Shopify Inc.

Thank you for standing by. Welcome to the Shopify, Inc. First Quarter Financial Results Conference Call. You are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. I would now like to turn the conference over to Katie Cata, Director of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. We hope everyone is keeping well during this uncertain time. We are joined this morning by Toby Lutka, Shopify's CEO, Harley Finkelstein, our Chief Operating Officer, and Amy Shapiro, our CFO. Each of us is dialing in safely from our homes. After some brief prepared remarks by Harley and Amy, we will open it up for your questions. While much has changed from our call in February, one thing that hasn't is the forward-looking statements on our call today, which are based on assumptions. As such, they are subject to risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements except as required by law. You can read about these risks and uncertainties in our press release. and in our filings with U.S. and Canadian regulators. Note that adjusted financial measures we speak to today are non-GAAP measures, which are not a substitute for GAAP measures. Reconciliations between the two can be found in our earnings press release. And finally, we report in U.S. dollars, so all amounts discussed today are in U.S. dollars, unless we tell you otherwise. With that, I turn the call over to Harley.

Good morning, everyone, and thank you for joining us today. Before moving ahead, I want to express our gratitude on behalf of the entire team at Shopify to the frontline workers who are in the trenches, from medical professionals to food store workers, to those in our partners' warehouses, who are keeping the rest of us safe and fed and operational during the COVID-19 pandemic. We are incredibly grateful for the tireless service of these heroes. I typically take this time every three months to review what we saw in the quarter. Today, I'll keep that commentary to a minimum since January and February saw a much different business environment than we have today. Instead, I'll use most of my remarks this morning to catch up everyone on what we've done, what we've seen in March and April. This shock to the economy was so sudden that patterns in March and April may not be predictive of the rest of the year. However, we do have reason to believe that some of the patterns that emerge will continue. I'll be covering three areas today. Shopify's response to COVID, how our merchants have been faring, and the world we think is emergent on the other side of this. Our highest priority as the COVID situation unfolded was the health and safety of our employees. In late February, we directed the entire Shopify team to cancel non-essential travel, and by mid-March, our entire workforce was working from home. We are fortunate to have already been well outfitted for collaboration at a distance. So this shift was minimally disruptive to most employees day to day. Others whose primary work supported our office spaces are contributing in other ways, many supporting initiatives that directly impact our merchants. No one has been furloughed due to COVID. Our merchants on the other hand have been far more impacted. So we acted quickly. In the early days of the pandemic, our guiding principle was the same as always, put merchants first. We prioritize efforts to give existing merchants the tools they need to survive and help get offline businesses online fast. We launched a continuously updated resource center for merchants with tutorials and links to apply for government provided funding. We rolled out in-store and curbside pickup for users of our point of sale product and showed merchants how to set up local delivery options. We made gift cards available on all of our plans. And with more than $1 million in gift cards sold since making this change, merchants are accessing much-needed cash quickly during this disruption. Both of these have triggered more local activity, including various communities setting up online sales to spur local commerce. And more than a quarter of our brick-and-mortar merchants in English-speaking geographies are now using in-store pickup and local delivery. We made 200 million additional dollars available through Shopify Capital to extend to merchants for whom working capital will make a difference and expanded the availability of capital beyond the US to the UK and to Canada. We rolled out Shopify email to all our merchants to help them reach out and build trust with their buyers during this uncertain time. We're making this feature available at no charge until October 1st. And we made our standard plans free to new users for three months. Brick and mortar only retailers have lost their only channel, the street. If these businesses are going to survive, it's mission critical to get online and we're giving them more time to do exactly that. This change is also helpful to anyone finding themselves with more free time or wanting to generate supplemental income. We've seen a notable increase in online store creation, some of which are established retailers. It is still too early and the macro environment is too uncertain to make predictions about how successful these new stores will be. But merchants can be assured that we are doing everything we can right now to give them the tools they need to succeed. Merchants will continue to need our help and we plan to continue our efforts to innovate and develop more impactful ways to support them. After all, small businesses are a vital part of the economic and social fabric of our society and support the livelihoods of many people in our communities. What are we seeing on the platform and among our merchants? First and foremost, we are seeing them find ways to operate under today's constraints through creativity, grit, and determination. Their stories have been incredibly inspiring, from pivots by tailors and distilleries now making face masks and hand sanitizers, to an 84-year-old grandmother in Italy who's taken her past-making course online to replace the in-person experience she was offering to tourists before the pandemic. Merchants are eager to mobilize, implementing discount codes at levels usually seen during the holiday shopping season. On Shopify Plus, verticals we've never seen before, like food stores, are showing up. In April, Heinz signed on to Shopify Plus and launched seven days later, while chocolate maker Lind launched in just five days. This pandemic is forcing all kinds of merchants to rethink how they sell things. And Shopify Plus offers larger merchants the ability to move fast while managing costs, especially important at a time when economics are pressured. We are seeing our partners around the world step up in a phenomenal way, even as many of them face hurdles themselves, being entrepreneurs and small businesses. Our partners are getting stores up and running significantly faster, with the number of stores created in three days or less increasing by 85% between March 13th and April 24th. relative to the six weeks leading up. Our partners are advocating for merchants and offering discounted and free services. And they are working hand in hand with other partners to solve problems for both businesses and for their communities. Some of these trends, like product pivots, are temporary. Others, like distance learning and the growth of omnichannel commerce, are likely to persist. This post-COVID world is what we're building for, and we have shifted accordingly. Shopify's worldview has not changed. Our conviction that merchants need to be able to sell to their buyers wherever they may be remains as true today as it was a decade ago. While we're uncertain about what is coming in the months ahead, Shopify is uniquely positioned to help improve the economic lives of our merchants in this difficult environment and in a retail landscape that is accelerating its shift online. In what is easily the greatest humanitarian crisis in a generation, with adverse effects that will last for the foreseeable future, it is important that we all keep building towards solutions. All of these shifts make Shopify, which was already a good fit for modern commerce, an even better fit for the world that emerges on the other side of this. Before I hand off to Amy, we wanted to share an exchange with a merchant that illustrates just how critical it is, especially right now, to make commerce better for everyone. In this case, it's a farmer. Here it is.