Shopify, the global business operating system in the AI era?

In the context of a turbulent global macro environment and frequent adjustments in trade policies, Shopify has delivered a remarkably resilient performance: in the first quarter of 2025, the company achieved a year-on-year revenue growth of 27%, a free cash flow profit margin of 15%, and a GMV growth of 23%, marking the eighth consecutive quarter of over 25% revenue growth and double-digit cash flow profit margins. During a period of slowing growth in the e-commerce industry and intensified platform competition, Shopify has not only maintained the momentum of scale expansion but has also restructured its growth engine and operational logic through AI. Whether it is the system switching for enterprise clients, the continuous expansion of the B2B module, or the structured breakthroughs in international markets, the platform's tool penetration rate in the critical paths of merchant operations continues to rise. The "new infrastructure" product group represented by payment, fulfillment, cross-border, taxation, and AI assistants is forming the underlying support for Shopify's new round of growth. Internally, the company has also embedded AI into its products, operations, and decision-making processes, creating an "AI-first" response mechanism, thereby providing more resilient and responsive system support for merchants in dealing with tariff changes, supply chain adjustments, and market deployments. Shopify is transforming from an e-commerce tool company into a global business operating system in the AI era. AI Accelerates Comprehensive Growth In the first quarter of 2025, Shopify continued its strong growth trend, achieving a year-on-year revenue growth of 27%, a free cash flow profit margin of 15%, and a global GMV growth of 23%. In the face of ongoing uncertainty in the global economy and trade environment, the company showed no signs of significant slowdown, instead delivering a performance of "growing against the tide amid fluctuations." The president of Shopify pointed out that, based on historical data, since 2015, the growth rate of the merchant community on the platform has exceeded that of the entire e-commerce industry for 38 quarters. He emphasized: "Merchants operating on Shopify are more resilient than those not on Shopify." The key to this sustained growth lies in the platform's adaptability and systemic capabilities. Shopify maintains its leading position in a changing environment through a flexible business model, continuous product innovation, and deep support for small and medium-sized enterprises. In the first quarter, the company performed outstandingly in several key metrics. Offline GMV grew by 23%, and B2B transaction volume surged by 109% year-on-year; international market GMV grew by 31%, with cross-border e-commerce accounting for 15% of GMV. This marks Shopify's evolution from a platform aimed at startup merchants to a preferred infrastructure for large brands expanding their global business. The rapid growth of B2B business is an important reflection of Shopify's years of expanding enterprise-level capabilities and enhancing platform capabilities. This not only means a more diversified revenue source for the platform but also reflects the trust that brands have in its tools and systems. In terms of cross-border business, the company's upgrades in multiple product capabilities have further enhanced its global trade capabilities For example, in the first quarter of 2025, the company launched multiple cross-border transaction features: an upgrade to the Managed Markets product for U.S. merchants, supporting more flexible tariff and tax compliance services; a new feature in the Shop App that allows buyers to filter local products by country, promoting a preference for local merchants; and the introduction of the AI-driven tariffguide.ai tool, which can intelligently recommend tariff strategies based solely on product descriptions and origin, saving merchants significant decision-making and compliance costs. Furthermore, the company has optimized services in international logistics, allowing merchants to purchase DDP (Delivered Duty Paid) labels directly on the Shopify platform, simplifying cross-border fulfillment operations. By expanding partnerships with third-party logistics (3PL) providers, the platform is gradually enhancing the geographical coverage of the Shopify Fulfillment Network, improving warehousing and local fulfillment capabilities. The payment product Shopify Payments has also achieved rapid breakthroughs. As of Q1, this product supports 39 countries globally (compared to only 23 at the end of 2024), with payment transactions accounting for a penetration rate of 64% of GMV. Additionally, the company has launched multi-currency settlement features in 20 European countries, allowing merchants to receive payments in their local currency, mitigating the gains and losses caused by exchange rate fluctuations. This development has practical significance for the increasingly complex global settlement system. The Shop Pay product performed particularly well in the first quarter, with GMV growing by 57% year-on-year and processing transaction amounts exceeding $22 billion. Large merchants, including brands like Purple, Johnny Was, Lilly Pulitzer, and Birkenstock, have begun to fully adopt this feature. Tapestry Group, which initially tested Shop Pay only on coachoutlet.com, has now expanded it to COACH, Kate Spade, and their outlet websites, reflecting the rapid increase in recognition of this payment tool among medium and large brands. On the consumer-facing mobile platform Shop App, GMV grew by over 94% year-on-year this quarter, up from 84% in the previous quarter. The Shop Pay installment service has also launched in Canada, with further global market expansion underway. The application of AI runs through both Shopify's internal processes and merchant tools. Internally, the company has built the MCP server system, making various types of data and work nodes within the organization "readable," allowing employees to access resources more efficiently. In terms of management policy, the company requires each team to prioritize using AI to achieve goals rather than prioritizing the request for more human resources. This "AI-first" culture has become ingrained in the daily operations of the teams. In terms of AI tools for merchants, Shopify has fundamentally restructured the Sidekick tool, enhancing its reasoning capabilities, enabling it to handle larger datasets, and supporting multilingual use Sidekick's monthly active users have doubled since the beginning of 2025, becoming an important entry point for Shopify merchants to obtain intelligent suggestions and operational assistance. Global Market and International Brand Preference In the past few quarters, Shopify's growth focus has expanded from initially serving SMB merchants to mid-to-large enterprises. Through enterprise-level capability building, B2B module upgrades, and deepening international market penetration, the platform is gradually transforming from a "tool-based product" to a "business operating system for complex organizations." This quarter, Shopify achieved significant breakthroughs in expanding large clients and penetrating regional markets, not only enhancing the hierarchical structure of platform merchants but also building a deeper moat. In Q1, Shopify continued to attract a number of large brands with substantial scale and complex management to go online. Apparel group VF Corp introduced 8 of its brands to Shopify this quarter, including Dickies, Ultra Running, Kipling, Ice Breaker, as well as the already launched JanSport and Eastpak. The integration of VF Corp not only enhances Shopify's vertical penetration in the apparel sector but also indicates that the platform has the system capability to serve a multi-brand matrix. The platform's strong appeal is also reflected in its extensive coverage across industries and regions. For example, the education sector giant Follett Higher Education Group also became a platform merchant in Q1, with its business spanning over 1,000 college bookstores in North America. The onboarding of such a large-scale client proves that Shopify's retail operating system can support inventory, payment, and fulfillment linkage for over a thousand stores, reflecting the platform's stability and scalability among enterprise-level clients. In the European market, the company has partnered with the beauty division of luxury group Kering. Kering Beauty includes top brands such as Alexander McQueen, Balenciaga, and Creed, and its choice to build an integrated B2B, B2C, and POS system on Shopify reflects the platform's technical endorsement and scalability among high-end luxury brands. Management emphasizes that Shopify is becoming the underlying technical framework for these brands to unify customer experiences and integrate channel data. The addition of these large merchants further validates the correctness of Shopify's "unified business operating system" strategy. The platform not only supports merchants' online businesses but also connects offline retail scenarios, bridging B2B and DTC (Direct to Consumer), allowing brands to achieve omnichannel collaboration without multiple independent systems. In addition to established large clients, Q1 also saw a large number of emerging brands and high-growth companies choosing Shopify as their launch platform, including: Paper Source, a stationery brand under Barnes & Noble; LVMH Group's fashion brand JW Anderson; High-end travel brand Away; Health technology brand Therabody; Industrial manufacturer Kent Automotive; Lifestyle brand Life is Good. The common characteristic of these brands is: seeking new brand narrative methods outside traditional channels, requiring platforms to have flexibility, technical depth, and brand carrying capacity. The international market is another pillar of Shopify's growth. European GMV grew by 36% year-on-year this quarter, with the UK, Netherlands, and Germany being the main growth points. With comprehensive upgrades to payment products, warehousing networks, and localized language support, the company is gradually building a complete commercial capability stack covering the EU region. The company is also actively expanding into the Asian and Latin American markets. Although current data disclosure is limited, management has clearly stated: Shopify views every country in the world as a potential e-commerce market and is building a product portfolio tailored to local merchant needs everywhere. To better serve international merchants, the company is iterating its multilingual AI translation capabilities, reinforcing support for merchants to use platform tools in their native languages while addressing different countries' data protection policies, and launching multiple privacy compliance features. These initiatives lay the foundation for the platform's subsequent entry into more markets. Shopify's layout in offline business also demonstrates systematic expansion capabilities. This quarter, offline GMV grew by 23% year-on-year, with key growth points concentrated in "medium to large multi-store brands" transitioning to the Shopify platform. For example, brands like FAO Schwarz, Just Cozy, and Grand Seiko are using Shopify POS to manage offline stores, reflecting that the platform can not only adapt to emerging retailers but also has the capability to serve traditional retail groups. In the collaboration process with these offline brands, Shopify further improved capabilities such as Same-day Delivery, local delivery, and smart replenishment. For instance, after the yoga and lifestyle brand Allo expressed a desire to implement same-day delivery service in its offline stores, Shopify quickly launched customized fulfillment services in collaboration with Uber and DoorDash. This ability to respond quickly to demand is one of the core advantages that attract large clients to the platform. In all these collaborations, Shopify's advantages are not only reflected in functional aspects but also in its culture of "default openness" and "product synergy." Management emphasizes that when responding to large client needs, "the default answer is Yes," and the team flexibly builds solutions around the client's growth strategy, achieving modular integration through the Shopify App and open API system. Additionally, as the proportion of large clients increases, the platform is also adjusting its go-to-market strategy. For example, in promoting the POS system, in addition to direct sales and online channels, the company is also collaborating with global large system integrators (SIs) to explore multi-store and cross-regional clients, and is exploring partnerships with financial institutions and payment service providers to penetrate emerging markets The management particularly emphasized that many large retail brands are currently experiencing fatigue with their existing "customization systems." Although these systems once met personalized needs, they have become "cumbersome, non-scalable, and costly to maintain" in response to global business changes. In contrast, Shopify's core advantages lie in: rapid system performance, frequent updates, strong integration capabilities, and low long-term operational costs. From product structure, system flexibility, cost control to ecological openness, Shopify is gradually becoming the preferred choice for global brand merchants seeking a "unified operating platform" in the new business cycle. This coverage path from SMB to Enterprise also means that Shopify will more efficiently scale technology, data, and services across different levels of merchants, pushing the platform into a "structural revenue upgrade" phase. AI Becomes a Core Operational Pillar Shopify stated that AI is no longer just an enhancement tool at the product level, but the cornerstone of decision-making, efficiency, and innovation processes across the entire company, positioning itself as a "core operational pillar." From team culture to platform capabilities, and to merchant product lines, the comprehensive penetration of AI is creating a truly "self-learning, flexible" growth system for Shopify. The management first emphasized the comprehensive implementation of AI within the company. A recent email from CEO Toby Lutke regarding AI has been made public to convey a clear message: At Shopify, "AI-first" is no longer just a methodology, but the default starting point in employees' daily work. The company stated that any department must first consider whether the corresponding goals can be achieved through AI before applying for additional resources or personnel. This principle is changing the company's organizational behavior model. In terms of specific execution, the company has deployed over 12 sets of MCP Servers (Multi-Channel Task Servers) internally in the past few weeks, fully structuring the company's internal documents, data, and knowledge systems, allowing every employee to query complex systems based on natural language, thereby improving response speed and decision quality. This means that AI tools have become the infrastructure for "empowering everyone" within the organization, significantly reducing the costs of cross-departmental communication and resource retrieval. Among the AI products aimed at merchants, the Sidekick tool is a key update this quarter. The product has undergone a complete rewrite of its underlying architecture to support deeper reasoning logic and larger data set processing capabilities, while also adding multi-language support to ensure that merchants worldwide can use it without barriers. Currently, the monthly active user count of Sidekick has doubled since the beginning of 2025, becoming the "co-pilot" in the daily operations of many small and medium-sized merchants, assisting them in tasks such as product selection analysis, inventory forecasting, and user insights. While enhancing product competitiveness, AI also helps Shopify achieve more efficient marketing investment capabilities. Marketing expenditures have increased this quarter, but the company emphasized that this is a result of proactively ramping up under a "high return elasticity model." The marketing strategy is assessed in real-time by the system, evaluating CAC (Customer Acquisition Cost) and LTV (Customer Lifetime Value), allowing for the assessment of investment return efficiency across different channels within days, thus enabling flexible adjustments for rapid scaling or tightening. This capability allows Shopify to expand robustly in uncertain environments like an algorithm-driven growth platform while minimizing unnecessary waste. As management stated, “Our speed of perception of market signals allows us to adjust our spending pace within a week and validate within the same cycle.” This is also the fundamental reason why Shopify can still acquire high-quality new users during market fluctuations. Regarding the trial strategy, the company has further expanded the coverage of the three-month paid trial mechanism to replace the original one-month trial period. Although this will cause short-term disturbances in MRR (Monthly Recurring Revenue) year-on-year data, management emphasized: Tests show that three-month trial users exhibit greater stickiness and growth in long-term GMV performance, actively optimizing future revenue. Current data indicates significant differences in the speed at which users with different trial periods reach specific GMV thresholds, with longer trial periods providing merchants with more ample time for experimentation and configuration, thereby improving overall retention rates. The company also clearly stated that while this adjustment slows short-term subscription revenue growth, it is extremely beneficial for long-term GMV growth on the platform. Additionally, the company revealed a small but strategically significant acquisition: the completion of the acquisition of Vantage Discovery in March, a team focused on AI-driven multi-vector search capabilities. Through this transaction, Shopify will further enhance the performance of its search system in scenarios such as the Shop App, merchant front-end, and API interfaces, especially laying the groundwork for cutting-edge applications like “semantic product discovery” and “content-driven e-commerce traffic entry.” In terms of collaboration with the AI ecosystem, Shopify has established partnerships with leading organizations such as OpenAI and Perplexity to ensure that platform products and brands can be accurately captured and prioritized in new AI search engines and recommendation systems. Management reiterated a core concept of its platform strategy: Regardless of where consumers explore shopping, Shopify merchants must appear in the first wave of results. Regarding the potential impact of AI agents, Shopify views this trend not as a threat but as a significant opportunity. If future shopping habits are driven by AI agents, then Shopify will become the underlying foundation for merchant products to be selected and transactions executed by agent systems. Through open APIs and platform architecture, Shopify plans to interface with multiple LLM systems to ensure its merchant products have the highest priority visibility and accessibility. In summary, the role of AI at Shopify has evolved from a “tool” to a “structural force,” comprehensively influencing multiple dimensions of the company from growth engines to organizational models to product forms. Through an AI-driven operational model, Shopify has both enhanced its marginal efficiency and strengthened its support for merchants throughout their entire lifecycle. Winning structural competitive advantages in change**. With Newin, original title: "Shopify, the global business operating system in the AI era?" Risk warning and disclaimer The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at one's own risk