Shopify (SHOP, Financial) reported a robust Q4, with merchants generating a record $11.5 billion in sales over the Black Friday - Cyber Monday weekend, marking a 24% year-over-year increase. The company exceeded revenue and GMV estimates, with revenue rising 31% to $2.81 billion and GMV increasing nearly 26% year-over-year to $94.46 billion.

Despite the impressive Q4 results, Shopify's Q1 2025 guidance fell short of expectations, projecting revenue growth in the mid-twenty percent range and a drop in free cash flow margin to the mid-teens. This contrasts with a 22% free cash flow margin achieved in Q4, surpassing both its guidance and the 19% margin in Q3.

• Q1 is typically Shopify's slowest quarter for GMV, suggesting a conservative revenue outlook. The decline in free cash flow margin is attributed to increased investments in B2B, international, enterprise, and core platform growth, areas where Shopify has a strong track record.
• Shopify has expanded its offerings to attract enterprises, adding features like Shop Pay and Shop Pay Installments. Notable enterprises scaling on Shopify's platform include Boot Barn, Crocs, GameStop, Reebok, and Hanes Brands.
• AI investment is central to Shopify's growth strategy, with recent launches like an AI-powered search integration and enhancements to Shopify Inbox improving customer communication efficiency.

Despite the conservative Q1 guidance, Shopify's earnings report underscores its resilience against macroeconomic headwinds and its growing market share, particularly among larger enterprises.