictions.
Our compensation arrangements may not always be successful in attracting new employees and retaining and motivating our existing employees. Our Flex Comp compensation system provides employees with a single total compensation amount that is allocated between cash and equity awards at the discretion of the employees, subject to certain restrictions.
The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have an adverse impact on our liquidity 31 Table of C ontents and results of operations.
The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have an adverse impact on our liquidity and results of operations.
Any changes to technologies used in our platform, to existing features that we rely on, or to operating systems or internet browsers that make it difficult for our merchants or their buyers to access our solutions, may make it more difficult for us to maintain or increase our revenues and could adversely impact our business and prospects.
Any changes to technologies used in our platform or other product offerings, to existing features that we rely on, or to operating systems or internet browsers that make it difficult for merchants or buyers to access our solutions, may make it more difficult for us to maintain or increase our revenues and could adversely impact our business and prospects.
Any of these provisions could have the effect of delaying, preventing or deferring a change in control which could limit the opportunity for our Class A subordinate voting shareholders to receive a 42 Table of C ontents premium for their Class A subordinate voting shares, and could also affect the price that investors are willing to pay for Class A subordinate voting shares.
Any of these provisions could have the effect of delaying, preventing or deferring a change in control, which could limit the opportunity for our Class A subordinate voting shareholders to receive a premium for their Class A subordinate voting shares, and could also affect the price that investors are willing to pay for Class A subordinate voting shares.
This Annual Report 12 Table of C ontents on Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below. See "Forward-Looking Statements" in this Annual Report on Form 10-K.
This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below. See "Forward-Looking Statements" in this Annual Report on Form 10-K.
We or our partners are currently subject to a variety of laws and regulations in various jurisdictions related to payment processing, including those governing cross-border and domestic money transmission, prepaid and other payment access instruments, electronic funds transfers, foreign exchange, anti-money laundering, counter-terrorist financing, banking and import and export restrictions.
We or our partners are currently subject to a variety of laws and regulations in various jurisdictions related to payment processing, including those governing cross-border and domestic money transmission, prepaid and other payment access instruments, electronic funds transfers, buy now pay later products, foreign exchange, anti-money laundering, counter-terrorist financing, banking and import and export restrictions.
Given that requirements may be inconsistent and evolving, how 26 Table of C ontents we choose to respond to these requirements globally may not meet the expectations of individual merchants, their buyers or other stakeholders, which could thereby reduce the demand for our services.
Given that requirements may be inconsistent and evolving, how we choose to respond to these requirements globally may not meet the expectations of individual merchants, their buyers or other stakeholders, which could thereby reduce the demand for our services.
Failure to prevent or mitigate security breaches and improper access to or disclosure of our data, merchant data and data of buyers shopping with our merchants, including personal information, or payment information from merchants and their customers, could result in the loss, modification, disclosure, destruction or other misuse of such data, which could harm our business and reputation and diminish our competitive position.
Failure to prevent or mitigate security breaches and improper access to or disclosure of our data, merchant data and data of buyers shopping with our merchants, including personal information, or payment information from merchants and their customers, could result in the loss, modification, disclosure, destruction or other misuse of such data, which could harm our business and reputation, diminish our competitive position and subject us to legal or regulatory action.
We rely on a variety of these mechanisms, including the European Commission Decision 2002/2/EC regarding the adequacy of Canadian law and Standard Contractual Clauses, and eventually intend to rely on Binding Corporate Rules for transfers between Shopify entities, to strengthen our ability to efficiently provide our services around the globe at scale.
We rely on a variety of these mechanisms, 27 Table of Contents including the European Commission Decision 2002/2/EC regarding the adequacy of Canadian law and Standard Contractual Clauses, and Binding Corporate Rules for transfers between Shopify entities, to strengthen our ability to efficiently provide our services around the globe at scale.
Merchants using the platform may also operate businesses in regulated industries, which are subject to additional scrutiny, increasing the potential scrutiny and potential liability we could incur. In addition, due to our international expansion, we may be subject to international actions alleging that merchants’ store content violate laws in foreign jurisdictions, which could negatively affect our business and operations.
Merchants using the platform may also operate businesses in regulated industries, which are subject to additional scrutiny, increasing the potential scrutiny and potential liability we could incur. In addition, due to our international expansion, we may be subject to international actions alleging that certain merchant store content violates laws in foreign jurisdictions, which could negatively affect our business and operations.
Our agreements with cloud hosting, 19 Table of C ontents technology, content and consulting providers are typically non-exclusive and do not prohibit such service providers from working with our competitors or from offering competing services. These third-party providers may choose to terminate their relationship with us or to make material changes to their businesses, products or services.
Our agreements with cloud hosting, technology, content and consulting providers are typically non-exclusive and do not prohibit such service providers from working with our competitors or from offering competing services. These third-party providers may choose to terminate their relationship with us or make material changes to their businesses, products or services.
If it appears necessary, we may seek to secure license rights to intellectual property that we are alleged to infringe at a 30 Table of C ontents significant cost, potentially even if we believe such claims to be without merit. If required licenses cannot be obtained, or if existing licenses are not renewed, litigation could result.
If it appears necessary, we may seek to secure license rights to intellectual property that we are alleged to infringe at a significant cost, potentially even if we believe such claims to be without merit. If required licenses cannot be obtained, or if existing licenses are not renewed, litigation could result.
Purchases of loans may fluctuate based on a number of factors, some of which may be outside of our control, including, but not limited to, economic conditions, changes in the regulatory environment in the United States, the availability of alternative investments, changes in the terms of the loans, loans offered by other entities and prevailing interest rates.
Sales of receivables may fluctuate based on a number of factors, some of which may be outside of our control, including, but not limited to, economic conditions, changes in the regulatory environment, the availability of alternative investments, changes in the terms of the receivables, loans and receivables offered by other entities and prevailing interest rates.
Additionally, we may from time to time be subject to opposition or similar proceedings with respect to applications for registrations of our intellectual property, including our trademarks.
Additionally, we may from time to time be subject to opposition or similar 34 Table of Contents proceedings with respect to applications for registrations of our intellectual property, including our trademarks.
As we grow, we will be required to continue to improve our financial controls and procedures, and we may not be able to do so effectively. Our business is highly competitive. We may not be able to compete successfully against current and future competitors.
As we grow, we will be required to continue to improve our financial controls and procedures, and we may not be able to do so effectively. 15 Table of Contents Our business is highly competitive. We may not be able to compete successfully against current and future competitors.
Issuances of preferred shares, or the perception that such issuances may occur, could cause the trading price of our Class A subordinate voting shares to drop.
Issuances of preferred shares, or the perception 41 Table of Contents that such issuances may occur, could cause the trading price of our Class A subordinate voting shares to drop.
For example, if the costs associated with acquiring new merchants materially rise in the future, including the fees we pay to third parties to market our platform, our expenses may rise significantly. Therefore, we 25 Table of C ontents cannot predict if we will maintain profitability over time.
For example, if the costs associated with acquiring new merchants materially rise in the future, including the fees we pay to third parties to market our platform, our expenses may rise significantly. Therefore, we cannot predict if we will maintain profitability over time.
As a result, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including: (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (iii) Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material non-public information.
As a result, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including: (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act imposing liability for insiders who profit from trades made in a short period of time and (iii) Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material non-public information.
We anticipate that we will, from time to time, issue additional Class A subordinate voting shares in the future. Subject to the requirements of the NYSE and the Toronto Stock Exchange ("TSX"), we will not be required to obtain the approval of shareholders for the issuance of additional Class A subordinate voting shares.
We anticipate that we will, from time to time, issue additional Class A subordinate voting shares in the future. Subject to the requirements of the Nasdaq Global Select Market ("NASDAQ") and the Toronto Stock Exchange ("TSX"), we will not be required to obtain the approval of shareholders for the issuance of additional Class A subordinate voting shares.
No assurance can be given that these agreements will be effective in securing 33 Table of C ontents ownership of our intellectual property or controlling access to our proprietary information and trade secrets.
No assurance can be given that these agreements will be effective in securing ownership of our intellectual property or controlling access to our proprietary information and trade secrets.
In addition to comprehensive U.S. state privacy laws and regulations that have gone into effect or will go into effect in the future, similar laws are being proposed elsewhere, which impose additional obligations such as additional rights processes, new contractual requirements, opt outs for certain uses and disclosures of sensitive personal information and opt outs from sharing personal information for targeted advertising.
In addition to comprehensive U.S. state privacy laws and regulations that have gone into effect or will go into effect in the future, similar laws are being proposed elsewhere, which impose additional obligations such as additional rights processes, new contractual requirements, opt outs for certain uses and disclosures of sensitive personal information, opt outs from sharing personal information for targeted advertising, and disclosures and other requirements with respect to the use of AI and automated decision-making.
These laws, which may focus on individuals’ financial and payment related 16 Table of C ontents information, are increasingly relevant to us, as we continue to collect and store more payment information from buyers directly through services such as Shop Pay.
These laws, which may focus on individuals’ financial and payment related information, are increasingly relevant to us, as we continue to collect and store more payment information from buyers directly through services such as Shop Pay.
The laws relating to the liability of online service providers are evolving and subject to challenge including claims related to defamation, product liability, libel, breach of contract, invasion of privacy, negligence, copyright or trademark infringement. Developments in these laws in various jurisdictions could subject us to liability, penalties or restrictions on our business.
The laws relating to the liability of online service providers, including with respect to defamation, product liability, libel, breach of contract, invasion of privacy, negligence, copyright or trademark infringement, are evolving. Developments in these laws in various jurisdictions could subject us to liability, penalties or restrictions on our business.
Pursuant to our restated articles of incorporation, holders of Class A subordinate voting shares and Class B restricted voting shares are treated equally and identically, on a per share basis, in certain change of control transactions that require approval of our shareholders under the CBCA, unless different treatment of the shares of each such class is approved by a majority of the votes cast by the holders of our Class A subordinate voting shares and Class B restricted voting shares, each voting separately as a class.
Pursuant to our restated articles of incorporation, holders of Class A subordinate voting shares and Class B restricted voting shares are treated equally and identically, on a per share basis, in certain change of control transactions that require approval of our shareholders under the CBCA, unless different treatment of the shares of each such class is approved by a majority of the votes cast by the holders of our Class A subordinate voting shares and Class B restricted voting shares, each voting separately as a class. 38 Table of Contents The market price of our Class A subordinate voting shares may be volatile.
Our efforts to comply with these laws and regulations could be costly and result in diversion of management time 24 Table of C ontents and effort and may still not guarantee compliance.
Our efforts to comply with these laws and regulations could be costly and result in diversion of management time and effort and may still not guarantee compliance.
Our solutions incorporate and are dependent to a significant extent on the use and development of open source software and we intend to continue our use and development of open source software in the 34 Table of C ontents future.
Our solutions incorporate and are dependent to a significant extent on the use and development of open source software and we intend to continue our use and development of open source software in the future.
We also expect new entrants to offer competitive services and merchants may also seek to build their own solutions, including using advanced tools such as AI, and particularly in markets where development costs are lower. If we cannot compete successfully against current and future competitors, our business, results of operations and financial condition could be negatively impacted.
We also expect new entrants to offer competitive services and merchants may also seek to build their own solutions, including using advanced tools such as AI. If we cannot compete successfully against current and future competitors, our business, results of operations and financial condition could be negatively impacted.
Historically, our costs have increased each year due to these factors and we expect to continue to incur increasing costs to support our anticipated future growth.
Historically, our costs have increased each year due to these factors and we expect to continue to incur 25 Table of Contents increasing costs to support our anticipated future growth.
The rapid evolution of AI and machine learning may require us to allocate additional resources to help implement AI and machine learning in a responsible and ethical way, in order to minimize unintended or harmful impacts, and may also require us to make investments in the development of proprietary datasets, machine learning models or other systems, which could be costly and negatively impact our profitability.
The rapid evolution of AI and machine learning may require us to allocate additional resources to help implement AI and machine learning in a manner that minimizes unintended or harmful impacts, and may also require us to make investments in the development of proprietary datasets, machine learning models or other systems, which could be costly and negatively impact our profitability.
We have never declared or paid any dividends on our securities. We do not have any present intention to pay cash dividends on our Class A subordinate voting shares and we do not anticipate paying any cash dividends on our Class A subordinate voting shares in the foreseeable future.
We do not have any present intention to pay cash dividends on our Class A subordinate voting shares and we do not anticipate paying any cash dividends on our Class A subordinate voting shares in the foreseeable future.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeDespite these protective efforts, we cannot eliminate all risks from cybersecurity threats, nor can we provide assurances that we have not experienced undetected cybersecurity incidents.
Biggest changeIn 2025, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition. Despite these protective efforts, we cannot eliminate all risks from cybersecurity threats, nor can we provide assurances that we have not experienced undetected cybersecurity incidents.
In addition, our employees receive cybersecurity training designed to enhance awareness of cybersecurity risks. Our board of directors has overall oversight of enterprise risk management and Audit Committee has direct oversight responsibility for cybersecurity risk.
In addition, our employees receive cybersecurity training designed to enhance awareness of cybersecurity risks. Our board of directors has overall oversight of enterprise risk management and the Audit Committee has direct oversight responsibility for cybersecurity risk.
The Trust team is comprised of personnel with a broad range of experience across the private and public sectors, the technology industry and different geographic regions.
The Trust team is comprised of personnel with a broad range of experience across the private and public sectors, the technology industry and different geographic regions. The CISO provides periodic reports to the Audit Committee on the cybersecurity program.
Removed
The CISO provides periodic reports to the Audit Committee on the cybersecurity program. 43 Table of C ontents In 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3: Legal Proceedings The information set forth under “Note 17 — Commitments and Contingencies — Litigation and Loss Contingencies” to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K is incorporated herein by reference. Item 4: Mine Safety Disclosures Not applicable. 44 Table of C ontents Part II
Biggest changeItem 3: Legal Proceedings The information set forth under “Note 17 — Commitments and Contingencies — Litigation and Loss Contingencies” to the consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K is incorporated herein by reference. Item 4: Mine Safety Disclosures Not applicable. 43 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities [None] Issuer Purchases of Equity Securities [None] Stock Performance Graph The above graph compares the total shareholder return on a $100 investment in Shopify's Class A subordinate voting shares to the same investment in the S&P 500 IT Index and the S&P/TSX Composite 45 Table of C ontents Index over the same period.
Biggest changeStock Performance Graph The above graph compares the total shareholder return on a $100 investment in Shopify's Class A subordinate voting shares to the same investment in the S&P 500 IT Index and the S&P/TSX Composite Index over the same period.
Our Class B restricted voting shares and Founder share are not listed for trading or quoted on any exchange or market. Holders As of December 31, 2024, there were approximately 1,620 shareholders of record of our Class A subordinate voting shares. These figures do not include beneficial owners who hold shares in the name of a nominee.
Our Class B restricted voting shares and Founder share are not listed for trading or quoted on any exchange or market. Holders As of December 31, 2025, there were approximately 1,580 shareholders of record of our Class A subordinate voting shares. These figures do not include beneficial owners who hold shares in the name of a nominee.
Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A subordinate voting shares are listed for trading on the New York Stock Exchange ("NYSE") and on the Toronto Stock Exchange ("TSX") under the trading symbol "SHOP".
Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A subordinate voting shares are listed for trading on the NASDAQ and on the TSX under the trading symbol "SHOP".
As of December 31, 2024, there were approximately 28 shareholders of record of our Class B restricted voting shares and 1 Founder share, which is issued to Tobias Lütke. Dividend Policy The Company has not paid and does not anticipate paying any cash dividends in the foreseeable future.
As of December 31, 2025, there were 22 shareholders of record of our Class B restricted voting shares and 1 Founder share, which is issued to Tobias Lütke. Dividend Policy The Company has not paid and does not anticipate paying any cash dividends in the foreseeable future. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None.
The above graph shows how a $100 investment in Shopify on January 2, 2020, with a closing stock price of $40.78 on such date (on a pro-forma basis, after giving effect to the Share Split), would have grown to $260.73 on December 31, 2024, with a closing stock price of $106.33 on such date.
The above graph shows how a $100 investment in Shopify on January 4, 2021, 44 Table of Contents with a closing stock price of $109.24 on such date (on a pro-forma basis, after giving effect to the Share Split), would have grown to $147.35 on December 31, 2025, with a closing stock price of $160.97 on such date.
Removed
We currently intend to retain any future earnings to fund the development and growth of our business.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

102 edited+15 added−48 removed49 unchanged
Biggest changeThree months ended Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 (in US $ millions, except per share data) Revenues Subscription solutions 666 610 563 511 525 486 444 382 Merchant solutions 2,146 1,552 1,482 1,350 1,619 1,228 1,250 1,126 2,812 2,162 2,045 1,861 2,144 1,714 1,694 1,508 Cost of revenues (1)(2) Subscription solutions 134 108 97 95 97 88 85 84 Merchant solutions 1,326 936 903 809 985 725 774 707 1,460 1,044 1,000 904 1,082 813 859 791 Gross profit 1,352 1,118 1,045 957 1,062 901 835 717 Operating expenses Sales and marketing (1)(2)(4) 348 331 353 361 317 295 321 287 Research and development (1)(2)(4) 351 332 349 335 311 313 648 458 General and administrative (1)(3)(4)(5) 112 114 60 124 100 137 131 123 Transaction and loan losses 76 58 42 51 45 34 31 42 Impairment on sales of Shopify's logistics businesses — — — — — — 1,340 — Total operating expenses 887 835 804 871 773 779 2,471 910 Income (loss) from operations 465 283 241 86 289 122 (1,636) (193) Other (expenses) income, net 956 577 (38) (342) 393 606 335 269 Income (loss) before income taxes 1,421 860 203 (256) 682 728 (1,301) 76 Provision for income taxes (128) (32) (32) (17) (25) (10) (10) (8) Net income (loss) 1,293 828 171 (273) 657 718 (1,311) 68 Net income (loss) per share attributable to shareholders: Basic $ 1.00 $ 0.64 $ 0.13 $ (0.21) $ 0.51 $ 0.56 $ (1.02) $ 0.05 Diluted $ 0.99 $ 0.64 $ 0.13 $ (0.21) $ 0.51 $ 0.55 $ (1.02) $ 0.05 60 Table of C ontents (1) Includes stock-based compensation expense and related payroll taxes as follows: Three months ended Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 (a) Jun 30, 2023 (a) Mar 31, 2023 (in US $ millions) Cost of revenues — — 3 1 1 — 1 2 Sales and marketing 13 15 10 12 14 17 13 15 Research and development 81 77 73 72 69 70 252 106 General and administrative 24 23 23 26 19 20 19 18 118 115 109 111 103 107 285 141 (a) Includes accelerated stock-based compensation of $1 million and $4 million in sales and marketing during the second and third quarter of 2023, respectively, and $164 million in research and development during the second quarter of 2023.
Biggest changeThree months ended Dec 31, 2025 Sep 30, 2025 Jun 30, 2025 Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 (in US $ millions, except per share data) Revenues Subscription solutions 777 699 656 620 666 610 563 511 Merchant solutions 2,895 2,145 2,024 1,740 2,146 1,552 1,482 1,350 3,672 2,844 2,680 2,360 2,812 2,162 2,045 1,861 Cost of revenues (1)(2) Subscription solutions 148 128 121 123 134 108 97 95 Merchant solutions 1,831 1,325 1,257 1,068 1,326 936 903 809 1,979 1,453 1,378 1,191 1,460 1,044 1,000 904 Gross profit 1,693 1,391 1,302 1,169 1,352 1,118 1,045 957 Operating expenses Sales and marketing (1)(2) 433 410 415 405 348 331 353 361 Research and development (1)(2) 390 375 394 377 351 332 349 335 General and administrative (1)(3)(4) 125 115 122 109 112 114 60 124 Transaction and loan losses 114 148 80 75 76 58 42 51 Total operating expenses 1,062 1,048 1,011 966 887 835 804 871 Income from operations 631 343 291 203 465 283 241 86 Net gain (loss) on equity and equity method investments (5) 182 (112) 658 (1,044) 906 484 (120) (417) Other income, net 79 77 130 71 50 93 82 75 Income (loss) before income taxes 892 308 1,079 (770) 1,421 860 203 (256) (Provision for) recovery of income taxes (149) (44) (173) 88 (128) (32) (32) (17) Net income (loss) 743 264 906 (682) 1,293 828 171 (273) Net income (loss) per share attributable to shareholders: Basic $ 0.57 $ 0.20 $ 0.70 $ (0.53) $ 1.00 $ 0.64 $ 0.13 $ (0.21) Diluted $ 0.57 $ 0.20 $ 0.69 $ (0.53) $ 0.99 $ 0.64 $ 0.13 $ (0.21) (1) Includes stock-based compensation expense and related payroll taxes as follows: Three months ended Dec 31, 2025 Sep 30, 2025 Jun 30, 2025 Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 (in US $ millions) Cost of revenues 1 1 1 1 — — 3 1 Sales and marketing 10 13 12 13 13 15 10 12 Research and development 87 78 85 84 81 77 73 72 General and administrative 27 24 22 25 24 23 23 26 125 116 120 123 118 115 109 111 57 Table of Contents (2) Includes amortization of acquired intangibles as follows: Three months ended Dec 31, 2025 Sep 30, 2025 Jun 30, 2025 Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 (in US $ millions) Cost of revenues 3 2 2 2 1 3 4 4 Sales and marketing — — — — 1 — — — Research and development 1 1 1 1 — 1 — — 4 3 3 3 2 4 4 4 (3) In the second quarter of 2024, we released an accrual for an estimated liability of $55 million associated with a legal matter.
GAAP. This data should be read in conjunction with our unaudited condensed consolidated financial statements and audited consolidated financial statements and related notes for the relevant period. These quarterly operating results are not necessarily indicative of our operating results for a full year or any future periods.
GAAP. This data should be read in conjunction with our unaudited consolidated financial statements and audited consolidated financial statements and related notes for the relevant period. These quarterly operating results are not necessarily indicative of our operating results for a full year or any future periods.
We plan to continue to expand sales and marketing efforts to attract new merchants, retain revenue from existing merchants and increase revenues from both new and existing merchants. Sales and marketing expenses are expected to increase in absolute dollars but over time, we expect sales and marketing expenses will eventually decline as a percentage of total revenues.
We plan to continue to expand sales and marketing efforts to attract new merchants, retain revenue from existing merchants and increase revenues from both new and existing merchants. Sales and marketing expenses are expected to increase in absolute dollars but over time, we expect sales and marketing expenses will decline as a percentage of total revenues.
Subsequently, revenues have increased in each of the next three quarters as a result of merchant, MRR and overall GMV growth. Our merchants have processed additional GMV during the fourth-quarter holiday seasons, and as a result we have generated higher merchant solutions revenues in our fourth quarters compared to other quarters.
Subsequently, revenues have increased in each of the next three quarters as a result of merchant, MRR and overall GMV growth. Our merchants have processed additional GMV during the fourth-quarter holiday seasons, and as a result we have generated higher subscription solutions and merchant solutions revenues in our fourth quarters compared to other quarters.
Factors Affecting the Comparability of Our Results Change in Revenue Mix As a result of the continued growth of Shopify Payments, referral fees, other transaction services and other services rendered as part of strategic partnerships and Shopify Capital, our revenues from merchant solutions have increased significantly.
Factors Affecting the Comparability of Our Results Change in Revenue Mix As a result of the continued growth of Shopify Payments, referral fees, other transaction services and other services rendered as part of strategic partnerships and Shopify Capital, our revenues from merchant solutions have increased.
Cash Flows From Operating Activities Our largest source of operating cash is from merchant solutions. Within merchant solutions, the largest source of cash flows are Shopify Payments processing fee arrangements, which are received on a daily basis as transactions are processed. We also generate significant cash flows from our subscription solutions with subscription revenues.
Cash Flows From Operating Activities Our largest source of operating cash is from merchant solutions. Within merchant solutions, the largest source of cash flows are Shopify Payments processing fee arrangements, which are received on a daily basis as transactions are processed. We also generate cash flows from our subscription solutions with subscription revenues.
Risk Factors of this Annual Report on Form 10-K. Forward-looking statements are intended to assist readers in understanding management's expectations as of the date of this MD&A and may not be suitable for other purposes See "Forward-looking Statements" in Part I of this Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Risk Factors of this Annual Report on Form 10-K. Forward-looking statements are intended to assist readers in understanding management's expectations as of the date of this MD&A and may not be suitable for other purposes. See "Forward-looking Statements" in Part I of this Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
The information for each of these quarters has been derived from unaudited condensed consolidated financial statements that were prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflects all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the results of operations for these periods in accordance with U.S.
The information for each of these quarters has been derived from unaudited consolidated financial statements that were prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflects all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the results of operations for these periods in accordance with U.S.
Cost of merchant solutions also consists of rewards earned by merchants through our rewards program, processing fees related to billing our merchants, POS hardware costs, product costs associated with expanding our product offerings, including Shopify Balance, third-party infrastructure and hosting costs, chargeback protection program costs, amortization of acquired intangible assets and an allocation of costs incurred by both the operations and support functions, including personnel-related costs directly associated with merchant solutions such as salaries, benefits and stock-based compensation.
Cost of merchant solutions also consists of rewards earned by merchants through our rewards program and advertising costs related to our customer acquisition services, processing fees related to billing our merchants, POS hardware costs, product costs associated with expanding our product offerings, including Shopify Balance, third-party infrastructure and hosting costs, chargeback protection program costs, amortization of acquired intangible assets and an allocation of costs incurred by both the operations and support functions, including personnel-related costs directly associated with merchant solutions such as salaries, benefits and stock-based compensation.
In this MD&A, we present Shopify's results of operations and cash flows for the fourth quarter and the fiscal years ended December 31, 2024, 2023 and 2022, and our financial position as of December 31, 2024.
In this MD&A, we present Shopify's results of operations and cash flows for the fourth quarter and the fiscal years ended December 31, 2025, 2024 and 2023, and our financial position as of December 31, 2025.
We also entered into an indemnification agreement that governs the liability obligations of the purchaser in connection with these guarantees. These arrangements, and our obligations arising from such arrangements, are not expected to have a material impact on the current or future financial performance or financial condition of the Company.
We also entered into an indemnification agreement that governs the liability obligations of the purchaser in connection with these guarantees. These arrangements, and our 61 Table of Contents obligations arising from such arrangements, are not expected to have a material impact on the current or future financial performance or financial condition of the Company.
Quarterly Revenue and Gross Margin Trends Historically, revenues experienced a seasonal decrease in our first quarter as consumers typically reduce their spending following the holiday season resulting in a seasonal decrease in GMV per merchant, which was not completely offset by merchant and MRR growth.
Quarterly Revenue and Gross Margin Trends Historically, revenues experienced a seasonal decrease in our first quarter as consumers typically reduce their spending following the holiday season resulting in a seasonal decrease in GMV per merchant, which was not completely offset by Shopify Payments penetration and MRR growth.
As of December 31, 2024 and 2023, there were no variable interest entities required to be consolidated in the Company’s consolidated financial statements.
As of December 31, 2025 and 2024, there were no variable interest entities required to be consolidated in the Company’s consolidated financial statements.
To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we re-evaluate these 65 Table of C ontents estimates on an ongoing basis.
To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we re-evaluate these estimates on an ongoing basis.
As a result of the continued growth of our merchant solutions offerings, we believe that our business may become more seasonal in the future and that historical patterns in our business may not be a reliable indicator of our future performance.
As a result of the continued growth of our merchant solutions offerings, we believe that our 48 Table of Contents business may become more seasonal in the future and that historical patterns in our business may not be a reliable indicator of our future performance.
Refer to "Item 7A: Quantitative and Qualitative Disclosures About Market Risk—Risks and Uncertainties" below for additional information on the effect on reported results of changes in foreign exchange rates. 49 Table of C ontents Key Components of Results of Operations Revenues We derive revenues from subscription solutions and merchant solutions.
Refer to "Item 7A: Quantitative and Qualitative Disclosures About Market Risk—Risks and Uncertainties" below for additional information on the effect on reported results of changes in foreign exchange rates. Key Components of Results of Operations Revenues We derive revenues from subscription solutions and merchant solutions.
We refer to accounting estimates of this type as significant accounting policies and estimates, which we discuss below and in further detail in Note 3 - Significant Accounting Policies of our audited consolidated financial statements for the year ended December 31, 2024 included in this Annual Report on Form 10-K.
We refer to accounting estimates of this type as significant accounting policies and estimates, which we discuss below and in further detail in Note 3 - Significant Accounting Policies of our audited consolidated financial statements for the year ended December 31, 2025 included in Item 15 this Annual Report on Form 10-K.
Cash equivalents and marketable securities include money market funds, term deposits, U.S. federal bonds and agency securities and corporate bonds and commercial paper, all maturing within the 12 months from December 31, 2024.
Cash equivalents and marketable securities include money market funds, term deposits, U.S. federal bonds and agency securities and corporate bonds and commercial paper, all maturing within 12 months from December 31, 2025.
Our future financing requirements will depend on many factors, including but not limited to our growth rate, subscription renewal activity, the timing and extent of spending to support development of our platform, the expansion of sales and marketing activities, the macroeconomic conditions and overall levels of consumer spending on goods and potential strategic investments and acquisitions activity.
Our future cash requirements will depend on many factors, including but not limited to our growth rate, subscription renewal activity, the timing and extent of spending to support development of our platform, the expansion of sales and marketing activities, the macroeconomic 59 Table of Contents conditions and overall levels of consumer spending on goods and potential strategic investments and acquisitions activity.
Instead, we believe Monthly Recurring Revenue ("MRR") is most closely correlated with the long-term value of our merchant relationships. As of December 31, 2024, MRR totaled $178 million, representing an increase of 24% relative to MRR at December 31, 2023. A detailed description of this metric is presented below in the section entitled, "Key Performance Indicators".
Instead, we believe Monthly Recurring Revenue ("MRR") is most closely correlated with the long-term value of our merchant relationships. As of December 31, 2025, MRR totaled $205 million, representing an increase of 15% relative to MRR at December 31, 2024. A detailed description of this metric is presented below in the section entitled, "Key Performance Indicators".
In the year ended December 31, 2024, we released an accrual for an estimated liability of $55 million associated with a legal matter. (5) In the years ended December 31, 2023 and 2022, we had $38 million and $84 million, respectively, of impairment related costs associated with right-of-use assets and leasehold improvements.
(4) In the years ended December 31, 2025 and 2023, we had $13 million and $38 million, respectively, of impairment related costs associated with right-of-use assets and leasehold improvements. (5) In the year ended December 31, 2024, we released an accrual for an estimated liability of $55 million associated with a legal matter.
The investments are carried at fair value at each balance sheet date and any movements in the fair values are classified as "Other income (expense), net" in the consolidated statement of operations and comprehensive income (loss).
The investments are carried at fair value at each balance sheet date and any movements in the fair values are classified as "Other income, net" in the consolidated statements of operations and comprehensive income.
(2) Includes amortization of acquired intangibles as follows: Years ended December 31, 2024 2023 2022 (in US $ millions) Cost of revenues 12 35 49 Sales and marketing 1 3 5 Research and development 1 — — 14 38 54 (3) In the year ended December 31, 2023, we had $148 million of severance related costs associated with the reduction in workforce with $28 million in sales and marketing, $102 million in research and development and $18 million in general and administrative.
(2) Includes amortization of acquired intangibles as follows: Years ended December 31, 2025 2024 2023 (in US $ millions) Cost of revenues 9 12 35 Sales and marketing — 1 3 Research and development 4 1 — 13 14 38 (3) In the year ended December 31, 2023, we had $148 million of severance related costs associated with the reduction in workforce with $28 million in sales and marketing, $102 million in research and development and $18 million in general and administrative.
We offer a variety of merchant solutions that are designed to add value to our merchants by passing on our economies of scale and augment our subscription solutions. During the year ended December 31, 2024, merchant solutions revenues accounted for 74% of total revenues ( 74% in the year ended December 31, 2023).
We offer a variety of merchant solutions that are designed to add value to our merchants by passing on our economies of scale and augmenting our subscription solutions. During the year ended December 31, 2025, merchant solutions revenues accounted for 76% of total revenues (December 31, 2024 - 74%).
In addition, we use MRR to forecast monthly, quarterly and annual subscription plan revenue, which makes up the majority of our subscription solutions revenue. We had $178 million of MRR as of December 31, 2024 compared to $144 million as of December 31, 2023 and $109 million as of December 31, 2022, as described above.
In addition, we use MRR to forecast monthly, quarterly and annual subscription plan revenue, which makes up the majority of our subscription solutions revenue. We had $205 million of MRR as of December 31, 2025 compared to $178 million as of December 31, 2024 and $144 million as of December 31, 2023.
Quarterly Other (Expense) Income Trends Historically, there have been no consistent trends associated with other (expense) income as changes are impacted by fluctuations in the fair value of our equity investments in public companies with readily determinable fair values, observable changes or impairments associated with our equity investments in private companies without readily determinable fair values, changes in our equity method investment based on our share of income and loss, including amortization of the basis difference, changes in the fair value of our investments in convertible notes of private companies, foreign exchange rates and interest rates.
Quarterly Gain (Loss) on Equity and Equity Method Investments and Other Income Trends Historically, there have been no consistent trends associated with gain (loss) on equity and equity method investments and other income as changes are impacted by fluctuations in the fair value of our equity investments in public companies with readily determinable fair values, observable changes or impairments associated with our equity investments in private companies without readily determinable 58 Table of Contents fair values, changes in our equity method investment based on our share of income and loss, including amortization of the basis difference, changes in the fair value of our investments in convertible notes of private companies, changes in the fair value of the embedded derivative held to settle the Notes, foreign exchange rates and interest rates.
On a constant currency basis, in which GMV in the year ended December 31, 2024 is converted using the comparative period's monthly average exchange rates, yea r-over-year growth was 24% (2023 vs 2022 - 16%).
On a constant currency basis, in which GMV in the year ended December 31, 2025 is converted using the comparative period's monthly average exchange rates, year-over-year growth was 28% (2024 vs 2023 - 24%).
This shelf prospectus and registration statement enables Shopify to offer Class A subordinate voting shares, preferred shares, debt securities, warrants, subscription receipts, units, or any combination thereof, from time to time during the 25-month period that the shelf prospectus is effective.
This allows us to offer Class A subordinate voting shares, preferred shares, debt securities, warrants, subscription receipts, units, or any combination thereof, from time to time during the 25-month period that the shelf prospectus is effective.
As a result, we have historically generated higher merchant solutions revenues in our fourth quarter than in other quarters. While we believe that this seasonality has affected and will continue to affect our quarterly results, our continued growth has partially masked seasonal trends to date.
Our merchants typically process additional GMV during the fourth quarter holiday season. As a result, we have historically generated higher merchant solutions revenues in our fourth quarter than in other quarters. While we believe that this seasonality has affected and will continue to affect our quarterly results, our continued growth has partially masked seasonal trends to date.
In the year ended December 31, 2024, our platform facilitated gross merchandise volume ("GMV") of $292.3 billion, representing an increase of 24% from the year ended December 31, 2023. A detailed description of this metric is presented below in the section entitled, "Key Performance Indicators".
In the year ended December 31, 2025, our platform facilitated gross merchandise volume ("GMV") of $378.4 billion, representing an increase of 29% from the year ended December 31, 2024. A detailed description of this metric is presented below in the section entitled, "Key Performance Indicators".
During the year ended December 31, 2024, our total revenue was $8.9 billion, an increase of 26% versus the year ended December 31, 2023. Our business model has two revenue components: a recurring subscription component we call subscription solutions and a merchant success-based component we call merchant solutions.
During the year ended December 31, 2025, our total revenue was $11.6 billion, an increase of 30% versus the year ended December 31, 2024. Our business model has two revenue components: a recurring subscription component we call subscription solutions and a merchant success-based component we call merchant solutions.
You should read this MD&A together with our audited consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K. Our audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All amounts are in U.S. dollars ("USD") except where otherwise indicated.
You should read this MD&A in conjunction with the audited consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K. Our audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
GMV does not represent revenue earned by us. However, the volume of GMV facilitated through our platform is an indicator of the success of our merchants and the strength of our platform. Our merchant solutions revenues are also directionally correlated with the level of GMV facilitated through our platform.
However, the volume of GMV facilitated through our platform is an indicator of the success of our merchants and the strength of our platform. Our merchant solutions revenues are also directionally correlated with the level of GMV facilitated through our platform.
Subscription solutions revenues increased from $1.8 billion in the year ended December 31, 2023 to $2.4 billion in the year ended December 31, 2024, representing an increase of 28% . Our merchants typically enter into monthly subscription agreements.
Subscription solutions revenues 46 Table of Contents increased from $2.4 billion in the year ended December 31, 2024 to $2.8 billion in the year ended December 31, 2025, representing an increase of 17%. Our merchants typically enter into monthly subscription agreements.
Additionally, we had interest income of $308 million and a net loss of $138 million on our equity method investment.
Additionally, we had a net loss of $138 million on our equity method investment.
We expect this overall trend to continue over time. 61 Table of C ontents In connection with expanding our operations internationally, we anticipate a growing proportion of our revenues and cost of sales transactions to be incurred in foreign currencies as compared to USD due to increased Shopify Payments, Shopify Capital, subscriptions and other billings to select countries in local currency.
In connection with expanding our operations internationally, we anticipate a growing proportion of our revenues and cost of sales transactions to be incurred in foreign currencies as compared to USD due to increased Shopify Payments, Shopify Capital, subscriptions and other billings in select countries in local currency.
The following table summarizes our total cash, cash equivalents and marketable securities as well as our operating, investing and financing activities for the years ended December 31, 2024, 2023 and 2022: Years ended December 31, 2024 2023 2022 (in US $ millions) Cash, cash equivalents and marketable securities (end of period) 5,479 5,008 5,053 Net cash provided by (used in): Operating activities 1,616 944 (136) Investing activities (1,586) (1,244) (719) Financing activities 61 60 18 Effect of foreign exchange on cash and cash equivalents (6) 4 (17) Net increase (decrease) in cash and cash equivalents 85 (236) (854) Decrease in marketable securities (1) 386 191 (1,861) Net increase (decrease) in cash, cash equivalents and marketable securities 471 (45) (2,715) (1) Excludes $709 million and $115 million of marketable securities classified in "Long-term Investments" as of December 31, 2024 and 2023, respectively.
The following table summarizes our total cash, cash equivalents and marketable securities as well as our operating, investing and financing activities for the years ended December 31, 2025, 2024 and 2023: Years ended December 31, 2025 2024 2023 (in US $ millions) Cash, cash equivalents and marketable securities (end of year) 5,778 5,479 5,008 Net cash provided by (used in): Operating activities 2,033 1,616 944 Investing activities (1,190) (1,586) (1,244) Financing activities (811) 61 60 Effect of foreign exchange on cash and cash equivalents 15 (6) 4 Net increase (decrease) in cash and cash equivalents 47 85 (236) Increase in marketable securities (1) 252 386 191 Net increase (decrease) in cash, cash equivalents and marketable securities 299 471 (45) (1) Excludes $975 million, $709 million and $115 million of marketable securities classified in "Long-term Investments" as of December 31, 2025, 2024 and 2023, respectively.
Other revenue generating services and products include, but are not limited to, the sale of shipping labels through Shopify Shipping, the sale of point-of-sale ("POS") hardware, advertising on the Shopify App Store and Shop Campaigns, our buyer acquisition offering. In the second quarter of 2023, we sold our logistics businesses.
Other revenue generating services and products include, but are not limited to, the sale of shipping labels, the sale of POS hardware, advertising on the Shopify App Store and Shop Campaigns, our buyer acquisition offering.
Other Income (Expense) Years ended December 31, 2024 % Change 2023 % Change 2022 (in US $ millions, except percentages) Other income (expense), net 1,153 * 1,603 * (2,801) * Not a meaningful comparison In the year ended December 31, 2024, we had net unrealized income on equity and other investments of $1.0 billion, of which $823 million was in investments with readily determinable fair values and was the result of the change in share prices from December 31, 2023 to December 31, 2024, $82 million in unrealized gain related to our investment option in Klaviyo and $89 million of unrealized gains offset by $14 million in unrealized losses and impairments related to investments without readily determinable fair values.
In the year ended December 31, 2024, we had net unrealized income on equity and other investments of $1.0 billion, of which $823 million was in investments with readily determinable fair values and was the result of changes in share prices from December 31, 2023 to December 31, 2024, $82 million in unrealized gain related to our investment option in Klaviyo and $89 million of unrealized gains offset by $14 million in unrealized losses and impairments related to investments without readily determinable fair values.
Cost of Revenues Years ended December 31, 2024 % Change 2023 % Change 2022 (in US $ millions, except percentages) Cost of revenues Cost of subscription solutions 434 23 % 354 7 % 331 Cost of merchant solutions 3,974 25 % 3,191 27 % 2,515 Total cost of revenues 4,408 24 % 3,545 25 % 2,846 Percentage of revenues Cost of subscription solutions 5 % 5 % 6 % Cost of merchant solutions 45 % 45 % 45 % 50 % 50 % 51 % Cost of Subscription Solutions Cost of subscription solutions increased for the year ended December 31, 2024 compared to the same period in 2023.
Cost of Revenues Years ended December 31, 2025 % Change 2024 % Change 2023 (in US $ millions, except percentages) Cost of revenues Cost of subscription solutions 520 20 % 434 23 % 354 Cost of merchant solutions 5,481 38 % 3,974 25 % 3,191 Total cost of revenues 6,001 36 % 4,408 24 % 3,545 Percentage of revenues Cost of subscription solutions 4 % 5 % 5 % Cost of merchant solutions 47 % 45 % 45 % 51 % 50 % 50 % Cost of Subscription Solutions Cost of subscription solutions increased for the year ended December 31, 2025 compared to the same period in 2024.
In addition, the sales of our logistics businesses in the second quarter of 2023, impacted the comparability of operating expenses. We note a significant portion of our operating expenses are incurred in foreign currencies which may impact the comparability of our quarterly and yearly trends.
We note a significant portion of our operating expenses are incurred in foreign currencies which may impact the comparability of our quarterly and yearly trends.
For the year ended December 31, 2024, the Shopify Payments penetration rate was 61.9%, resulting in GMV of $181.0 billion that was facilitated using Shopify Payments. This compares to a penetration rate of 58.1%, resulting in GMV of $137.0 billion that was facilitated using Shopify Payments in the same period in 2023.
This compares to a penetration rate of 61.9%, resulting in GMV of $181.0 billion that was facilitated using Shopify Payments in the same period in 2024.
Loss Contingencies The Company records accruals for loss contingencies when losses are probable and reasonably estimable. The Company evaluates developments in legal matters that could affect the amount of liability that has been previously accrued and makes adjustments as appropriate.
Loss Contingencies The Company records accruals for loss contingencies when losses are probable and reasonably estimable. The Company evaluates developments in legal matters that could affect the amount of liability that has been previously accrued and makes adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount of a loss or potential loss.
Key Balance Sheet Information December 31, 2024 2023 (in US $ millions) Cash, cash equivalents and marketable securities (1) 5,479 5,008 Total assets 13,924 11,299 Total liabilities 2,366 2,233 Total non-current liabilities 410 1,335 (1) Excludes $709 million and $115 million of marketable securities classified in "Long-term Investments" as of December 31, 2024 and 2023, respectively.
Key Balance Sheet Information December 31, 2025 2024 (in US $ millions) Cash, cash equivalents and marketable securities (1) 5,778 5,479 Total assets 15,189 13,924 Total liabilities 1,716 2,366 Total non-current liabilities 324 410 (1) Excludes $975 million and $709 million of marketable securities classified in "Long-term Investments" as of December 31, 2025 and 2024, respectively.
Cost of Revenues Cost of Subscription Solutions Cost of subscription solutions consists primarily of third-party infrastructure, hosting costs and other direct costs, an allocation of costs incurred by both the operations and support functions, including personnel-related costs directly associated with subscription solutions such as salaries, benefits and stock-based compensation, processing fees related to billing our merchants, payments for domain registration and amortization of acquired intangible assets.
For a discussion of how we expect seasonal factors to affect our merchant solutions revenue, see “Factors Affecting the Comparability of our Results—Seasonality". 49 Table of Contents Cost of Revenues Cost of Subscription Solutions Cost of subscription solutions consists primarily of third-party infrastructure, hosting costs and other direct costs, an allocation of costs incurred by both the operations and support functions, including personnel-related costs directly associated with subscription solutions such as salaries, benefits and stock-based compensation, processing fees related to billing our merchants, payments for domain registration and amortization of acquired intangible assets.
We have focused on rapidly growing our business and plan to continue making investments to drive future growth. We believe that our investments will increase our revenue base, improve the retention of this base and strengthen our ability to increase sales to our merchants.
We have focused on rapidly growing our business and plan to continue making investments to drive future growth. We believe that our investments will increase our revenue base, improve the retention of this base and strengthen our ability to increase sales to our merchants. We also maintain a portfolio of investments with varying time horizons in our cash management program.
Discussion of the Results of Operations Revenues Years ended December 31, 2024 % Change 2023 % Change 2022 (in US $ millions, except percentages) Revenues Subscription solutions 2,350 28 % 1,837 23 % 1,488 Merchant solutions 6,530 25 % 5,223 27 % 4,112 Total revenues 8,880 26 % 7,060 26 % 5,600 Percentage of revenues Subscription solutions 26 % 26 % 27 % Merchant solutions 74 % 74 % 73 % 100 % 100 % 100 % Subscription Solutions Subscription solutions revenues increased for the year ended December 31, 2024 compared to the same period in 2023.
Discussion of the Results of Operations Revenues Years ended December 31, 2025 % Change 2024 % Change 2023 (in US $ millions, except percentages) Revenues Subscription solutions 2,752 17 % 2,350 28 % 1,837 Merchant solutions 8,804 35 % 6,530 25 % 5,223 Total revenues 11,556 30 % 8,880 26 % 7,060 Percentage of revenues Subscription solutions 24 % 26 % 26 % Merchant solutions 76 % 74 % 74 % 100 % 100 % 100 % Subscription Solutions Subscription solutions revenues increased for the year ended December 31, 2025 compared to the same period in 2024.
While our total revenues have increased in recent periods, the mix has shifted towards merchant solutions revenue, most notably in the fourth quarter due to higher holiday volume of orders facilitated and the resulting Shopify Payments revenue during this period.
While our total revenues have increased in recent periods, the mix has shifted towards merchant solutions revenue, most notably in the fourth quarter due to higher order volumes facilitated during the holiday season and the resulting Shopify Payments revenue during this period. We expect this overall trend to continue over time.
(Provision for) Recovery of Income Taxes Years ended December 31, 2024 % Change 2023 % Change 2022 (in US $ millions, except percentages) (Provision for) recovery of Income taxes (209) * (53) * 163 * Not a meaningful comparison In the year ended December 31, 2024, we had a provision for income taxes of $209 million on account of earnings and unrealized gains on the Company's equity and other investments, net of an offset to the reversal of valuation allowance.
Provision for Income Taxes Years ended December 31, 2025 % Change 2024 % Change 2023 (in US $ millions, except percentages) Provision for Income taxes (278) 33% (209) * (53) * Not a meaningful comparison In the year ended December 31, 2025, we had a provision for income taxes of $278 million on account of earnings, offset by unrealized losses on the company's equity and other investments.
Merchant Solutions We principally generate merchant solutions revenues from payment processing fees and currency conversion fees from Shopify Payments, referral fees from partners, Shopify Capital and Transaction Fees.
Merchant Solutions We principally generate merchant solutions revenues from payment processing fees and currency conversion fees from Shopify Payments, our lending services and financial products and referral fees from partners.
In the year ended December 31, 2024, subscription solutions revenues accounted for 26% of our total revenues (26% in the year ended December 31, 2023). We offer a range of plans that increase in price depending on additional features and economic considerations.
In the year ended December 31, 2025, subscription solutions revenues accounted for 24% of our total revenues (December 31, 2024 - 26%). We offer a range of plans that increase in price depending on additional features and economic considerations. Shopify Plus is offered at a starting rate that is several times that of our standard Shopify plans.
In connection with the expiration of our previous short-form base shelf prospectus, we filed a new short-form base shelf prospectus with the securities commissions in each of the provinces and territories of Canada, except Quebec, and a corresponding shelf registration statement on Form F-10 with the U.S. SEC, on November 12, 2024.
Shopify maintains a short-form base shelf prospectus with the securities commissions in each of the provinces and territories of Canada, except Quebec, and a corresponding shelf registration statement on Form F-10 with the U.S. SEC.
These factors drove $31.0 billion of additional GMV facilitated using Shopify Payments in 2023 compared to the same period in 2022 , representing growth of 29% year over year. For the year ended December 31, 2023 , the Shopify Payments penetration rate was 58.1% , resulting in GMV of $137.0 billion that was facilitated using Shopify Payments.
These factors drove $67.2 billion of additional GMV facilitated using Shopify Payments in 2025 compared to the same period in 2024, representing growth of 37% year over year. For the year ended December 31, 2025, the Shopify Payments penetration rate was 65.6%, resulting in GMV of $248.1 billion that was facilitated using Shopify Payments.
Given the ongoing cash generated from operations and our existing cash and cash equivalents, we believe there is sufficient liquidity to meet our current and planned financial obligations over the next 12 months and into the foreseeable future.
Excluding current deferred revenue, working capital as of December 31, 2025 was $7.2 billion. Given the ongoing cash generated from operations and our existing cash and cash equivalents, we believe there is sufficient liquidity to meet our current and planned financial obligations over the next 12 months and into the foreseeable future.
The Company evaluates tax positions taken or expected to be taken in the course of preparing tax returns to determine whether the tax positions have met a “more-likely-than-not” threshold of being sustained by the applicable tax authority.
The Company evaluates tax positions taken or expected to be taken in the course of preparing tax returns to determine whether the tax positions have met a “more-likely-than-not” threshold of being sustained by the applicable tax authority. The Company is subject to review and audit by tax authorities around the world, which may lead to adjustments to our tax liabilities.
District Court for the District of Delaware returned a verdict finding that the Company infringed three web technology patents owned by Express Mobile, Inc. and the Company recorded an estimated liability in that period for damages and potential interest of $55 million. The Company filed a post-trial motion for judgment as a matter of law.
District Court for the District of Delaware returning a verdict finding that the Company infringed three web technology patents owned by Express Mobile, Inc.. The Company filed a post-trial motion for judgment as a matter of law.
The paid trial incentives initially launched in the second half of 2022. 48 Table of C ontents Gross Merchandise Volume GMV is the total dollar value of orders facilitated through our platform including certain apps and channels for which a revenue-sharing arrangement is in place in the period, net of refunds, and inclusive of shipping and handling, duty and value-added taxes.
Gross Merchandise Volume GMV is the total dollar value of orders facilitated through our platform including certain apps and channels for which a revenue-sharing arrangement is in place in the period, net of refunds, and inclusive of shipping and handling, duty and value-added taxes. GMV does not represent revenue earned by us.
General and Administrative General and administrative expenses consist of employee-related expenses for finance and accounting, legal, administrative, talent and information technology personnel, impairment related to certain office leases we have ceased using, professional services fees, sales and use tax and other indirect taxes, insurance, the provision for expected credit losses on uncollectible receivables, corporate overhead allocations, legal contingencies and other corporate expenses, including sustainability spend.
While we expect research and development expenses to increase in absolute dollars as we continue to increase the functionality of our platform, over the long term we expect our research and development expenses will decline as a percentage of total revenues. 50 Table of Contents General and Administrative General and administrative expenses consist of employee-related expenses for finance and accounting, legal, administrative, talent and information technology personnel, impairment related to certain office leases we have ceased using, professional services fees, sales and use tax and other indirect taxes, insurance, the provision for expected credit losses on uncollectible receivables, corporate overhead allocations, legal contingencies and other corporate expenses, including sustainability spend.
Total net assets increased $2.5 billion as of December 31, 2024 compared to December 31, 2023, due to the increase of $2.6 billion in total assets and the decrease of $133 million in total liabilities.
Total net assets increased $1.9 billion as of December 31, 2025 compared to December 31, 2024, due to the increase of $1.3 billion in total assets and the decrease of $650 million in total liabilities.
Our merchants represent a wide array of retail verticals, business sizes, and geographies and no single merchant has ever represented more than five percent of our total revenues in a single reporting period.
Our business model is driven by our ability to attract new merchants, retain revenue from existing merchants and increase sales to both new and existing merchants. Our merchants represent a wide array of retail verticals, business sizes and geographies, and no single merchant has ever represented more than five percent of our total revenues in a single reporting period.
We expect that over time general and administrative expenses will decrease as a percentage of total revenues as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business. 51 Table of C ontents Transaction and Loan Losses Transaction and loan losses consist of expected and actual losses related to Shopify Payments, Shop Pay Installments, Shopify Balance and Shopify Capital.
We expect that over time general and administrative expenses will decrease as a percentage of total revenues as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business.
Impairment on Sales of Shopify's Logistics Businesses Impairment on sales of Shopify's logistics businesses consists of impairment charges incurred as the result of the sales of our logistics businesses in 2023. Other Income (Expense) Other income (expense) consists primarily of unrealized and realized gains or losses on equity and other investments, losses on our equity method investment in Flexport, Inc.
(Loss) Gain on Equity and Equity Method Investments (Loss) gain on equity and equity method investments consists primarily of unrealized and realized gains or losses on equity and other investments, gains or losses as a result of our share of the income or loss on our equity method investment in Flexport, Inc.
We are exposed to transaction losses on Shopify Payments, Shop Pay Installments and Shopify Balance as a result of unrecovered merchant transactions due to returns and disputes. We are also exposed to Shopify Balance losses when a merchant account experiences unauthorized transactions where funds cannot be recovered or reversed.
We are also exposed to Shopify Balance losses when a merchant account experiences unauthorized transactions where funds cannot be recovered or reversed. We are exposed to transaction losses on loans and merchant cash advances offered through Shopify Capital as a result of fraud or uncollectibility.
Gross Profit Years ended December 31, 2024 % Change 2023 % Change 2022 (in US $ millions, except percentages) Gross profit 4,472 27 % 3,515 28 % 2,754 Percentage of total revenues 50 % 50 % 49 % 56 Table of C ontents Operating Expenses Sales and Marketing Years ended December 31, 2024 % Change 2023 % Change 2022 (in US $ millions, except percentages) Sales and marketing 1,393 14 % 1,220 (1) % 1,230 Percentage of total revenues 16 % 17 % 22 % Sales and marketing expenses increased for the year ended December 31, 2024 compared to the same period in 2023, due to increases of $84 million in overall marketing program spend primarily related to an increase in performance marketing spend, $68 million in payouts related to our affiliate partner programs and $43 million in employee-related costs, offset by a decrease in severance related costs of $28 million associated with the reduction in workforce in the second quarter of 2023.
Gross Profit Years ended December 31, 2025 % Change 2024 % Change 2023 (in US $ millions, except percentages) Gross profit 5,555 24 % 4,472 27 % 3,515 Percentage of total revenues 48 % 50 % 50 % 54 Table of Contents Operating Expenses Sales and Marketing Years ended December 31, 2025 % Change 2024 % Change 2023 (in US $ millions, except percentages) Sales and marketing 1,663 19 % 1,393 14 % 1,220 Percentage of total revenues 14 % 16 % 17 % Sales and marketing expenses increased for the year ended December 31, 2025 compared to the same period in 2024, due to increases of $242 million in overall marketing program spend and $41 million in employee-related costs, offset by a $15 million decrease in payouts related to our affiliate partner programs.
General and Administrative Years ended December 31, 2024 % Change 2023 % Change 2022 (in US $ millions, except percentages) General and administrative 410 (16) % 491 (31) % 708 Percentage of total revenues 5 % 7 % 13 % General and administrative expenses decreased for the year ended December 31, 2024 compared to the same period in 2023, due to a reversal of an estimated legal liability of $55 million recorded in the second quarter of 2024, impairment expenses of $38 million incurred relating to certain office locations we ceased using in the third quarter of 2023 and severance related costs of $18 million associated with the reduction in workforce in the second quarter of 2023, offset by increases in indirect taxes of $20 million and employee-related costs of $6 million in 2024. 57 Table of C ontents General and administrative expenses decreased for the year ended December 31, 2023 compared to the same period in 2022, due to $97 million in legal expenses incurred in the third quarter of 2022, a decrease of $70 million in employee-related costs and a decrease of $46 million in impairment related costs associated with right-of-use assets and leasehold improvements.
General and Administrative Years ended December 31, 2025 % Change 2024 % Change 2023 (in US $ millions, except percentages) General and administrative 471 15 % 410 (16) % 491 Percentage of total revenues 4 % 5 % 7 % General and administrative expenses increased for the year ended December 31, 2025 compared to the same period in 2024, due to a reversal in the second quarter of 2024 of a previously recorded estimated legal liability of $55 million and an increase of $13 million for impairment related costs associated with right-of-use assets and leasehold improvements, offset by a decrease of $17 million in indirect taxes.
("Flexport"), transaction gains or losses on foreign currency, interest income and interest expense related to Shopify's convertible senior notes. Equity and other investments in publicly traded companies with readily determinable fair values are carried at fair value at each balance sheet date based on the closing share price at the end of the period.
("Flexport") and loss on the embedded derivative held to settle our previously issued convertible senior notes (the "Notes") in the fourth quarter of 2025. Equity and other investments in publicly traded companies with readily determinable fair values are carried at fair value at each balance sheet date based on the closing share price at the end of the period.
We principally generate merchant solutions revenues from payment processing fees and currency conversion fees from Shopify Payments. Shopify Payments is a fully integrated payment processing service that allows our merchants to accept and process payment cards online and offline.
We principally generate merchant solutions revenues from payment processing fees and currency conversion fees from Shopify Payments. Shopify Payments is a fully integrated payment solution.
In addition, during the year ended December 31, 2024, the Company performed a U.S. state tax sourcing analysis that resulted in a change to our U.S. state tax apportionment. This also resulted in a reduction in deferred tax assets, including unused non-capital tax losses, that were fully offset by a valuation allowance.
In addition, during the year ended December 31, 2024, the Company performed a U.S. state tax sourcing analysis that resulted in a change to our U.S. state tax apportionment.
The results from these equity and debt investments may fluctuate from period to period and may cause volatility to our earnings as well as impact comparability of our results from period to period. 52 Table of C ontents Results of Operations The following table sets forth a summary of our condensed consolidated statement of operations for the years ended December 31, 2024, 2023 and 2022: Years ended December 31, 2024 2023 2022 (in US $ millions, except share and per share amounts) Revenues Subscription solutions $ 2,350 $ 1,837 $ 1,488 Merchant solutions 6,530 5,223 4,112 8,880 7,060 5,600 Cost of revenues (1)(2) Subscription solutions 434 354 331 Merchant solutions 3,974 3,191 2,515 4,408 3,545 2,846 Gross profit 4,472 3,515 2,754 Operating expenses Sales and marketing (1)(2)(3) 1,393 1,220 1,230 Research and development (1)(2)(3) 1,367 1,730 1,503 General and administrative (1)(3)(4)(5) 410 491 708 Transaction and loan losses 227 152 135 Impairment on sales of Shopify's logistics businesses — 1,340 — Total operating expenses 3,397 4,933 3,576 Income (loss) from operations 1,075 (1,418) (822) Other income (expense), net 1,153 1,603 (2,801) Income (loss) before income taxes 2,228 185 (3,623) (Provision for) recovery of income taxes (209) (53) 163 Net income (loss) 2,019 132 (3,460) Net income (loss) per share attributable to shareholders: Basic $ 1.57 $ 0.10 $ (2.73) Diluted $ 1.55 $ 0.10 $ (2.73) Shares used to compute net income (loss) per share attributable to shareholders: Basic 1,289,812,124 1,281,554,559 1,266,268,155 Diluted 1,301,509,980 1,295,511,385 1,266,268,155 53 Table of C ontents (1) Includes stock-based compensation expense and related payroll taxes as follows: Years ended December 31, 2024 2023 2022 (in US $ millions) Cost of revenues 4 4 9 Sales and marketing (a) 50 59 65 Research and development (a) 303 497 396 General and administrative 96 76 93 453 636 563 (a) Includes accelerated stock-based compensation of $5 million and $164 million in sales and marketing and research and development, respectively, during the year ended December 31, 2023.
Other Income Other income consists of the interest income, net transaction gains or losses on foreign currency and interest expense related to the Notes. 51 Table of Contents Results of Operations The following table sets forth a summary of our condensed consolidated statement of operations for the years ended December 31, 2025, 2024 and 2023 For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024: Years ended December 31, 2025 2024 2023 (in US $ millions, except share and per share amounts) Revenues Subscription solutions 2,752 2,350 1,837 Merchant solutions 8,804 6,530 5,223 11,556 8,880 7,060 Cost of revenues (1)(2) Subscription solutions 520 434 354 Merchant solutions 5,481 3,974 3,191 6,001 4,408 3,545 Gross profit 5,555 4,472 3,515 Operating expenses Sales and marketing (1)(2)(3) 1,663 1,393 1,220 Research and development (1)(2)(3) 1,536 1,367 1,730 General and administrative (1)(3)(4)(5) 471 410 491 Transaction and loan losses 417 227 152 Impairment on sales of Shopify's logistics businesses — — 1,340 Total operating expenses 4,087 3,397 4,933 Income (loss) from operations 1,468 1,075 (1,418) Net (loss) gain on equity and equity method investments (6) (316) 853 1,361 Other income, net 357 300 242 Income before income taxes 1,509 2,228 185 Provision for income taxes (278) (209) (53) Net income 1,231 2,019 132 Net income per share attributable to shareholders: Basic $ 0.95 $ 1.57 $ 0.10 Diluted $ 0.94 $ 1.55 $ 0.10 Shares used to compute net income per share attributable to shareholders: Basic 1,298,955,860 1,289,812,124 1,281,554,559 Diluted 1,304,953,255 1,301,509,980 1,295,511,385 52 Table of Contents (1) Includes stock-based compensation expense and related payroll taxes as follows: Years ended December 31, 2025 2024 2023 (in US $ millions) Cost of revenues 4 4 4 Sales and marketing (a) 48 50 59 Research and development (a) 334 303 497 General and administrative 98 96 76 484 453 636 (a) Includes accelerated stock-based compensation of $5 million and $164 million in sales and marketing and research and development, respectively, during the year ended December 31, 2023.
BarkBox, Vuori, BevMo, Carrier, JB Hi-Fi, Meta, ButcherBox, SKIMS and Supreme are a few of our notable merchants seeking a reliable, cost-effective and scalable commerce solution. The flexibility of our pricing plans is designed to help our merchants grow in a cost-effective manner and to provide more advanced features and support as their business needs evolve.
The flexibility of our pricing plans is designed to help our merchants grow in a cost-effective manner and to provide more advanced features and support as their business needs evolve.
Our MD&A is intended to enable readers to gain an understanding of Shopify's results of operations, cash flows and financial position. To do so, we provide information and analysis comparing our results of operations, cash flows and financial position for the most recently completed period with the same period from the preceding fiscal year.
To do so, we provide information and analysis comparing our results of operations, cash flows and financial position for the most recently completed period with the same period from the preceding fiscal year. We also provide analysis and commentary that we believe will help investors assess our future prospects.
Investments that qualify for the equity method of accounting treatment are carried at the Company’s investment amounts and adjusted each period for the Company’s share of the investee’s income or loss and amortization of the basis difference, which is the difference between the fair value of our investment in the company and the underlying equity in the net assets of the investee.
Investments that qualify for the equity method of accounting treatment are carried at the Company’s investment amounts and adjusted each period for the Company’s share of the investee’s income or loss and amortization of the basis difference, which is the difference between the fair value of our investment in the company and the underlying equity in the net assets of the investee. 62 Table of Contents The Company assesses its equity and other investments in private companies and equity method investment for impairment through analyzing market conditions, business results and other qualitative measures that indicate that the carrying amount of the investment may be impaired, and the decline in value below the carrying amount is determined to be other than temporary.
The following table shows MRR and GMV for the years ended December 31, 2024, 2023 and 2022: Years ended December 31, 2024 2023 2022 (in US $ millions) Monthly Recurring Revenue 178 144 109 Gross Merchandise Volume 292,275 235,910 197,167 Monthly Recurring Revenue We calculate MRR at the end of each period by multiplying the number of merchants who have subscription plans with us at the period end date by the average monthly subscription plan fee, which excludes variable platform fees, in effect on the last day of that period, assuming they maintain their subscription plans the following month.
The following table shows MRR and GMV for the years ended December 31, 2025, 2024 and 2023: Years ended December 31, 2025 2024 2023 (in US $ millions) Monthly Recurring Revenue 205 178 144 Gross Merchandise Volume 378,441 292,275 235,910 47 Table of Contents Monthly Recurring Revenue MRR is the aggregate value of all subscription plans, excluding variable platform fees, in effect on the last day of the period, assuming merchants maintain their subscription the following month.
Building a 100-year company requires a balance between growth and profitability, and we maintain a portfolio of investments with varying time horizons in our cash management program. 47 Table of C ontents Key Performance Indicators Our key performance indicators, which we do not consider to be non-GAAP measures, that we use to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions are MRR and GMV.
Key Performance Indicators Our key performance indicators, which we do not consider to be non-GAAP measures, that we use to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions are MRR and GMV.
For the year ended December 31, 2024 we facilitated GMV of $292.3 billion (December 31, 2023 - $235.9 billion, December 21, 2022 - $197.2 billion ), representing year-over-year growth 24% (2023 vs 2022 - 20%). In 2024, o ver 57% of our GMV was generated in the United States.
For the year ended December 31, 2025 we facilitated GMV of $378.4 billion (December 31, 2024 - $292.3 billion, December 31, 2023 - $235.9 billion), representing year-over-year growth 29% (2024 vs 2023 - 24%).
Over time, we expect that our subscription solutions gross margin percentage will fluctuate modestly based on the mix of subscription plans that our merchants select and the timing of expenditures related to infrastructure expansion projects. 50 Table of C ontents Cost of Merchant Solutions Cost of merchant solutions primarily consists of costs that we incur when transactions are processed using Shopify Payments, such as credit card network fees (charged by credit card providers such as Visa, Mastercard and American Express) as well as third-party processing fees.
Cost of Merchant Solutions Cost of merchant solutions primarily consists of costs that we incur when transactions are processed using Shopify Payments, such as credit card network fees (charged by credit card providers such as Visa, Mastercard and American Express) as well as third-party processing fees.
We view this revenue stream as beneficial to our operating margins, as Shopify Payments requires significantly less sales and marketing and research and development expense than Shopify’s core subscription business. The lower margins on merchant solutions compared to subscription solutions means that the continued growth of merchant solutions may cause a decline in our overall gross margin percentage.
We view this revenue stream as beneficial to our operating margins, as Shopify Payments requires significantly less sales and marketing and research and development expenses than Shopify’s core subscription business.
As a result of this decision, in the second quarter of 2024, the Company reversed the previously recorded liability within "General and administrative" in the condensed consolidated statement of operations and comprehensive income (loss), as a loss contingency was no longer considered probable.
Litigation and Loss Contingencies During the year ended December 31, 2024, the Company reversed the previously recorded liability of $55 million within "General and administrative" in the consolidated statement of operations and comprehensive income, as a loss contingency was no longer considered probable. The initial recognition of the liability in 2022 related to a jury in the U.S.
Additional funds may not be available on terms favorable to us or at all. 63 Table of C ontents Cash, Cash Equivalents and Marketable Securities Cash, cash equivalents and marketable securities increased by $471 million to $5.5 billion as of December 31, 2024 from $5.0 billion as of December 31, 2023, primarily as a result of cash provided by our operations partially offset by the purchase and origination of loans, net of repayments and the purchase of equity and other investments.
Cash, Cash Equivalents and Marketable Securities Cash, cash equivalents and marketable securities increased by $299 million to $5.8 billion as of December 31, 2025 from $5.5 billion as of December 31, 2024, primarily as a result of cash provided by our operations and proceeds from the exercise of stock options, partially offset by the settlement of the Notes, the purchase and origination of loans, net of repayments, and the purchase of equity and other investments.
Fluctuations in foreign currencies relative to the USD may impact identified quarterly and yearly trends. Quarterly Operating Expenses Trends Excluding the events described below and outlined in the tables above, prior to the second quarter of 2023 operating expense growth was relatively steady.
Fluctuations in foreign currencies relative to the USD may impact identified quarterly and yearly trends. Quarterly Operating Expenses Trends Excluding the items outlined in the tables above, operating expenses have increased in connection with revenue and operations growth.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeTo help mitigate the impacts associated with foreign currency fluctuations on future cash flows from operating expenses, we maintain a portfolio of foreign exchange derivative products designated as hedging instruments. 67 Table of C ontents Effect of Foreign Exchange Rates The following non-GAAP financial measures convert our revenues, cost of revenues, operating expenses and income (loss) from operations in the current reporting period using the comparative prior year period's monthly average exchange rates: Years ended December 31, 2024 2023 GAAP Amounts as Reported Exchange Rate Effect (2) At Prior Year Effective Rates (1) GAAP Amounts as Reported (in US $ millions) Revenues 8,880 5 8,885 7,060 Cost of revenues (4,408) (5) (4,413) (3,545) Operating expenses (3,397) (22) (3,419) (4,933) Income (loss) from operations 1,075 (22) 1,053 (1,418) (1) Represents the outcome that would have resulted if the comparative prior year period's effective foreign exchange rates are applied to the current reporting period.
Biggest changeEffect of Foreign Exchange Rates The following non-GAAP financial measures convert our revenues, cost of revenues, operating expenses and income (loss) from operations in the current reporting period using the comparative prior year period's monthly average exchange rates: Years ended December 31, 2025 2024 GAAP Amounts as Reported Exchange Rate Effect (1) At Prior Year Effective Rates (2) GAAP Amounts as Reported (in US $ millions) Revenues 11,556 (49) 11,507 8,880 Cost of revenues (6,001) 20 (5,981) (4,408) Operating expenses (4,087) (7) (4,094) (3,397) Income from operations 1,468 (36) 1,432 1,075 (1) Represents the increase or decrease in GAAP amounts reported resulting from using the comparative year's effective foreign exchange rates.
GAAP, do not have standardized meanings and may not be comparable to similar measures presented by other public companies. Such non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with U.S. GAAP.
GAAP, do not have standardized meanings and may not be comparable to similar measures presented by other public companies. Such non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with U.S.
Item 7A: Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks, as discussed in Note 3 in our consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2024.
Item 7A: Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks, as discussed in Note 3 in our consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2025.
These investments are classified as available-for-sale debt securities, for which we have elected to account for under the fair value option. These investments are carried at fair value at each balance sheet date and any movements in the fair value are recognized in "Net income (loss)" in the consolidated statement of operations and comprehensive income (loss).
These investments are classified as available-for-sale debt securities, for which we have elected to account for under the fair value option. These investments are carried at fair value at each balance sheet date and any movements in the fair value are recognized in "Net income" in the consolidated statements of operations and comprehensive income.
The results from these changes may fluctuate from period to period and may cause volatility to our earnings as well as impact comparability of our results from period to period. Interest Rate Risk We had cash, cash equivalents and marketable securities in our cash management program totaling $5.5 billion as of December 31, 2024.
The results from these changes may fluctuate from period to period and may cause volatility to our earnings as well as impact comparability of our results from period to period. Interest Rate Risk We had cash, cash equivalents and marketable securities in our cash management program totaling $5.8 billion as of December 31, 2025.
Our marketable securities greater than one year, and less than 3 years, representing $708 million of our investments as of December 31, 2024, are recorded at carrying value and any changes in the fair value due to the interest rate are not recorded until the investment is sold as they are classified as "held to maturity".
Our marketable securities greater than one year, and less than 3 years, representing $975 million of our investments as of December 31, 2025, are recorded at carrying value and any changes in the fair value due to the interest rate are not recorded until the investment is sold as they are classified as "held to maturity".
Our equity investments in private companies, representing $717 million of our investments as of December 31, 2024, are recorded using the measurement alternative and are assessed each reporting period for observable price changes and impairments, which may involve estimates and judgments given the lack of readily available market data.
Our equity investments in private companies, representing $963 million of our investments as of December 31, 2025, are recorded using the measurement alternative and are assessed each reporting period for observable price changes and impairments, which may involve estimates and judgments given the lack of readily available market data.
The underlying entity's valuation includes inputs such as interest rates which impact the market value of the investment. 69 Table of C ontents Concentration of Credit Risk The Company’s cash and cash equivalents, marketable securities, trade and other receivables, loans, merchant cash advances and foreign exchange derivative instruments subject the Company to concentrations of credit risk.
The underlying entity's valuation includes inputs such as interest rates which impact the market value of the investment. Concentration of Credit Risk The Company’s cash and cash equivalents, marketable securities, trade and other receivables, loans, merchant cash advances and foreign exchange derivative instruments subject the Company to concentrations of credit risk.
Our equity method investment in Flexport, representing $642 million of our investments as of December 31, 2024, is subject to market-related risks based on our share of income or loss, including amortization of the basis difference, from this investment which may cause volatility to our earnings.
Our equity method investment in Flexport, representing $602 million of our investments as of December 31, 2025, is subject to market-related risks based on our share of income or loss, including amortization of the basis difference, from this investment which may cause volatility to our earnings.
Our investment option derivative to purchase Series B common shares in Klaviyo, representing $204 million of our investments as of December 31, 2024, is impacted by market price volatility and interest rates.
Our investment option derivative to purchase Series B common shares in Klaviyo, representing $75 million of our investments as of December 31, 2025, is impacted by market price volatility and interest rates.
Our debt investments in convertible notes of private companies are recorded at fair value represented $543 million of our investments as of December 31, 2024, which are impacted by the underlying entities' valuations and interest rates.
Our debt investments in convertible notes of private companies are recorded at fair value representing $558 million of our investments as of December 31, 2025, which are impacted by the underlying entities' valuations and interest rates.
The following table summarizes the effects on revenues, cost of revenues, operating expenses and income (loss) from operations of a 10% strengthening of all foreign currencies the Company transacts in versus the USD without considering the impact of the Company's hedging activities and factoring in any potential changes in demand for the Company's solutions as a result of fluctuations in exchange rates: Years ended December 31, 2024 2023 GAAP Amounts As Reported Exchange Rate Effect (1)(2) At 10% Stronger Rates (3) GAAP Amounts As Reported Exchange Rate Effect (2) At 10% Stronger Rates (1)(3) (in US $ millions) Revenues 8,880 190 9,070 7,060 125 7,185 Cost of revenues (4,408) (86) (4,494) (3,545) (64) (3,609) Operating expenses (3,397) (104) (3,501) (4,933) (117) (5,050) Income (loss) from operations 1,075 — 1,075 (1,418) (56) (1,474) (1) A 10% weakening of the foreign currencies versus the USD would have an equal and opposite impact on the Company's revenues, cost of revenues, operating expenses and income (loss) from operations as presented in the table.
GAAP. 64 Table of Contents The following table summarizes the effects on revenues, cost of revenues, operating expenses and income from operations of a 10% strengthening of all foreign currencies the Company transacts in versus the USD without considering the impact of the Company's hedging activities and factoring in any potential changes in demand for the Company's solutions as a result of fluctuations in exchange rates: Years ended December 31, 2025 2024 GAAP Amounts As Reported Exchange Rate Effect (1)(2) At 10% Stronger Rates (3) GAAP Amounts As Reported Exchange Rate Effect (1)(2) At 10% Stronger Rates (3) (in US $ millions) Revenues 11,556 270 11,826 8,880 190 9,070 Cost of revenues (6,001) (124) (6,125) (4,408) (86) (4,494) Operating expenses (4,087) (113) (4,200) (3,397) (104) (3,501) Income from operations 1,468 33 1,501 1,075 — 1,075 (1) A 10% weakening of the foreign currencies versus the USD would have an equal and opposite impact on the Company's revenues, cost of revenues, operating expenses and income (loss) from operations as presented in the table.
However, because we classify our debt securities as "held to maturity", no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other than temporary. In September 2020, we issued $920 million aggregate principal amount of Notes.
However, because we classify our debt securities as "held to maturity", no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other than temporary. The Company holds convertible notes in private companies.
Foreign Currency Exchange Risk While the majority of our revenues, cost of revenues and operating expenses are denominated in USD, a significant portion are denominated in foreign currencies. Due to offering Shopify Payments, Shopify Capital, subscriptions and other billing to select countries in local currency, a significant proportion of revenue transactions are denominated in EUR, GBP and CAD.
Due to offering Shopify Payments, Shopify Capital, subscriptions and other billings to select countries in local currency, a significant proportion of revenue transactions are denominated in EUR, GBP and CAD. A significant proportion of operating expenses are also incurred in the aforementioned foreign currencies.
As of December 31, 2024, we had equity and other investments in public and private companies and our equity method investment totaled $5.3 billion. Our equity and other investments with readily determinable fair values, representing $3.1 billion of our investments as of December 31, 2024, are recorded at fair value, which is subject to market price volatility.
Our equity and other investments with readily determinable fair values, representing $3.0 billion of our investments as of December 31, 2025, are recorded at fair value, which is subject to market price volatility.
If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
Inflation Risk We are subject to inflation risk that could have a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.
Furthermore, our merchants are also subject to risks associated with inflationary pressures that could impact their business and financial condition. These pressures could subsequently result in impacts to our GMV and further affect our business, particularly if economic growth has slowed across many of the regions in which we operate.
These pressures could subsequently result in impacts to our GMV and further affect our business, particularly if economic growth has slowed across many of the regions in which we operate.
(3) Represents the outcome that would have resulted had the foreign exchange rates relative to the USD in those periods been 10% stronger than they actually were, excluding the impact of our hedging program and without factoring in any potential changes in demand for the Company's solutions as a result of changes in exchange rates. 68 Table of C ontents Equity and Other Investments Risk We hold equity and other investments that are subject to market-related risks that could substantially reduce or increase the fair value of our holdings.
(3) Represents the outcome that would have resulted had the foreign exchange rates relative to the USD in those periods been 10% stronger than they actually were, excluding the impact of our hedging program and without factoring in any potential changes in demand for the Company's solutions as a result of changes in exchange rates.
The cash and cash equivalents are held for operations and working capital purposes. Our investments within cash, cash equivalents and marketable securities are made for capital preservation purposes. We do not enter into these types of investments for trading or speculative purposes.
The cash and cash equivalents are held for operations and working capital purposes. Our investments within cash, cash equivalents and marketable securities are made for capital preservation purposes.
Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates.
We do not enter into these types of investments for trading or speculative purposes. 65 Table of Contents Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates and macroeconmic conditions.
These risks primarily include foreign currency exchange risk, equity and other investments risk, interest rate risk, concentration of credit risk and inflation risk, as discussed below. We regularly assess these risks to minimize any adverse effects on our business as a result of those factors.
These risks primarily include foreign currency exchange risk, equity and other investments risk, interest rate risk, concentration of credit risk and inflation risk, as discussed below.
A significant proportion of operating expenses are also incurred in the aforementioned foreign currencies. We therefore are subject to foreign currency exchange risk related to these currencies and fluctuations in foreign currency exchange rates.
We therefore are subject to foreign currency exchange risk related to these currencies and fluctuations in foreign currency exchange rates. To help mitigate the impacts associated with foreign currency fluctuations on future cash flows from operating expenses, we maintain a portfolio of foreign exchange derivative products designated as hedging instruments.
(2) Represents the increase or decrease in GAAP amounts reported resulting from using the comparative prior year period's effective foreign exchange rates. The exchange rate effect is primarily driven by fluctuations in CAD, GBP, JPY and EUR foreign exchange rates.
The exchange rate effect is primarily driven by fluctuations in EUR, CAD, GBP and AUD foreign exchange rates. (2) Represents the outcome that would have resulted if the comparative prior year's effective foreign exchange rates are applied to the current reporting period.
Trade and other receivables, loans receivable and merchant cash advances are monitored on an ongoing basis to ensure timely collection of amounts. The Company has mitigated some of the risks associated with Shopify Capital by holding insurance policies with an AAA rated provider as of December 31, 2024.
Trade and other receivables, loans receivable and merchant cash advances are monitored on an ongoing basis to ensure timely collection of amounts. There are no receivables from individual merchants accounting for 10% or more of revenues or receivables.
Removed
The Notes have a fixed annual interest rate of 0.125%; accordingly, we do not have economic interest rate exposure on the Notes. However, the fair market value of the Notes is exposed to interest rate risk. Generally, the fair market value of our fixed interest rate Notes will increase as interest rates fall and decrease as interest rates rise.
Added
We regularly assess these risks to minimize any adverse effects on our business as a result of those factors. 63 Table of Contents Foreign Currency Exchange Risk While the majority of our revenues, cost of revenues and operating expenses are denominated in USD, a significant portion are denominated in foreign currencies.
Removed
In addition, the fair market value of the Notes will generally fluctuate as the price of our Class A subordinate voting shares fluctuates. We carry the Notes at face value less debt offering costs, plus any amortization of offering costs, and we present the fair value for required disclosure purposes only. The Company holds convertible notes in private companies.
Added
Equity and Other Investments Risk We hold equity and other investments that are subject to market-related risks that could substantially reduce or increase the fair value of our holdings. As of December 31, 2025, we had equity and other investments in public and private companies and our equity method investment totaled $5.2 billion.
Removed
The Company pays a monthly premium based on total eligible dollars advanced, and records this as "General and administrative" expense in the consolidated statements of operations and comprehensive income (loss). All policies include a deductible set at either a specified dollar loss threshold or calculated as a percentage of eligible advances issued.
Added
Our inability or failure to do so could harm our business, financial condition and results of operations. Furthermore, our merchants are also subject to risks associated with inflationary pressures that could impact their business and financial condition.
Removed
After considering the Company’s deductible and the insurer's maximum liability under the policies, the majority of the Company's gross outstanding balance of loans and merchant cash advances as of December 31, 2024 is covered. The receivable related to insurance recoveries, if any, is included in "Loans and merchant cash advances, net" in the consolidated balance sheets.
Removed
There are no receivables from individual merchants accounting for 10% or more of revenues or receivables. Inflation Risk We are subject to inflation risk that could have a material effect on our business, financial condition or results of operations.