There's this very funny kind of Shopify folklore from the very early days of Shopify pre-IPO where I was on stage with our first CFO. His name was Russ, and someone asked us at a conference like 2012, 'What happens if Google buys Shopify or something like that?' And without skipping a beat, Russ and I responded and said, 'Well, what if Shopify one day buys Google?' That I think is the audacity that is required to build like generational hundred-year companies. And today, Shopify is the second largest company by market cap in the country. We were for a while the biggest. Well, I'm sure we'll be the biggest again soon. I think you need more role models here.
All right, we're live in the situation room with Harley Finkelstein, who is the president of Shopify. Before that, you were the COO at Shopify and had a whole bunch of roles. You've been there for a bunch of stuff.
Yeah. Almost half my life.
So, Shopify just reported Q1 earnings, and it seems pretty good to me. You're up 35% year-over-year on merchant sales, the second straight quarter over 100 billion. You're up 34% on revenue. You have half a billion in free cash flow, and Wall Street was not happy. The stock is down like 16%. So, what happened there? It seems like good numbers to me.
Very good numbers. Incredible quarter. This is my 43rd earnings call. We took the company public in May 2015. This is incredible strong growth, consistent results, real AI leadership. GMV is amazing. This is our second consecutive quarter of hundred billion dollars or more in GMV. Remember, GMV is like a proxy for the entire business model because the way Shopify is built, we are built on when our merchants do better, we do better. Q1 is generally a seasonally not as good of a quarter as Q4, not just for Shopify, but for retail in general. So hitting that was pretty amazing. That was actually our 11th consecutive quarter of GMV growth above 20%. And then revenue, we had our 12th consecutive quarter of 25% or more topline growth, that was about 3.2 billion. And then free cash flow is about as you said, about half a billion dollars. So 15% of revenue, in line with expectations. So we kind of beat across the board there. In terms of how the stock reacts, I try to kind of take a much longer term view of it after 43 quarters or so. I think the key is like build the greatest company, build the most amount of products, deliver disproportionate value to the people you serve, and make sure you have a business model that allows you to grow top line and bottom line in kind of this compounding way. And I'm really, really proud of these results.
Yeah, it seems like great stuff. You've talked about building a hundred-year company, making Shopify into a hundred-year company. Almost China pill, you know, they're always thinking about building the nation over the next century. They can't own the entire brand of a century like tenure or longevity. So let's take that back if we can. But yeah, look, I think when you add the lens of a hundred-year company, and I think you've heard me say this and certainly Toby talks about this too,
It allows you to make much better decisions much longer term. And I think you begin to just think differently about products, about pricing, about markets. It's sort of the opposite of pulling future profits back at a discount. We went public at a billion dollar market cap or so. We're currently sitting at a 150 or so billion dollar market cap, give or take. I think that our thinking in this idea of like a 100 years, and we're 20 years in, so we got 80 years left to go, and it just allows, it's a really important heuristic and philosophy that allows us to make better decisions.
We'll continue monitoring right after this message from our sponsors. This episode is brought to you by Merge, the connective layer for production AI. Look, I DoorDash Chipotle probably more than I should. And the thing I've come to appreciate is that I never think about what's happening behind the scenes. I tap a few buttons and a burrito shows up. That's the bar. That's exactly the problem with building AI agents right now. The hardest part isn't the agent itself. It's everything around it. Connecting to the tools your team and customers rely on, letting agents take action with the right permissions, and keeping everything reliable and cost-efficient once you're in production. Merge handles all of that for you. It connects agents to thousands of tools, handles permissions and LLM routing, and lets teams move faster without building it all themselves. OpenAI, Dropbox, and RAMP use Merge to move fast and build AI right. Visit merge.dev/mts to start building for free.
Quick word from our friends at AdQuick. I'm just trying to monitor the situation online as much as I can. Between the pop-ups, the autoplay video ads, and the sponsored posts, it's a miracle any of us see anything at all. That's why marketers are turning back to out of home. AdQuick unlocks the benefits of out of home advertising in a way no one else has. It's built for marketers with the engineering excellence you've come to expect from the internet. Out of home is one of the best ways to build brand awareness, to reach new customers, and reinforce your brand message. It's just been hard to scale. With AdQuick, you can plan, deploy, and measure campaigns as easily as digital ads. Buy from 1,700 plus media owners in one place. Modernize your marketing at adquick.com. That's adquick.com.
This episode is brought to you by Macroscope. The last time I went to San Francisco, I found that I couldn't go anywhere, even to the coffee shop, without hearing some founder talk about how they're shipping faster than ever. What they're not saying is that nobody on the team actually knows what got shipped, who shipped it, or whether it's about to break something in production. Macroscope is the AI codebase understanding company, and they fix that. They have three core products. The first one is status, the best way to understand what's happening at your company and what all your engineers and agents are shipping. The second one is code review. All this extra code being shipped needs a robust defense layer. Macroscope is the highest signal code reviewer with the least noise. The third is agent, a single layer of intelligence that synthesizes all the tools in your stack, issue management systems, code, docs, logs, and more, and answers questions, takes actions, and automates workflows for your team. Like an omniscient, always-on, uber-capable senior engineer plus a product manager plus a TPM plus ops person that helps your team be 10 times more productive. Head to macroscope.com/mts to get started. That's macroscope.com/mts.
So like concretely, what does that mean? Like what decisions do you think you have made differently on product or anything really given your orientation for a hundred years?
Let's look at merchant solutions. Something that people don't realize is that if you were to pretend for a moment that Shopify was a single retailer, so you aggregate the millions of stores, we would be the second largest online retailer in America. We'd be the second largest checkout in America. So years ago, we began to kind of think about, okay, if we're the second largest retailer in America, we get these massive economies of scale. What can we do with those economies of scale? And I think the way that we sort of looked at it was we're now able to go ahead and take things that every business needs of all sizes and negotiate on their behalf, build products on their behalf. So merchant solutions came up I think around actually the time of the IPO. We began to build out things like Shopify Payments, then Shopify Capital, now we're doing some advertising, we did some shipping for a bit although we now have partnered with other companies who are doing shipping much better than we ever did. But we began to kind of think about what else can we do kind of horizontally to make it so that you are better positioned on Shopify than any other platform because effectively when you combine a bunch of tiny little lights you get the sun is sort of the metaphor. And all of those are in different stages of development. And I think other companies would have just kind of like gone out as fast as possible, got those to market, stuffed those down the throats of their customers and tried to get rewards. Instead, we're like, okay, let's build the greatest capital product for this segment in this geography. Once that's done, let's then move to a different geography. And even things like advertising for example, our advertising product, we have campaigns, we have Shop, and we're beginning to ensure that the merchants that use each merchant solution of Shopify, it doesn't just become a new feature of their business, it becomes a core element of their day-to-day operations. Another example is probably Sidekick, which I think is probably one of the most exciting areas of Shopify. It is effectively this tool that we built, this intelligent assistant that we built for our merchants. The proof points are insane. Like merchants are loving it. Usage is up like 4x year-over-year. It knows everything about your business, knows everything about Shopify, about the industry. And it actually helps you with like personalized intelligence about how to make money from that. I think I got two questions today about, you know, how do we monetize that directly on the call? And my answer was something like, well, look, if merchants are making better decisions and they're growing faster and they're making less errors or mistakes, then ultimately they're going to be way more successful way faster and our business model allows us to share in that upside. And that I think is the main difference between companies that are thinking in decades or centuries versus companies that are thinking quarter to quarter. And I think the net net result of it is that there's real alpha with Shopify. This is like 20 years of commerce context. And we're able to help merchants get much bigger, much faster. I mentioned Grüns on the call, which do you know that company? Grüns.
Crazy story. So, they built a store.
I do know this. I do know this. I've seen their Instagram ads, I think.
So, 2023 built a store on Shopify. They're doing like nine figures in revenue and they just got acquired last week by Unilever for a billion bucks. That velocity of growth in commerce and retail frankly has never been seen before and it's happening on Shopify every single day. So I don't know, those are some of the things that we're doing to ensure that we are building like the global commerce platform long term.
We'll continue monitoring right after this message from our sponsors. You're in back-to-back meetings all day. You're trying to monitor the situation. You're nodding like you're following along. But somewhere in the back of your head, a little voice is screaming, 'What was the action item? Did I agree to something? Whose dog was that on the call?' That's where Granola comes in. Granola is an AI-powered notepad for meetings. You jot down whatever messy notes you take anyway, and in the background, Granola is quietly turning it all into something a real adult would write. No bots crashing your calls, no distractions, just a clean little notepad that does the heavy lifting so you can focus. During or after the call, you can actually chat with your notes. Ask Granola to pull out action items, help you negotiate your next raise, draft a follow-up email, or coach you through a tough conversation using recipes from Matt Machari, Lenny Rachitsky, and others. It's the same tech we use to make our podcast notes. Try it once and going back to your old system feels deranged. Head to granola.ai/MTS and get three months free with the code granola.ai/MTS. That's granola.ai/mts.
At every founder dinner in SF, everyone's talking about models and data. Nobody's talking about the real bottleneck in AI adoption. It's the connective tissue, the layer between your models, agents, APIs, and context. Kong gives you the platform to power and govern that connectivity. The control tower that governs your traffic, cuts your cost, and sets guardrails for agent-to-agent interactions. Without it, you're not monitoring the situation. The situation is monitoring you. The infra decisions you make in the next 12 months decide whether you're shipping in the agentic era or posting through it from the sidelines. Because when AI traffic scales 100x, the companies without proper connectivity and governance don't just slow down, they can't function at all. Kong manages all of your AI traffic in motion, giving you the full picture regardless of traffic type and adding a governance layer regardless of model, agent, or architecture. Fortune 500s run on it. AI native startups ship on it. If you're serious about AI, visit konghq.com.
At MTS, we are always monitoring the situation in enterprise software. And right now the situation is this. When AI code generation first emerged in 2022, NVIDIA master inventor and Harvard engineer Sid Pardeshi took a contrarian stance. Inference time compute and agent orchestration, not pre-training, would be the key to unlocking high-quality AI-driven software development in the enterprise. He believed the real breakthrough wasn't in how fast AI could generate code, but in how deeply it could reason to build enterprise-grade applications. While the rest of the world focused on co-pilots, he architected something fundamentally different. The first autonomous software development platform leveraging thousands of agents that is purpose-built for enterprise-scale code bases. Blitzy is unlocking 5x engineering velocity and delivering months of engineering work in a matter of days for Fortune 500 leaders right now. Transform the way you develop software. Discover how at blitzy.com. That's blitzy.com.
So Shopify is roughly the only big tech company in all of Canada, you know, a country of 40 million people as big as California, which has hundreds of them.
