Carrie Gillard: Our next question comes from Brad Sills at Bank of America.
Brad Sills: And I wanted to ask about the SI channel and some of the progress you may be seeing there with Deloitte, IBM. How are some of those customers that you’re targeting there different from the traditional Shopify Plus end market? And how is the SI channel helping to customize and go after that end of the market?
Harley Finkelstein: Look, more large enterprise retailers are joining Shopify. It’s happening every single day. And I think across the market, these large brands, these large businesses are recognizing both the value, but also the ease of combining our solutions with their existing infrastructure. They’re doing it because they want a better total cost of ownership, but they also want to future proof their business. And at the start of this year, we announced, I think, January 3rd, our new enterprise solution. We now have something for everyone, whether it’s headless or it’s Shopify Plus or it’s things like Commerce Components. And part of that is also finding new channels to get in front of those merchants. And we talked about brands, like Pucci from LVMH or Moda Operandi or Boardriders, which owns Billabong and Quiksilver and GoPuff.
These are all different types of merchants in different geographies. And so, what you’re seeing is a very intentional push to find better onramps into Shopify. And one of those onramps is — are the SIs and that is going really, really well. So we now have agreements with Deloitte, EY, KPMG, Accenture, IBM Consulting, Cognizant. We just announced a new one with WPP. And what it’s really doing is it’s helping very high volume and high complexity, merchants and businesses that they already work with daily, really migrate on to Shopify. You have companies like Accenture right now that are actually training entire teams on selling Shopify and working together on these high revenue and high profit projects together, and it’s working. But you’re also seeing us, for the first time, do things like participate in the Gartner Magic Quadrant, which we are now the highest in that study in terms of ability to execute and a leader there.
You’re seeing us create new summits and new events for where we’re bringing 600 global enterprise partners together. We had a partner summit a couple weeks ago in LA. These are things we didn’t do historically. And we’re doing that because we know that these sort of enterprise merchants and retailers that we want to bring on in the future, they require a different onramp into the business, and SIs play a big role in that, and it’s working.
Carrie Gillard: We’ll now go to Clarke Jeffries at Piper Sandler.
Clarke Jeffries: Jeff, I wanted to ask about the low-single-digit decline in OpEx between Q4 and Q3. What specifically is going to be the largest driver of the sequential dollar move there and any way to think about what remains the lowest hanging fruit for cost optimization?
Jeff Hoffmeister: I think one of the things that you’re going to see from us is the continued implementation of all the hard work we’ve been doing over the last four quarters, specifically to make sure we’re continuing to get to the new shape of Shopify and get to an operating expense level, which we think will allow us to be disciplined on costs while we’re going to continue to grow the top line. The things that we’ve talked about, I think from a headcount perspective, I alluded to that both as Q3 results in terms of also how we think about Q4, stabilizing where we are from on a headcount perspective. We will continue to hire in select key areas. We will continue to make sure we’re making investments in things like AI.
We want to always be there for merchants. We will continue to invest in what we’re doing on the product development front. But as you heard from my comments as it relates to Q3, we’ve been very-disciplined in the back office. We’ve been very-disciplined on the marketing front. We will always — Q3, I talked about leaning in to what we’re seeing in marketing behind point-of-sale and also as it relates to offline in Europe. So, when we see opportunities on the marketing side, we will lean in. But also importantly, at the same time, what we’re doing is we’re being really disciplined across all the different markets, products, channels, geographies. So, if we look at the returns, we as a senior management team spend a lot of time looking at the returns by channel, by segment, in terms of what are the marketing dollars need to cross, in terms of the threshold before we spend.
And if in any given quarter, we don’t meet those thresholds, then obviously, we won’t spend there. So I think it’s going to be continued discipline on headcount, continued funnel marketing and driving the back office, largely through automation.
Carrie Gillard: Our next question will come from Siti Panigrahi at Mizuho Securities.
Siti Panigrahi: I will ask about the Shop app traction. So it’s good to see some of this marketing initiative you guys doing, like Drake’s tour. But could you help us understand, like, what’s the adoption so far? Like, what percentage of your consumer currently that purchased from Shopify merchants use Shop app and what kind of active use you are seeing there?
Harley Finkelstein: Yes. We’re not talking about those metrics, we’re not disclosing just yet, but the Shop app is becoming much more popular. I mean, when we launched it, we were very clear that the goal is really to strengthen merchant relationships and increase customer LTV. It is a new owned channel. It offers this end to end shopping experience for consumers. They get a real time order tracking, in-app checkout with Shop Pay and Shop Pay Installments. So from the consumer perspective, it’s, this is an incredible place where some of the more favorite brands, all have, wonderful products listed. From a merchant perspective, what really matters is it’s an own channel that can help them drive traffic the way they want, and it’s something that, obviously, you can only get by being on Shopify.
Now in terms of some of the stuff we’re doing now, I mean, we’ve been teaming up — you mentioned this earlier, but we’ve been teaming up with brands well beyond Drake, companies like Spanx and Feastables and Steve Madden, where we’re bringing some of the biggest brands on to Shop app and providing them with opportunities like Shop Cash to give these great promotions to their audiences. It grows their GMV. It also grows their user base, and we’ve done about 40 of these so far with some of the largest brands. The current focus for Shop App is sort of threefold. First is, enable merchants to customize the in-app shopping experience with things like Shop Minis. It is beautiful mobile application that actually allows them to reflect their brand in the Shop app.
The second is to build incredible brand awareness and acquire new customers. That’s where Shop Cash is playing a big role. And then finally, how do they convert browsers into buyers? Things like signing with Shop and Shop identities and obviously seamlessly transact with Shop Pay. This is getting to be a really wonderful channel for these merchants to use. And so, we’ll talk a little bit more about how it’s growing in terms of some of the metrics you’d ask for in the future. But, generally, I mean, for anyone that uses Shop App, you know how great it’s become. It’s only going to get better.
