Shopify's Harley Finkelstein on 29% GMV growth to $378B and building rails for agentic commerce

Definitely.

We got Harley

in the waiting room. Let's bring him in

to the TV. Harley, how you doing,

gentlemen? Great to be here as always. Love being here on earnings day.

Yeah, always good to have you. Great to have you back.

Uh yeah, give us the update on earnings and then I want to dig into, you know, what you can tell us about the economy broadly, 2025, the jobs numbers, everything about what's happening in the world, help us understand it.

All right, let's go. All right, let's start with the headlines. Um,

last time uh we were on together, I think it was Black Friday, Cyber Monday. It was I think I came to you live from the middle of the national retail or maybe it was it was January actually national retail federation and I told you that uh you asked about how things are with Shopify I said wait for the earnings. So

uh so here are the earnings we we announced earlier this morning. GMBB was up 29% to $370 billion which is

incredible. Revenue was up 30% to 11.5 billion which is a decade of growth of over 20%.

The number that actually is I've been in Shopify for almost half my life. Um, and this number is I know it hits hard, which is that we now power more than 14% of the entire US e-commerce market, which is uh which is

you guys did the you did the 1% of the TAM meme and then you 14xed it.

That's exactly that's exactly right. Um, and uh and actually, you know, one of the cool parts is that we also did it with I think with incredible discipline. Uh cash flow for the year was about $2 billion for 20 uh 2025. Beyond that, one of the things that I think uh I'm certainly most proud of is that we really spent kind of 2025 building the rails for AI shopping and we we did things like announce the universal commerce protocol that we co-developed with Google which effectively means that every single brand will be able to sell on every major AI platform with our aentic storefronts and we have partnerships with chatbt, Google Gemini, AI mode and Microsoft co-pilot. Um, and so I think if you if you kind of think about 2025 is the year that we kind of laid the rails for Aentic. I think 2026 is the year that we scale what runs on them. And um, and so that I think is is really incredible. Back to what we were talking about at NRF, we're talking about some of the brands and and how the velocity of growth. We can talk about consumer as well, but just in terms of the merchants entrepreneurs we see, I I'm beginning to think that 2026 is is really going to be kind of year one for this next generation of these billion dollar brands. I think there's going to be more billion dollar brands created in the next 10 years than the last 100 years. And um and in terms of, you know, if you're looking for kind of a proxy for how the consumer is doing, I mean, we we talked, you know, we talked during BFCM, of course, we did that um you know, I sort of became a a couple of hours exactly. Um but look, GMV for the quarter was 124 billion. I mentioned, you know, for the year was almost $400 billion. And so if you if you think about that as a as a proxy for, you know, how consumers are doing, consumers are buying. They're buying from brands they love. They're being incredibly thoughtful about where they're spending their dollars. But for the brands that they care about, they're voting with their wallets to support them.

Uh talk about agentic commerce. Is there any activity that's happening yet? Is the uh ads launch from ChachiPT going to be an important moment in driving that? uh what are you looking forward to this quarter in terms of agentic?

So we do have some merchants live already uh merchants like Glossier, Spanx, Viori, Stanley, Steve Madden already live. Actually if you just look from Jan 2025 to Jan 2026, we actually have seen um approximately um AI searches. So if you look at your Shopify admin in terms of sources, it's up like 15x. It's still very early, but it's certainly beginning to evolve. And one of the things that we're trying to do for the merchants on Shopify is that if you're with us, you can sell everywhere commerce is happening, whether that's online or offline or certainly on on Agentic. And I I think, you know, you guys have discussed this many times, but I think there's going to be a bunch of like there's going to be a bunch of diff different permutations of exactly how Agentic Commerce evolves. What we're doing is we're preparing for whichever path wins. Shopify is going to be well set up there. Um, in terms of ads, I mean, that's not, you know, ads are not a new thing. I think ads have always been part of the commerce experience in some form, sort of natural evolution. I think consumers expect this. I think the key though is going to be there has to be a clear distinction between kind of ads and organic content. Um, and so far that's what we're seeing as well. But generally and and you know I I think you know we're in the early stage of 2026 but it does certainly feel like there is a massive I know you were talking earlier about you know how a bunch of young people became kind of drop shippers based on certain influence.

In many ways it does feel like there are more people starting businesses but the velocity of those businesses is just insane right now. And and like because like they can access global markets like right away. They have incredible resources. Yeah, it feels like a really really important time to be an entrepreneur right now and a very exciting time.

Yeah. What's the moat for DTOC entrepreneurs? Is it changing? Is it brand? Is it distribution? Marketing chops?

I mean, look, I I think let me I'll give you a quick example. We launched Shopify Sidekick um about a year ago or so, which is our we we sort of call it your your co-founder. It lives inside of Shopify. It knows everything about your business and everything about commerce and Shopify. We added to this thing called Shopify Pulse recently, which is this new feature that effectively it proactively helps merchants grow their business. It works in the background. It surfaces like these tailored recommendations for things you can do to grow your business and then if you agree to them, it actually goes and executes. I heard this story last week of a of a jewelry merchant who was actually who got a recommendation from Pulse to rather than having four separate SKUs to actually bundle them into a stack and create a bundle. And immediately that that particular merchant like immediately saw more sales happen.

If you are meeting these great merchants with great ambition and great products and adding this like personalized data analysis with great intelligence, I don't know it it's it's bespoke, it's intuitive, but it it really will allow more of these direct to consumer brands to access I think more customers and this idea of you know like initially it was like online only for DTC then it was like let's try offline as well have online and offline working simultaneously. It feels like we've evolved well past that that and this is kind of what we're doing at Shoplet which is that regardless of where consumers are spending their time make it really easy for merchants and entrepreneurs to access those markets and simple something as simple as like the agentic storefronts where with a couple clicks you can push products to chat GBT and to Gemini that's only going to increase the velocity even further. uh SAS Apocalypse. How are you guys? Uh I I'm just going to say the word uh that that's been on everybody's mind the last like, you know, 10 days or so or 10 months if if for for kind of our corner of the internet. I look at Shopify, it's a system of record, it's payments, it's a cons, you know, consumer buying network. it's battle tested infrastructure that uh that needs to be you know have you know insane uptime like I don't see the I don't see the vibe coding risk at all but how are you guys answering that uh kind of question uh with analysts

yeah it it's look I I we did our call this morning 8:30 and um we basically have been with analysts and investors the entire day the question does come up I mean first of all let me just say this um people have been underestimating Shopify pretty pretty much since day one we've sort of made it a habit of proving them wrong which is which is kind of fun. I think a couple things. I think AI for on the agentic side, I think AI will change how people discover products and potentially even how they buy.

That's what we're building for. We are building for these agentic storefront experiences and and making sure tools like Sidekick make it so that if you're on Shop, you're just better positioned.

Mhm.

But, you know, the the truth is like AI is going to rewrite interfaces.

It's not it will not rewrite the transaction contract. And and one of the things that we've been building on Shopify, you know, everyone talks about the online store, like your, you know, the the e-commerce component of Shopify. The killer feature of Shopify for a very long time has actually been the back office, the retail operating system. That's where you go to do inventory and and you do taxes and you do analytics and reporting. You launch marketing campaigns and you create loyalty and you do payment authorizations and fraud prevention. Ultimately, I think the companies that are going to continue to do really well, notwithstanding some of this vibe coding, the ones that will do well will be the ones that are system of records, the ones that are actually operating like operating systems and and you know that's that's Shopify. Yeah. And some other companies. Yeah.

Yeah. But just jumping in like I do think that there when when uh throughout my history, you know, being being a Shopify, you know, customer and and user over the years, I would be if I was operating like a tiny Shopify plugin that one engineer had built and they were charging $30 a month, I would be a little bit worried about vibe coding because I do remember in throughout history using a plugin where I was like, "Okay, this is a nice little feature that I can bolt on and I'm happy to pay for this because it doesn't make sense for me to go hire an engineer to build some custom uh you know yeah whatever whatever that is so I think

but again that is a that is a uh that's a tailwind for Shopify as a platform because you have the system of record and it's like hey now we can allow you to add these kind of like Lego blocks on top of it. So

yeah I you know one of the things we're noticing actually one of the uh questions I got on the earnings call this morning was um the growth of the app ecosystem that there's now more people building apps for us. So, one of the things we're seeing app developers, but also merchants themselves who historically would hire, you know, a third party to build a tool do it themselves. And part of the reason that we're putting out all these new APIs and SDKs and and these new tools to build on top of is because we actually think having more people build on on top of Shopify, you know, benefits benefits merchants. But back to that whole like if you were just a feature I mean you you know you guys uh if I had to word cloud you know your show the word rapper probably comes up as much as uh as as anything I think you actually have to create something of real value and if all you're really doing is wrapping something you're going to struggle but companies and if you look at the apps on I mean you know take some of the larger apps on Shopify like the Clavios of the world you know who are who built this incredible in their own ways their own

rails around email marketing that is very very difficult to disrupt. So I I think the idea of like we want to invite more people to build incredible tools on top of Shopify and also give merchant tools to build it themselves. But I think that you know AI rewrite interfaces will never rewrite like real infrastructure. Yeah, Clavio is a great example because you could have a somebody could could build something that can send an email, but then if your delivery is just terrible, it's just going to be you might like save a little bit a little bit using the fivecoded solution, but then you're like losing tens or hundreds of thousands of dollars because you're not actually getting through to your customers. So there's there's uh any like e-commerce operator like getting you guys know this too like you've spent like you guys have had a better solution in the market for how many years and you're still you know how hard it is to convert a legacy brand to even trust a new platform because they're like our current system is not great but we know we know how critical this infrastructure is and and what a big step it is. So I

it is interesting you know even on the enterprise side one of the things that I've noticed coming out of NRF which effectively is is like all the major the largest retailers are all there is that even the largest retailers who feel like they have something that's good enough they're getting pushed by their exec team or their board to think about like unified commerce this idea that you know think about the metaphor of like a browser with 12 tabs open online offline agentic um cross-ell on social media platforms B2B even the most traditional of of retailers and businesses we are finding now are coming to Shopify for simplicity that they don't want to run this like you know this Rube Goldberg machine in commerce they actually want to create this centralized back office that runs all of it that's been amazing for us in fact one of the biggest areas of growth for us has been the enterprise and companies that traditionally did not come to shop like General Motors for example or Estee Lauder for example are now migrating to us as well so I I think you know it's an exciting time to be a new entrepreneur getting started because the resources and the tools are insane But even some of the largest retailers, the next few years are going to be incredible for them because they're going to access these tools and be able to operate at a pace that frankly some of them have never been able to operate at.

Yeah.

Do you have a hard stop at 12:30?

I can keep going for a bit.

Okay. Uh uh I want to talk about uh evolution of UI sort of uh tactical like uh when I had an e-commerce site that was not on Shopify regrettably uh launching a new product was like how are we going to literally Django go in the back end what's the database schema is it a boolean right like all these different things right then you go to Shopify and it's very easy

Yahoo stores or something like what was it

no it was literally Django like like Python like it was like hosted on Heroku I Um, and so, uh, yeah, homegrown disaster. Uh, huge, huge waste of resources. Um, you go to Shopify, you get a an HTML page with a bunch of fields that you can fill in when you have a new product and it fills into the templates, right? Is the future I talk to Shopify in natural language? Is that actually better than defining my product variance in HTML UI? Like do you think that like Shopify will have an agent that where I'm I'm I'm making changes within the Shopify ecosystem but in in natural language or is HTML dropdowns are there sort of like more lindy than we'd think?

So I think uh the good news you can do both right like the idea is can we make the important things really easy and everything else possible. There are merchants right now that we have a product we just announced um in in December at our at our edition called SimJim.

Mhm. Simjim effectively simulates what any task might be. So you can say if I change this particular design or I try this particular campaign, what does SimJim simulate will be the results of that and we're seeing a lot of our merchants begin to adopt it now and try it out. I think the idea should be you can do both. If ultimately what you do best is you are an artisan. You make beautiful products. you make some sort of like children's toys and they're amazing and and you actually do not know anything about digital commerce or digital marketing. I think you can use Sidekick as really your your CMO and your your your co-founder that helps you become a lot more um you know internet native when it comes to commerce and retail.

In other cases, the idea that you know some of our our brands like Skiims for example uh or or Alo Yoga for example, I mean they want to do some really customizable stuff. They're very technical. They have an amazing engineering team. They want to go into the code and really make it so their particular store is exactly what they want. That ability where you know at some point you had to either build your own stack if you wanted massive customization or if you didn't know how to use anything when it came to e-commerce, you had to go and hire, you know, some sort of like company to go build everything on your behalf. I think all that's gone. I think the net result of that's going to be you're going to have way more people starting businesses and way more companies getting larger at a much faster clip and sidekick is a really good example of that and so is Simjam. I think beyond that the other thing is like this idea that you start with one particular channel I think will will very quickly go away. We're already starting to see that where immediately you know you may start with your online store as your online hub but very quickly you're going to activate an Instagram channel or a Tik Tok channel or you may decide hey I want to try this agentic thing. I think this idea that I am an ex kind of merchant, I'm an online merchant, offline merchant. I think that's going to be something that like it's going to be like talking about the color TV. It makes no sense in the future. Um, but all that coming together is is what we've been building in Shopify for two decades. And the end result of it is that, you know, we're seeing way more entrepreneurship than ever before.

Yeah, makes a lot of sense. But Jordy, anything else? Uh, how are you talking to, Last question, how are you talking to, uh, friends, family outside of the tech bubble about AI on X? You were busy with earnings, but on X there's a there's an essay with like 50 million views basically telling everyone to freak out.

Uh, I'm curious how your

I saw I saw the essay before I before I started my day. I actually sent the essay to my wife um just because I wanted to substantiate that I'm not an insane person talking about this stuff every single day. Yeah.

Um I think that essay I think you guys said or someone said like that essay feels like it crossed the chasm.

It did. Yeah.

Like it it like

containment.

Exactly. It it went kind of well beyond just like our kind of little, you know, world circle of the internet.

I think ultimately uh the the idea of being reflexive with AI, you know, Toby wrote this letter a couple months ago, you guys probably remember it that got leaked. Um, and it really, you know, the reason it got leaked was it talked about that if you want to hire someone at Shopify for your team, first you have to substantiate why AI can do it better. But if you actually looked at like the the meta message in the in in email, right?

Yeah.

Definitely cannot do it better. Exactly. That AI cannot that. So if you can't do it better then you like you can hire but like if AI can do it better you're you know we're not we're not you know the headcount doesn't get allocated which

what it really suggested was this idea of like AI reflex that

rather than sort of use it as a tool how do you kind of use it as part of your day-to-day life you know when I'm preparing for an earnings call with Jeff our our CFO we used to go around and meet a ton of different product leaders around the company to kind of glean uh and figure out and summarize like what are the most exciting things happening at Shopify. It was an like it was part of the process for I don't know like 10 quarters. Now effectively we go to Shopify's vault. We have like a dozen MCPs running. We're able to pull way more information we can. So when we do meet with those product leaders, the conversations are way richer. They're not spending a bunch of time explaining to us on on a you know at a very abstract level or a you know at a macro level what they're working on. We can ask specific questions. I think companies that become more reflexive and individuals that become more reflexive, especially entrepreneurs, there's no doubt it's going to make you more, you know, it's going to make you more effective and more efficient. But I think articles like this, it invites the non- tech community into what we're seeing in a way that I think is is important. I think the reason it's getting so much traction is because it felt like it was um it felt like it was written for my wife as opposed to for me. and not a but she needed someone who isn't really seriously

but that's different

then I think a lot of people are sharing it saying you should take this seriously it's really cool I think a lot of people have been processing this as like you should take this seriously and it's like get your financial house in order like you know this is like a you're going to get steamrololled

um

yeah look I I I'm not like I like I don't believe in the doom of I'm an eternal optimist I think I think what it's done for Shopify, for our merchants, for our business has been incredible. I think what it's doing for individual entrepreneurs is incredible. My daughter, you know, we we recently moved to uh we moved to Montreal, which is a French city. My my kids, we moved from an English city. My kids are learning French right now. There's homework that comes that I just cannot help them with. I I would have had to hire a tutor. I still may have to at some point, but the fact that I'm able to do so much more on my own, even in my own like dad role, makes my life better. Totally. So, yeah. And what's so cool about that is for for for you, you can you you can go hire a tutor. You could hire 10 tutors, but there's a lot of there's a lot of families that just never would have been able to do that. The kids would have been struggling optimistic. That's what I'm saying. I mean, sometimes like my my four-year-old will ask me just why why why, you know, the 10 ws of like why like why is the sky blue? And I'll be like, I think I know why, but I I even if I even with the money, I can't hire a tutor to come buy the house at 9:00 p.m. on a Tuesday in 2 seconds, but I can go and look it up and then relay a story and I can tell that story.

How can you not be optimistic when you have those tools available to you? The key though is looking at them as these incredible tools, looking at them as a way for you to create like some sort of exoskeleton in for all of our lives. And um and there's going to be some lagards. I mean it's going to be like I think it's was Jeffrey Moore crossing the chasm like we will cross the chasm where in the mainstream we'll use it.

Yeah.

My mom's using uh AI right now mostly for like things like recipes but that's sort of like a gateway drug I think for her using it for things like questions about I don't know banking or whatever my mom does daily. So I I it's tough not to be optimistic and and certainly from a Shopify perspective it's been incredibly valuable for us. Aentic shopping hasn't even started yet, but like we're prepared for it. And I think um I don't know, this sounds like Yeah, even even for entrepreneurship.

I think we're still underelling the opportunity with AI.

Yeah. When when I look back in my early days of entrepreneurship, luckily I had people around that I could call and say, "Hey, how do you do this?" Or what kind of contract do I need for this? Uh how do I set this thing up? How do I what should I use a safe note? Should I use this or that? And now it's, you know, hopefully entrepreneurs can build a network quickly, but you don't need a network to get like customized advice on pretty much any situation. And yes, it could still be wrong sometimes, but it's usually directionally correct and helps you be more informed. And it's amazing. Uh,

it feels also like we as humans, we don't often want to ask someone else um the question that we deem as being like a silly question or a d a stupid question.

Um,

that's one of my favorite parts of AI, right? Just like ask a dumb question. Yeah,

totally totally agree. I remember when we raised our first our series A, this is I don't know, literally almost 20 years ago. I had to look up what a liquidation preference was and I call around

and and I felt like, you know, I like we were raising a series A and it was a $25 million round let it and um and I remember thinking like I I I went to I was already a lawyer like I wasn't a very good lawyer, but I finished law school. I didn't went to business school and I wasn't exactly sure what it meant. I just sort of think back of now the like the amount of information I could have taken. I could have got all these case studies. I could have understood it in in a much deeper way. That is where I think so it's not surprising that this

you could have dropped the term sheet into any LLM and instantly gotten like pretty deep.

Tell me what's wrong with pull out all the main terms. Here's what's market. Here's what you can push back on.

Anyway, it's amazing. No more doom. Thank you for not

No more doom, guys. Come on. Appreciate you taking the extra time. This is going to be great. We kept a great rest of your day. We'll talk to you soon. Goodbye, Harley. Let me tell you about Gusto, the unified platform for payroll benefits and HR built to evolve with small modern small and medium-sized businesses. And I'm also going to tell you about the New York Stock Exchange. Want to change the world? Raise capital