Carrie Gillard: Next question comes from Tim Chiodo at UBS.
Tim Chiodo: I want to dig in a little bit more to some of the comments around Shop Pay moving off-platform. If you could just talk a little bit about how you envision the button competing maybe with the likes of PayPal or Apple Pay across the broader retail landscape in terms of checkout share and if there’s any great early signs of — maybe example retailers where the Shop Pay button has been added alongside those payment methods for non-Shopify merchants? And also to the extent that this could be an opportunity to sort of get a trial with some of the more enterprise merchants, they get to work with Shopify, get a good experience with Shop Pay, and then potentially move more of their e-commerce infrastructure over to Shopify?
Harley Finkelstein: Yes. I mean, you sort of nailed it, which is that this really allows us to begin a business relationship with brands and businesses and huge retailers that may not otherwise be ready to fully migrate on to Shopify enterprise, whether it’s Shopify Plus or it’s headless — our Hydrogen product or even commerce components. But Shop Pay off-platform still very much in its early days, but we see that as really the tip of the spear for enterprise, and it allows us to begin a relationship. But why is that — is Shop Pay in particular so important? Well, right now, it is the highest converting checkout on the internet. More than a 100 million buyers have opted into Shop Pay and it’s already — I mean, the quarter alone, it’s facilitated $12 billion of GMV and a $110 billion cumulative since we launched it.
So, we know that Shop Pay is consumers’ favorite way to check out from an accelerated perspective. And now, really, what we’re trying to do is continue to make it easier to check out with Shop Pay, add it into things like Shopify point-of-sale, for example, and expand it across more surfaces. But, really, making Shop Pay the preferred accelerated checkout across commerce is the goal here. And, by creating this opportunity for some very large brands to use Shop Pay off-platform, again, the goal is not for them just to use Shop Pay off-platform indefinitely. It’s to begin a business relationship. It’s the same philosophy around commerce components, right? Not everyone wants to use all of Shopify. There are some very large brands that historically didn’t consider Shopify that are now coming on, because they want to use our checkout, which converts 35% better than our competitor or 15% better on average across the entire internet.
They want to use Shop Pay or they want to use something with our inventory. They want to use our admin. They want to use point-of-sale. By allowing them to choose certain components of Shopify, we believe over time, they will take more and more components to us, and that’s what Shop Pay off-platform provides us with.
Carrie Gillard: Our next question will come from Martin Toner at ATB Capital Markets.
Martin Toner: I’d like to hear a little bit more about the commercial agreement with Flexport. Does it include a fee as a percentage of GMV? And when do you think something like that might be material to your overall numbers?
Jeff Hoffmeister: Yes. I’ll go ahead and start on this. We haven’t disclosed all the details around the commercial agreement. I did say in my prepared remarks, it’s not going to have a material impact on this year. It’s still early days. Obviously, as a result of the divestiture, we’ve got a really strong partnership with Flexport. We will continue to expand ways to partner with them. We’ll — either at the investor day or early next year, we’ll talk a little bit more about the financial impact it will have for us. But as of right now, there’s nothing in your models I would change just based on it. It’s just still too early.
Carrie Gillard: Our next question comes from Deepak Mathivanan at Wolfe Research.
Deepak Mathivanan: Maybe for Jeff. Jeff, just following up on your 4Q OpEx guide, how much more runway do you see to optimize OpEx into 2024, specifically, in areas like back office and marketing, which have been a pretty healthy source of leverage?
Jeff Hoffmeister: I don’t want to get at this point into 2024. Obviously, I’ll give you some guidance on 2020, the last quarter of 2023. I think when you look at both Q3 results, as well as obviously in Q4, what we’ve talked about in terms of expectations, both of those without logistics, I think that gives you reasonable clarity on how we think about the new shape of Shopify in terms of where we sit right now. And we talked about in terms of the guidance, a slight downturn in terms of operating expenses for Q4. So, our goal is, as we’ve talked about and as Harley mentioned in his comments as well earlier to one of the questions. We’re going to work really hard to make sure that we continue to drive the top line and do that with a very reasonable operating expense base and try and deliver that combination of strong top-line growth and financial discipline on OpEx. So, again, while I don’t want to get into 2024 just yet, hopefully, Q3 and Q4 of 2023, give you some good indication of how we’re thinking about things.
Thanks.
Carrie Gillard: Thank you. Our next question comes from Anna Andreeva at Needham. We’ll go to the next one then. We’ll take the next question instead from Bhavin Shah at Deutsche Bank.
Bhavin Shah: Great. Thanks for taking my question. GMV is very healthy in light of continued pressure on the consumer. Can you maybe just discuss the trends you saw and how they progressed through the quarter? And maybe any divergence you saw across verticals that your merchants play in? And how do you feel your merchants are kind of positioned into the holiday season? Thank you.
Harley Finkelstein: Yes. I’ll take that question. So I think, as you said, we’re coming to the busiest shopping season of the year for our merchants. What we’re seeing really is that the consumer is quite resilient. There is always things that are shifting, obviously, on the broader economic landscape, but I think our job, our responsibility is to adapt, expand, and build over time so that no matter what happens, our merchants are really well prepared, and arm them with the solutions they need to be to be successful. But we expect our merchants to continue to be resilient and outperform the broader U.S. retail market as they have in the past. I think Shopify is a product and from a decision making perspective, is — it is such a great deal for merchants to use.
