Shopify Inc.

Good morning, and thank you for joining Shopify's fourth quarter 2024 conference call. I'm Carrie Gillard, Director of Investor Relations, and joining us today are Harley Finkelstein, Shopify's President, and Jeff Hoffmeister, our CFO. After their prepared remarks, we will open it up for your questions. We will make forward-looking statements on our call today that are based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements. We undertake no obligation to update or revise these statements, except as required by law. You can read about these assumptions, risks, and uncertainties in our press release this morning, as well as in our filings with U.S. and Canadian regulators. We'll also speak to adjusted financial measures, which are non-GAAP and not a substitute for GAAP financial measures. Reconciliations between the two are provided in our press release. And finally, we report in U.S. dollars, so all amounts discussed today are in U.S. dollars unless otherwise indicated. With that, I'll turn the call over to Harley.

Thanks, Kerry, and good morning, everyone. As we close another year, I've honestly never been more excited by what we've achieved and how it's positioning us for 2025. 2024 was one for the books. We executed with discipline, just as we said we would. We maintained a rapid speed of product innovation marked by three, yes, three additions, and we further solidified our position as a leader in unified commerce. We continue to expand our global reach and scale, coming in just shy of $300 billion in GMV and $9 billion in revenue for the year. That is nearly 2.5 times more GMV and three times more revenue than 2020, just four years ago. Or to put it another way, we delivered annual revenue growth of 26% and an annual free cash flow margin of 18%. And we ended the year on a really high note, with Q4 absolutely knocking it out of the park, delivering 31% revenue growth and 22% free cash flow margins, putting us in the rare air of hitting the rule of 50 at a size and scale that very few are achieving. We can deliver the success like we did throughout 2024 and specifically in Q4 because Shopify was founded on the belief that we grow by helping our merchants grow and succeed. In other words, their success fuels our own. And that remains the flywheel behind our success today. Our commitment to making entrepreneurship more common is why Shopify has become the go-to platform across all corners of commerce. From local startups landing their very first sale to global brands pushing billions in GMV, merchants everywhere are choosing Shopify. I'm especially proud to share that in the US alone, Shopify is now over 12% of the e-commerce market share. And we continue to grow rapidly in places like Europe and Japan. Let's quickly touch on how we closed out 2024. From a regional perspective, North American revenue was up 23%, with the U.S. crossing $5.7 billion in revenue, which is more than our entire company's revenue in 2022. Our international regions continued to outperform North America, achieving a 33% growth rate for the year. With two consecutive years of international growth exceeding 30%, we are driving rapid growth at scale as we continue to expand our global presence. In offline, we grew revenue 33% to $588 million for the year, while also crossing $100 billion in cumulative offline GMV processed on Shopify. And finally, our merchants' full-year GMV accelerated to 24% compared to last year, which includes our merchants' most successful Black Friday, Cyber Monday selling period ever, generating $11.5 billion in GMV. What's even more impressive about these growth numbers is that we did it while managing our operating expense growth to deliver an incredible milestone for Shopify. Our operating income surpassed $1 billion for the year, which is four times higher than our previous peak of $269 million in 2021. And on top of that, our free cash flow margin expanded to 18% up from 13% in 2023. I also want to take a minute to mention some major milestones Shopify hit in 2024 that demonstrate our strength. Over 875 million consumers bought something from a Shopify merchant's online store. That is essentially one in every six internet users. We passed a massive milestone crossing the $1 trillion mark for cumulative GMV that has been processed through Shopify. And we now have hundreds of millions of ShopPay users, with ShopPay representing 38% of GPV, up from 33% of GPV in 2023. In my 15 years of Shopify, I firmly believe this is the strongest and the most durable version of the company to date. 2024 was nothing short of spectacular, especially with a powerhouse Q4. And if I may, I want to pause for a second here and just make sure that is really, really clear. Nothing matters more than this. Q4 was an incredible quarter, and even more importantly, the entire 2024 was exceptionally strong. On this very call one year ago, we laid out very clear goals, and then we set out and we absolutely crushed them. We delivered 24% GMV growth, 26% revenue growth, and an 18% free cash flow margin. This is not just Shopify doing well. This is Shopify operating as a growth company at peak performance across our team, our products, our business model, and with operational discipline, exactly as we said we would. And even though we get to get on here four times a year to walk through the quarterly results, we are laser focused on the bigger picture. Our vision goes way beyond just the next quarter. We are committed to building a durable 100 year company that doesn't just meet the needs of our merchants, but anticipates what they'll need in the next 5, 10, even 20 years. We are really pleased with how things are shaping up. Our market position is strengthening. Our operating model is proving very effective. And our profitability levels are exactly where we want them to be. If you walk away from this call with nothing else, I hope it's that. Okay, where was I? Okay, so in 2024, we focused a ton on optimizing and fortifying the incredible platform we have built. We fine-tuned the edges, we improved performance, and we made sure everything works seamlessly together. Now, while there are too many to list in this call, I want to hit on a couple of the most impressive time-saving features and new products that we launched this past year. First, our engineers focus on enhancing Shopify's intuitiveness and ease of use by streamlining operations and reducing friction. We increased variant limits to 2,000 to enable building even more complex catalogs for larger merchants. We enhanced customer account extensions so merchants can add features like loyalty programs without touching code. We launched Shopify Balancer Plus, introducing next-day payouts and attractive APYs, and added flexible payment options in Shopify Credit to improve cash flow management. We expanded Shopify tax to the UK and EU and enhanced Shopify inbox, leveraging AI to make customer communications more efficient. In our offline business, we rolled out tap-to-pay in multiple countries, introduced Shopify bundles and customer metafields, and launched robust order management features like ship-to-store and draft orders. We also helped merchants turn their retail locations into powerful acquisition channels by capturing more emails at checkout powered by the network effect of ShopPay. Internationally, we've taken big strides by expanding our POS terminal to eight additional countries and integrating payments in France. We also made it easier for merchants to discover and engage with their customers. The Shop app introduced a new merchant-focused home feed, highlighting the diversity and richness of brands. We also made shop campaigns available to all Shopify plans, enabling more merchants to run acquisition campaigns on platforms like Shop, Google, and Meta, targeting new and lapsed customers with incentives in the Shop app. As it relates to helping our merchants go global, we've significantly enhanced the global buyer experience by adding UPS as a carrier option in managed markets, expanding our comprehensive coverage for U.S. outbound labels across economy, standard, and express services. We've expanded multi-currency payouts across select parts of Europe, introduced Shopify plans in Japanese yen, and launched Rise, our first flagship theme tailored for the Japanese e-commerce market. Additionally, we've integrated Klarna into Shopify payments as a local payment method for certain countries, and we increase our local shipping options across Europe and the UK, further broadening our market coverage and streamlining operations for our merchants. Beyond our products, one of the greatest strengths is our thriving partner ecosystem. We are widely recognized as one of the best companies in the world at fostering a long-term, mutually beneficial partnership. Last year, we became Roblox's first commerce integration partner. We integrated with YouTube Shopping in the US, expanded our payments offering through our partnership with PayPal, launched our first AI-powered search integration with Perplexity, enabling new ways for buyers to find merchants, and launched a new collaboration with Oracle for Enterprise. Additionally, over the past year, we have paid out $1 billion to partners for apps benefiting our merchants. We also added over 3,000 new apps to our App Store, bringing our total to more than 16,000 apps by the end of 2024, including the over 675 that are part of our Built for Shopify program. This is what differentiates us. We accomplish all of this product innovation in a single year. Again, in a single year. We are building for the long term, and 2024 shows just that. It's one of the strongest and most balanced years across all aspects of our business in our 20-year history. And with that in mind, let me take you through some of the accomplishments from our Q4 across our growth drivers, and then I'll wrap up by sharing an overview of our aims for 2025. So let's dive into Q4. Shopify is expanding its merchant base to include larger, high-volume global brands. Since our last earnings call, brands like Reebok, Champion, West Wing, and BarkBox all launched on Shopify. We also continue to deepen our portfolio of brands across our largest verticals, signing names from the apparel and accessories vertical like the Canadian behemoth Reitmans, David's Bridal, Uncommon Goods, and luxury handbag designer Dunian Burke, health and beauty companies like Goop, while adding to newer verticals, including the legendary Warner Music Group and the renowned window covering company Hunter Douglas. In Europe, we also signed iconic luxury fashion retailer Karl Lagerfeld, who will launch over 70 global point-of-sale locations with Shopify. We're also thrilled to continue welcoming some of the biggest and the most renowned sports teams to Shopify. Most recently, FC Barcelona, the iconic soccer team with a global fan base of over 330 million, has expanded their use of our platform to include our unified commerce and point of sale system, moving beyond just online. They joined an impressive roster of major sports teams already leveraging Shopify, including European football giants like Real Madrid and Newcastle United, NBA powerhouses such as the LA Lakers, Miami Heat, Dallas Mavericks, and Sacramento Kings, as well as the Toronto Maple Leafs and Red Bull Racing. not to mention within global esports teams, including Team Liquid, and of course, our very own Shopify Rebellion. You could say we're knocking out of the park in the commerce game. Clearly, we are playing in a league of our own as the MVP, the most valuable platform. And that is just the beginning. Think about this. From top sports teams to major music labels and even one of the largest window covering businesses, Shopify powers them all. This diversity isn't just impressive. It proves that Shopify is the most compelling choice for any business looking to grow quickly, reliably, and at scale. No matter your industry, we have got you covered. In addition to new brands consistently choosing Shopify for its comprehensive enterprise-level offerings, the ShopPay Commerce component has also become a compelling entry point into the Shopify ecosystem for enterprise brands. Take Everlane, for example. Everlane was the first merchant to sign up for ShopPay Commerce component about 15 months ago. But since then, our partnership has only grown stronger. And by Q4 of this year, we've expanded our agreement with them, bringing more of their operations over to Shopify. And we believe this trend should continue to play out over time for the Shopify commerce component. We expect that enterprise retailers may often begin with a simple integration of Shopify and gradually over time adopt more and more of Shopify's products and services. Or here's another example. In Q4, we signed three very large shoe brands, Aldo, Sperry, and Call It Spring, that combined will bring both their online and offline businesses to Shopify, including over 400 physical retail locations through point of sale. Initially, these brands were only looking at our shop pay commerce component. But after working closely with our team and seeing what our full unified commerce offering can do, they each decided to go all in with us. I love this example because it highlights so clearly that our go-to-market strategy of offering a singular component as an option can open up conversations that lead to merchants adopting our entire platform. Now let's dive into Shop Products, the buyer-facing side of Shopify that's all about making shopping simpler, more delightful, and becoming the most trusted brand for commerce everywhere. Our Shop Products are anchored by four main pillars, Shop Pay, Shop Pay Installments, Sign In with Shop, and the Shop App. Let's start by talking about Shop Pay. The Shop Pay button has become a highly valuable piece of real estate for both merchants and buyers. We believe that buyers are actively seeking it out during checkout, so much so that if not available, they are more likely to abandon their checkout. Now, this behavior underscores what we and our merchants have long understood. Shopee's ability to drive conversions is very powerful. This quarter, Shopee processed $27 billion of GMV, up 50% from last year, and double that of the next accelerated checkout on Shopify merchant stores. I want to make sure that everybody caught that. Nearly double that of the next closest option. So it's no surprise that the shop pay commerce component in particular has been generating very strong interest amongst enterprise-level brands. In 2024, GMV from this component alone surged by nearly 20x, with major brands like Arctic, Boot Barn, and Bespoke Post adopting it. And this quarter, well-known brands such as Crocs and GameStop also signed up for Shop Pay Commerce component, further expanding our reach. Now, the Shop app, which has seen its GMV grow 6x in the past two years alone, continues to scale across active users and in-app native GMV. In fact, Q4, Shop app native GMV was up 84% versus the prior year, as we continue to make it an even more compelling destination for buyers to find their favorite brands on their mobile devices. Recent improvements include a more personalized and fresh shopping feed, new curated shopping events and category browsing, and the launch of cart syncing, which allows users to complete abandoned ShopPay web checkouts through the Shop app. This is really, really cool. And finally, let's quickly touch on offline and B2B before we turn our focus to 2025. Q4 Offline GMV grew 26% thanks largely to our focused effort on expanding our reach with large multi-location merchants. Notably, we launched three new brands in the Asia Pacific region with over 320 locations and celebrated the opening of Skim's first location in NYC and Beams' first pop-up store. Additionally, a recent Ernst & Young market report has validated our leadership in unified commerce, recognizing Shopify point of sale for its efficiency and cost effectiveness. EY highlighted that because of our best-in-class architecture, Shopify point of sale enables enterprise retailers to achieve 22% lower cost of ownership and 20% faster point of sale implementation, enhancing both operational and revenue efficiencies. This is a really, really big deal in the physical retail industry. In B2B, Shopify is really crushing it, with six straight quarters of over 100% year-over-year GMV growth. In fact, Q4 alone was a 132% increase, and November smashed records with an all-time high in monthly GMV. Throughout the year, our B2B GMV climbed by more than 140% compared to 2023. In 2024, we also secured a top spot in the Forrester Wave rankings, a recognition that not only showcases our robust B2B capabilities, but also enhances our appeal to larger merchants. We also welcome new brands from various industries, expanding our market reach and customer base. While B2B still accounts for a small portion of our GMV, the strong growth we are experiencing highlights the vast opportunities ahead. Our aim is to make Shopify the premier self-serve wholesale purchasing platform, offering a unified solution that powers commerce online, offline, and everywhere in between. And we are well on our way to achieving that. Okay, so yes, 2024 was an incredible year capped off by a particularly strong Q4. But as you all know by now, we are already full steam ahead into 2025, actively building on the scaling foundations we have built. Every year, Toby sets the core themes for our company, reminding us of the impact of her work and guiding our focus for the year ahead. This year's aims build directly off of last year's successes, emphasizing a continued commitment to strong operational performance, rapid product innovation, and most importantly, the continued success and the growth of our merchants. First, we remain committed to nailing the basics, and as a result, continuing our focus on simplification is front and center. Everything we build and do should make Shopify even more user-friendly for our merchants. This means stripping away unnecessary processes and focusing on what truly adds value. In other words, help our merchants to grow revenue without growing complexity for their business. Next, we will continue to embrace the transformative potential of AI. This technology is not just a part of the future, it is redefining it. We've anticipated this, so we're already transforming Shopify into a platform where users and machines work seamlessly together. We plan to deepen our investment in Sidekiq and other AI capabilities to help not just brand new merchants to launch, but also to help larger merchants scale faster and drive greater productivity. Our efforts to shift towards more goal-oriented software will further help to streamline operations and improve decision-making. This focus on embracing new ways of thinking and working positions us not only as the platform of choice today, but also as a leader for commerce in the AI-driven era with a relentless focus on cutting-edge technology. Additionally, expansion remains a cornerstone for our ability to build for the long term. In 2025, we plan to continue to grow our reach across various merchant sizes, from entrepreneur to enterprise, and gain greater presence and market share across all geographies, particularly internationally in Europe and countries like Japan. we will continue to defend and to grow our leadership position as the place to start an online business. We are dedicated to reinforcing our position as the go-to platform for starting an online business and driving growth in areas like point of sale, B2B, and shop, supported by further strategic marketing and targeted go-to-market initiatives. This expansion is not just about increasing our footprint. It's about strengthening the trust and reliability that our merchants expect from Shopify, all while working to become the gold standard for trusted commerce by buyers across the internet. And all of this is backed by our continued commitment to a strong free cashflow margin profile. We plan to continue to operate efficiently as possible to create the flexibility we want for further investment in the multiple areas of growth that we see before us. This disciplined approach allows us to focus on investing in long-term strategies rather than just short-term gains. Okay, to close this out, our path is clear and we are executing. We've consistently demonstrated our commitment to financial discipline, enabling solid free cash flow margins that position us well for future growth and profitability. In 2025, we will continue to invest in our core platform and in key areas like enterprise, offline, and international markets, as these key growth drivers are helping to fuel our top-line growth and laying the groundwork for ongoing success and innovation. As the commerce landscape evolves, we firmly believe Shopify is best positioned to thrive thanks to our proven track record, agile platform, relentless focus on product innovation, and the success of our merchants. We are entering an exciting era of commerce driven by transformative shifts in technology like AI. We are ready to embrace this change and the competition it brings, confident in our ability to continue leading the way. So thank you to the entire Shopify team, to our partner ecosystem, and to all our merchants for another amazing year of making commerce better for everyone. As I hope is evidence at this point, we are ready and we are excited for what is next. And with that, let me turn the call over to Jeff.

Thank you, Harley. Q4 was an exceptional quarter for us, capping a year where we delivered 25% or greater top-line growth in each quarter when excluding logistics and expanded our free cash flow margin to 18% for the year. This marks our seventh straight quarter of delivering pro forma revenue growth of 25% or greater, sixth consecutive quarter of GMV growth rate exceeding 20%, ninth consecutive quarter of positive free cash flow, and sixth consecutive quarter of double-digit free cash flow margins. We also achieved some significant milestones on the expense side, but more on that later. We are delivering growth across multiple products, multiple geographies, and multiple merchant sizes and types, all while being disciplined on expenses but thoughtfully investing for Shopify's continued growth. Now let's dive into our Q4 results. In Q4, GMV increased 26% year over year, marking the highest quarterly GMV rate since the pandemic-driven growth rate of 31% in Q4 2021. The Q4 GMV results were driven primarily by same-store sales growth from our existing merchants, led by our plus merchants, growth in the number of merchants on our platform, continued strength internationally, with GMV outside North America growing 33% in Q4. This continued momentum was led by 37% growth from the combined region of Europe, the Middle East, and Africa, with growth in that region slightly weighted to same-store sales growth versus new merchant acquisition. And fourth, online, our point of sale, where we had 26% GMV growth year over year. In terms of industry verticals, Q4 saw notable growth from health and beauty, food and beverage, home and garden, and apparel and accessories. We also had in Q4 notable strength from a few interesting but smaller verticals for us, like toys and games and animals and pet supply. Q4 revenue was $2.8 billion, up 31% year-over-year, and full-year revenue was up 26% to $8.9 billion. The key drivers were the GMV growth that I just mentioned, growth in subscription solutions revenue, stemming from the growth in the number of merchants on our platform, and to a lesser degree, variable platform fees and apps and domains, and increased payments penetration, which hit 64% for Q4. The revenue outperformance relative to our outlook was driven by North America representing a larger percentage of GMV than expected. More of our products are available in North America versus other geographies, so outperformance in the U.S. and Canada brings higher revenue per merchant. Q4 merchant solutions revenue increased 33% year-over-year, primarily driven by the continued strength in GMV and increased penetration of Shopify payments. 61 billion of GMV was processed on Shopify payments in Q4. That's 35% higher than last year and 64% of GMV compared to 60% in Q4 of 2023. Several factors drove the quarter's higher gross payments volume, including the strong performance of merchants who use Shopify payments, an increasing percentage of which are on Shopify Plus, more merchants across the globe adopting payments, and greater penetration of shop pay, which was 41% of GPV in the quarter. As a reminder, Q4 is a quarter which traditionally sees the highest percentage of revenue from payments. For the year, GPV penetration was 62%, up from 58% in 2023. Subscription solutions revenue was up 27% over Q4 of last year. The growth was driven by an increase in the number of merchants on our platform, and to a lesser degree, higher variable platform fees and the benefit from the plus pricing change. We continue to execute at an impressive scale, driving both commerce overall and our share of the commerce market. Q4 MRR was up 24% year over year with continued growth in each of standard, plus, and offline, with all three categories seeing an increase in the number of merchants. Plus represented 33% of MRR for the quarter, consistent with Q3. Important note that during Q4, we started shifting to a three-month paid trial in certain markets versus our previously predominantly one-month paid trials. This change was a headwind to our Q4 MRR growth, particularly in standard and offline. Moreover, based on the timing of our rollouts, we expect it to impact Q1 and Q2. As you know, we are always iterating on our approach to merchant acquisition, focusing on enabling and accelerating merchant success for the long term. With respect to paid trials, the one-month trials yielded revenue to Shopify faster, but our data also suggested that it came with a cost of durability. Specifically, given merchants a little bit more time to experiment with our platform increased the likelihood that they were setting themselves up for greater GMV success over the long term. This point became clear through testing that we did regarding how quickly merchants from various trial lengths achieved certain GMV milestones. For nearly every lens of our business, like geography or merchant type, the three-month trial yielded better long-term results for merchants and Shopify. Therefore, we are moving to three-month trials in most geographies. As a reminder, paid trials are just one of our merchant acquisition tools. Q4 gross profit was $1.4 billion for the quarter, up 27% year-over-year, and our full-year gross profit was up 27% to $4.5 billion. Subscription Solutions' gross margin was 79.9%, compared to 81.5% in the prior year. The decrease was mainly due to higher cloud and infrastructure hosting costs, in part to support our higher-volume fourth quarter. But we do not expect this to have as much of an impact going forward. Merchant Solutions gross margin was 38.2% compared to 39.2% in Q4 of 2023. The decrease was primarily driven by lower non-cash revenues from certain partnerships, which carry a high gross margin, and the impact from the expanded partnership with PayPal. Partially offsetting these headwinds in Q4 was strength in our other Merchant Solutions products led by international selling, previously known as markets. Now, let's turn to operating expenses. Reflecting on just the past two years, we've made significant strides. In Q4 2022, operating expenses, excluding the real estate charge, were 52% of revenues. That went down to 36% in Q4 of 2023, and further down to 32% this Q4, which was right in line with the outlook we provided. We have come a long way. Through Q4, we achieved operating expense leverage in each of R&D, sales and marketing, and G&A, largely due to our disciplined management of headcount. As of December 31st, 2024, our headcount was just under 8,100 employees, down from approximately $8,300 at the end of 2023. In the fourth and smallest of our four operating expense categories that we have on the income statement, transactions, loans, and losses, which does not involve headcount, we saw a slight increase as a percentage of revenue to 3% from 2% the previous year. This increase is simply a function of higher volumes for both our payments and capital businesses. Important to note that our loss ratios for each remained within a consistent range. Payments and capital are growing well, and this was an outgrowth of that. I want to take a moment to thank all my colleagues for the hard work and discipline they're exercising on headcount and the constant innovation and leveraging of automation, all while we continue to invest in key growth opportunities. In my opening remarks, I referenced some milestones on the expense side. In Q4 and for the year, we reached four milestones for the first time since going public nearly a decade ago. Operating expenses for the year were down to 38% of revenues. Operating expenses for Q4 were down to 32% of revenues. Operating margin for the year hit 12%, double that of our previous peak in 2021, and operating margin for the quarter was 17%. All of these metrics represent the strongest profitability levels that we have achieved since going public in 2015, all while maintaining, and in many instances accelerating, growth at scale. Stock-based compensation was $118 million for the quarter. Q4 free cash flow was $611 million, or 22% of revenue, coming in better than our outlook primarily due to our revenue outperformance. We delivered increases in both free cash flow margin and free cash flow dollars each successive quarter last year, delivering 12% in Q1, 16% in Q2, 19% in Q3, and 22% this past quarter. For the year, free cash flow was 1.6 billion, up 77%, achieving a free cash flow margin of 18% for the year. Our free cash flow levels are the manifestation of the hard work throughout 2022 and 2023. I believe the strength of our business allows us to achieve these attractive free cash flow margins, but still, importantly, invest in the future. To be clear, we are a growth company. We plan to prioritize investing further in key areas like our core platform, international, B2B, enterprise, and offline, as opposed to driving for higher free cash flow margins in the near term. It's simply the right thing to do with the immense opportunities we see ahead, but delivers a profitability level that we are proud of and believe we can maintain without impacting future growth. Before diving into outlook for Q1, one additional dynamic for the full year 2025 to call out. This year, we expect to return to the normal pattern of merchant solutions growing quicker than subscription solutions. A recurring theme of merchant solutions outperformance over the years has been the strength of our payments product, the growing number of our merchant solutions products that we offer, and our ability to drive merchant adoption of these offerings. Two things are expected to impact subscription solutions growth this year. First, the move to three-month trials. Second, our subscription solutions revenue recently benefited from the changes in our pricing plans for Standard and Plus. While we always examine pricing across products and geographies, we don't expect to have substantive pricing changes this year, and therefore expect this benefit to subscription solutions growth to normalize. With this backdrop, let's move to our expectations for Q1. We expect Q1 revenue growth to be in the mid-20s year over year, driven by many of the same factors that supported our strong revenue growth in 2024. noting that Q4 specifically is our seasonally strongest quarter. Turning to gross profit, we expect our gross profit dollars to grow in the low 20s. The year-over-year gross margin impact versus Q1 of 2024 is driven by the mixed shift between the growth rates of merchant solutions and subscription solutions that I just mentioned, the continued strength of payments, including the growth of Plus and Enterprise, and the two dynamics that I mentioned regarding Q4 gross margins, PayPal accounting and lower non-cash revenues. We expect that our Q1 operating expenses will be 41 to 42% of revenues, reflecting a 500 to 600 basis point improvement from Q1 last year. The factors that contributed to our expense leverage in Q4, as I detailed earlier, are expected to continue into Q1. We are committed to finding opportunities for operating leverage, but notably want to make sure that we are investing in R&D talent and will continue to invest in marketing to support our key growth areas, including enterprise, offline, and international. Stock-based compensation is expected to be $120 million in Q1. Finally, free cash flow margin. Q1 is typically our lowest GMV quarter, which naturally affects our revenue scale and thereby our free cash flow margin. Despite this, we still expect our Q1 free cash flow margin to be in the mid-teens, up from 12% last year. It is important to note that while we've significantly expanded our free cash flow margins over the last two years, as we move into 2025, and as I mentioned on our last call, we believe the free cash flow margin profile that we have achieved in 2024 strikes the right balance between profitability and investing in building the best products for our merchants today and into the future. We aim to maintain this level of cash flow profitability rather than optimizing for further margin expansion in the near term. There are simply too many compelling growth opportunities ahead. And with that, I'll turn the call back over to Kerry for your questions.