Good morning. My name is Lisa and I'll be your conference operator today. At this time, I would like to welcome everyone to the Shopify Q4 2018 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. [Operator Instructions] Thank you. Katie Keita, you may begin your conference.

Thank you, operator and good morning everyone. We are glad you can join us for Shopify’s fourth quarter 2018 conference call. We are joined this morning by Tobi Lütke, Shopify’s CEO; Harley Finkelstein, our Chief Operating Officer; and Amy Shapero, our CFO. After 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. We undertake no obligation to update these statements except as required by law. You can read about these risks and uncertainties in our press release this morning as well as in our filings with U.S. and Canadian regulators. Also our commentary today will include adjusted financial measures, which are non-GAAP measures. These should be considered as a supplement to and not as a substitute for GAAP measures. Reconciliations between the two can be found in our earnings press release, which is on our websites. Finally note that because we report in U.S. dollars, all amounts discussed today are in U.S. dollars unless we say otherwise. With that, I will turn the call over to Harley.

Thanks, Katie and good morning everyone. 2018 was another phenomenal year for Shopify and for our merchants. We hit major product milestones while stepping into new and exciting territory and we continue to evolve as an organization in our mission to make commerce better for everyone. First off, I want to thank the team at Shopify for their passion and hard work over the past year. We wrapped up an amazing year and delivered incredible fourth quarter as a result, and together we achieved a truly incredible milestone this year. No other SaaS company at the $1 billion revenue market has ever grown at this rate, 54% in our last quarter and 59% for the full year. This is historic, not just for us, but for the industry. It is truly something to be proud of. How did we get here? Simple, merchant success has been and will always be our top priority. It guides the decisions we make on a daily basis and is infused into everything we do at Shopify. This is reflected in our fourth quarter and across our three priority areas of investment in 2018; Platform, Shopify Plus, and International. Let's start with Platform. We aim for Shopify to be the first thing that merchants open in the morning and the last thing that merchants close at night. In other words we want Shopify to be the heart and soul of our merchants' business helping them sell more and work more efficiently so that they can focus on the things that really matter to them. The features that our product team shipped this year were geared towards achieving this; multilocation inventory, Shopify Ping and our Centralized Marketing Dashboard helps streamline operations, while Dynamic Checkout and new discount features are designed to enable merchants to personalize a…

Thanks Harley and good morning everyone. As Harley mentioned, 2018 was a fantastic year for Shopify as we continued our strong growth trajectory ending the year with more than $1 billion in revenue and achieving adjusted operating profitability for the quarter as well as for the full year. Shopify's ability to give merchants superpowers was on full display in the fourth quarter. We expanded revenue 54% year-over-year to $343.9 million on strong performance from both subscription solutions and merchant solutions. Subscription solutions revenue grew 42% to $133.6 million as we continue to attract new merchants ending the year with more than 820,000 merchants on the Shopify Platform. Monthly recurring revenue grew 37% year-over-year to $40.9 million primarily driven by merchant adds. Shopify Plus continued to increase its contribution to monthly recurring revenue accounting for $10.4 million or 25% compared with 21% of MRR in Q4 of 2017. Strong app and platform fee revenues contributed to the 5 percentage point difference between the growth of subscription revenue and MRR. Merchant Solutions revenue grew 63% over the same period in 2017 to $210.3 million. This growth was driven by GMV expansion which increased to 54% year-over-year to $14 billion. Continued penetration of Shopify payments, shipping and capital also contributed to this growth. The highlight of the fourth quarter came during the Black Friday, Cyber Monday weekend as Harley mentioned more than $1.5 billion was transacted on our platform over those four days. During this period, peak sales reached $870,000 per minute and $37 million per hour while our platform experienced zero downtime. This performance is an absolute testament to the resiliency of the Shopify platform and the talent of our infrastructure and support teams. $5.8 billion of GMV was processed on Shopify Payments in Q4, an increase of 65% versus the comparable…

Thank you, Amy. Before we open the call up for everyone's questions, I'll remind you to please limit yourself to one question, so everyone who wants ask a question has time to do so. Lisa, can we hear from the first questioner please?

Thank you. [Operator Instructions] And our first question comes from the line of Brad Zelnick from Credit Suisse. Your line is open.

Thanks very much and congrats on a strong finish to a great year. I didn't hear Tobi on the call, is he with us today? Tobi Lütke: I'm here, hi Brad.

Excellent. Hi Tobi, I have a big picture questions and I know it's super early, but what are your thoughts on augmented reality and the impact it can ultimately have on e-commerce? Tobi Lütke: Love it, great. I mean it's very early right? We are sort of the foundational infrastructure stage of augmented reality. Now I do think that augmented reality will be the final or at least second to last form factor for computing. We started with mainframe and went to desktop computers, we and then reached to mobile phones. We are going to go to augmented reality as a primary from of digital consumption somewhere in the next probably decade, decade and a half and then eventually to direct interfaces. So I think everyone should have a good strategy, but I'm not sure how much it is going to immediately matter, like we will find initial use cases. We have prepared the platform for it, so you can go to a number of Shopify stores and you know sort of seize it a little bit early fruits of that labor, you can look at couches, you might want to buy in your web browser on Shopify stores and then instead of looking at pictures you can actually place something in your living room and see if it actually fits dimension wise all these kind of things which is really, really cool. But there is such an enormous amount of work that has to happen to get proper 3D models of the products, you know pick out how to permanently place objects in the real world and then of course we sort of are all standing by until the other companies can figure out how to miniaturize all the coupons [ph] put them in proper classes. And so, the…

Thanks so much for the color and thanks for taking my question.

Thank you, Brad.

Our next question comes from the line of Ken Wong from Guggenheim Securities. Your line is open.

Thank you very much. Maybe a question for Amy, you touched on a lot of investment for 2019, maybe if you could just circle a little bit on just gross margins, how should we think about gross margins relative to 2018 when trying to figure out to manage through the operating income goals that you guys tossed out there?

Yes, sure. Let me just break it down for you by the subscription solutions and merchant solutions and then we'll talk a little bit about overall gross margins. So with respect to subscription solutions margin we should generally see improvement year-over-year. The first three quarters of 2018 were impacted by the cloud migration and we saw in the fourth quarter of 2018 we did see a rebound. So generally for 2019 calling for improved subscription solutions margins year-over-year. With respect to merchant solutions margins, we expect sort of steady-state with a slight bias towards improvement. There are some puts and takes with respect to what's in there. We have continued growth of high margin products like Shipping, Capital, Fraud Protect. We expect Payment margins to continue to be relatively strong and steady. Within that, International Payment margins tend to be higher than average, but there are some downward pressure on that as Plus merchants continue to take Shopify Payments. So generally, calling for steady merchant solutions margins year-over-year. When you step back and then you look at the overall blended gross margin, there will be some pressure, some slight downward pressure as we continue to see higher mix of merchant solutions revenue year-over-year. But I'd like to just emphasize that we aren't optimizing for an overall gross margin. We're focused on gross profit dollar growth, that's what we think is important, that the signal to us that our merchants are successful and that we're sharing in that upside and that a trade-off we are happy to make.

Got it, thanks for that Amy.

Great.

Thanks Ken. Next question please?

Our next question comes from the line of Colin Sebastian from Robert Baird. Your line is open.

Great, thanks. I'll add my congratulations on a strong year. May be also a big picture question for Tobi, but given that Shopify's success rests in large part due to the strong underlying technology stack, I guess I'm wondering, you know your level of confidence that the current platform has structure with rails and containers and will continue to scale efficiently at such a high level of growth and volume and performance or do you foresee the need maybe to step back and reinvest in the platform over the next couple of years? Thank you. Tobi Lütke: Yes so, you know what, a mentor of mine once told me that when I was doing my apprentice as a programmer like in Germany that when you start a software project you have about two years of making changes to it afterwards it is like someone put cement to code base and you are never going to change a thing anymore and, that was two, back then in the '90s. So I've been terrified of that ever happening and you know the industry has matured significantly. We know a lot more about software craftsmanship than we did in the '90s and one this Shopify has done from the beginning and that was really very difficult and we're like very scrappy startup time to just sort of survive. Most, once you've figured out a better way to do a certain thing, or a better way to architect certain things we actually went back and made those changes instead of accumulating technical debt, that of course you end up having to pay a lot of interest on over the years. And the Shopify has had it done that [ph] and broken art and just making sure that the platform is able to adapt to…

Thank you, thank you.

Great, thank you Colin. Next question please?

Our next question comes from the line of Monika Garg from KeyBanc. Your line is open.

Hi, thanks for taking my question. Amy, you know one question is operating margins you are guiding on flattish like 1.2-ish percent for 2019. Even you are guiding to a strong growth in 2019, could you walk through like, how, why we are not seeing more leverage and at what time do you think we can see more leverage?

Yes, we still see continued strong growth, huge opportunity in front of us and so we're going to continue to invest OpEx areas. With respect to sales and marketing, we will see some light operating leverage in 2019, but we see opportunities to continue to invest in International and Plus. We talked a little bit in my earlier remarks about the $30 million for brand spend and so not all of those investments will necessarily pay off in 2019, but will help us continue to grow at strong rates well into the future. With respect to R&D, we likely will not see any operating leverage as we continue to invest in the areas where we have been investing, Plus, International and some newer capabilities to be announced later and so we're adding technical talent there. And then with respect to G&A, might see some slight operating leverage, but we'll continue to invest there as well for the future. It's too early to talk about when we might see more operating leverage while we see opportunities for growth. We're going to continue to invest for the longtime long term as we have in the past.

Thank you.

Great. Thank you, Monika. Next question please?

Our next question comes from the line of Tom Forte from D. A. Davidson. Your line is open.

Hi, good morning. Thanks for taking my question. So the question I had was, what are the keys to your success in highly regulated markets such as cannabis? And then stated differently, what are the keys to your skill set that enable you to help merchants exploit highly regulated markets?

Hey there it's Harley. I'll take that question. So part of it, just to be clear, the reason that we were so aggressive in going after the Canadian cannabis market was, we felt that – what the Canadian Government was legislating was very clear and it made it easy for us to understand what was required, but what it also did was it also positioned us if we did this right to be a global leader and be the first phone call that any other country thinks about when they're thinking about regulating or allowing cannabis sales to the consumer to be to be allowed. So a couple of things that had to happen. One was we were able to work with very tight timelines because effectively we were given only a couple of months to know all the legislation and how it would be implemented. The second was we also had to abide by very specific legislative requirements and so things like age verifications for example or in the case of licensed producers the need to do what they call Seed to Sale applications. And so we felt that there was a good challenge for us not only as a business, but also on the engineering side and if we were able to secure most of the major provinces and most of the major licensed producers which we did and then be highly successful at that, that it would open the doors for us for a really good future as cannabis sales increase internationally. And actually funny enough the provinces that didn't use Shopify, did have some problems and the ones that did use Shopify had no problems whatsoever so we're quite proud of that. But really the Canadian cannabis push was really not only just to get a foothold in the Canadian market, but also ensure that we have a really good positioning globally as things begin to decriminalize.

Great, thank you very much.

Thank you, Tom. Next question please?

Our next question comes from the line of Richard Tse from National Bank Financial. Your line is open.

Yes, thank you. From capital allocation perspective, I was wondering if you can provide some color on sort of the thought process around how you make those decisions and where you might be focused more today?

Yes, sure. I'll start with that one. We obviously start with our merchants and what their needs are. And as I said, we look at three merchant segments, Aspirational, Core and Plus and our investments are largely geared towards better serving them and continuing to grow our capabilities there and also to increase our TAM. We talked a little bit about international in my earlier remarks which I think is typical of how we invest, we'll typically start where we're testing somewhere as we did in international we talked about blogs and how we saw early success with translating blogs. And then in 2018 we started investing in earnest in International where we picked four key markets to focus on localizing and we saw that localizing actually produced significant results. Three of our four focus countries actually more than doubled their GMV year-over-year and so we saw success there. So we learned and so we're taking those learnings and now taking that to the next level. And in 2019, we'll continue to localize in the markets where we're at. We'll continue to translate into new languages. And we'll continue to look at new markets, but we'll do it in a very focused and concerted way. So we've been smart allocators of capital in the past and we'll continue to invest in that sort of way and allocate capital in a smart way.

That’s helpful. Thank you.

Okay, thank you, Richard. Next question please?

Our next question comes from the line of Darren Aftahi from Roth Capital Partners. Your line is open.

Good morning. Thanks for taking my question and congrats as well. Just on the rest of world growth, do you think there one, any geographies you can call out that other index growth? I know there was one country you said three of the four did well. And then two, as it pertains to international investment and additional kind of regions, countries, languages, you can kind of call out where that investment is directed to? Thanks.

Hi there Darren, it's Harley. I'll take that call. So as you sort of called that last year there were a couple of priority countries that we focused on. The reason we focus on those four countries to start was we felt that we had the closest product market fit in those countries, yet we weren't necessarily translated, from a language perspective. We didn't have the right payment methods in place. We certainly had a very small if any partner ecosystem. And so we thought that's where we can get the most leverage from with the least amount of work. That being said, there's still quite a bit of work to do in those countries. And as Amy just mentioned the results sort of speak for themselves, the fact that GMV doubled in three out of those four was incredibly we thought that was really great. Now we will also look to some new countries in the future. We're not going to call those out right now, but we will continue to expand and figure out where else we can find product markets fit. That being said, you know as Amy mentioned in her prepared remarks, we really, I mean we were accidental International in the early days. We were - merchants beat a path to our door. We really weren't doing very much. Now we're really beginning to focus on it. We have the right team, the right leadership, and I think you'll see a lot more from international as indicated by our merchant going merchant going from 21% of total merchants on our platform being rest of world to now 24%. So I think we will continue to see good growth in international.

Great. Thank you, Darren. Next question please?

Our next question comes from the line of Samad Samana from Jefferies. Your line is open.

Hi, good morning. Thanks for taking my questions. So net merchant adds on a full year basis for 2018, looks like there are Plus 211,000 down slightly from Plus 232,000 in 2017, but sales and marketing spend itself is about 50% year-over-year. So I'm just wondering if how we reconcile maybe how net margins have trended in 2018 and how you think the investment dollars in sales and marketing should translate into merchant growth in 2019? . That will be helpful. Thank you.

Yes, I would. We - we're happy with our merchant adds in 2018. We feel like we have a strong and healthy and growing TAM which is evidence from the plus growth that we saw in 2018 as well as International growth. One of the things, I'd encourage you is this isn't just about merchant adds. We feel very confident that we will continue to add merchants well in to future, but this is also about GMV growth, share of wallet growth, and overall revenue growth. So that's how we look at it. In terms of sales and marketing, some of that spend in 2018 was absolutely geared towards adding merchants in the year, but some of that is longer term investment in International and Plus and we also invest in areas like product marketing that don't necessarily show up in merchant acquisition, but show up in product adoption and take rate. And so I think you have to look at it a little bit more holistically. And then just lastly, I'd say that we keep a very close eye on our LTV to CAC ratio and that continues to be healthy and strong and while that's continuing to be strong we're going to invest healthily for sales and marketing.

Great, thanks I appreciate that answer.

Thank you, Samad. Next question please?

Our next question comes from the line of Ross MacMillan from RBC Capital Market. Your line is open.

Thanks so much, and my congrats as well. Amy, just on take rate when we think about Merchant Solutions revenue relative to GMV that's been growing nicely but it was a little flat in Q4 versus Q3 and I was just curious as to why that was given gross payment volumes as a percentage of GMV were higher? And then maybe just bigger picture, as we think about adding more merchant solutions do you have a kind of view on what you'd like to target in terms of that increase in that take rate relative to GMV over time? Thanks.

Thanks. Sure. With respect to take rate in the fourth quarter, our overall take rate quarter-over-quarter was flat. But if you dissect take rate by merchant segment Aspirational, Core, Plus and International, take rate actually increased quarter over quarter for every merchant segment. What you saw in the fourth quarter was a GMV mix change. We saw very significant growth in GMV from Plus in International and those are lower take rate segments. They are earlier stage in terms of the introduction of Merchant Solutions. And so, I would actually view that as a significant opportunity for us going forward. It shows that our investments in those areas are paying off. Merchants are successful, their GMV is growing, and we have an opportunity to go more fully monetize that GMV over time. There could be some headwind a little bit near-term because of the strength of POS and international GMV, growth but we fully expect our take rate will increase over the course of 2019 and beyond. We don't have a target rate. We tend to focus mostly on what we believe merchants need and we feel like the take rate will sort of take care of itself over time. But we are focused on increasing our share of wallet and we'll continue to do so into the future.

Thank you so much.

Thank you, Ross. All right, next question please?

Our next question comes from the line of Gus Papageorgiou from Macquarie. Your line is open.

Hi, thanks. Thanks for taking the question. So in the quarter you, sorry, in the year you paid out $100 million to your partners and app developers. I think that's up from $50 million last year. Can you kind of help us characterize, what do you think your competition is paying out and would you look at your platform and its differentiation? Could you kind of quantify how important is that application ecosystem versus your competition? I mean does it account for half the differentiation or a third or anyway you could kind of quantify that would be helpful?

Hey, it's Harley. I'll take that. I mean look from the early days of Shopify, we've always had this really great relationship with our partners. In fact, we don't have a merchant conference, we actually have a partner conference called Unite that many of you have attended. They're important part of what we offer. What the partner app ecosystem allows Shopify to do it is it means that every single merchant on Shopify gets exactly what they need from us. We are able to provide with most of the merchants and most of the time, but every merchants business is really unique and we can't necessarily anticipate every single need of every individual use case. The partner ecosystem allows us to ensure that that every merchants business no matter what they require they are able to get a solution for the exact complexity of their particular business. That's really important. To your other point which is how do we ensure that you know competition from - for our partners, we've always been generous with our partners. If you look at our rep share structure it's an 80-20 split which has always been quite generous beyond that rather than giving a bounty for referral we pay rep share in perpetuity. What we really try to do is not only get partners to build on Shopify and refer merchants to Shopify but over the long run become exclusive to Shopify. And now that we have more merchants than any of our competitors do certainly in the SMB side it means that most of these partners are only building and only referring business to Shopify. We really like that. The other thing we're also seeing is that some of these partners are growing so large in just supporting Shopify that they themselves have built multimillion dollar companies, building apps and themes and doing services for our merchants. So we're really happy with our positioning with our partners. The relation we have with them is very, very strong and that will continue long into the future. It's an important part of our business.

Great, thank you.

Thank you, Gus. Next question please?

Our next question comes from the line of David Hynes from Canaccord. Your line is open.

Hey, thanks guys. I want to ask about some of the marketing automation enhancements you've made to the platform right, we have Marketing Dashboard, Ping, Kit. I'm sure I'm missing some, but where are in terms of the build out of that suite versus your vision and what are you seeing in terms of early customer adoption? Tobi Lütke: I mean, early customer adoption is really good because that again Shopify is the interface that people spend most of their time with than thinking about their business, so that's a nice situation we got ourselves into from a introduce standpoint. On where we are at this is, it's really early. It may be just sort of the clear intention, that's the way I would put this. So there's a lot more work to be done. It's a very big space and we are mostly interested in marketing simplification, increasing approachability of marketing rather than the actual industry of marketing optimization which is massive. And it would be too much for us to support although we would like both to feedback into Shopify and so to again give the merchants all the data they need in one place. So, there's a couple of different things going on, but it's definitely an area that we are spending a good deal of time just looking to see how we can we have, how can we make, how can we get people to competently run their first couple of campaigns just to get into the mind space of, this is how growth looks on the Internet, how to can - once they allocate some capital we would like to have them use it as wisely as possible based on all the data that is available. We have them interpret the results, learn from them, take a next step and so on and that's the main focus right now and we'll have to see where this road leads us. We don't have – this is one of the areas where we do not have like a world domination ambition. We just want to – we kind of have to do it because, it seems like it this – the marketing world and industry seems a little bit like what e-commerce was like before Shopify came around as in everyone focused on the people who already had a lot of money because obviously they are better customers, but what everyone then tends to forget is, you have to have the new guys too because otherwise you eventually run out of people who already have money. You need new ones to come into the market and they need a road there. So, we are picking up the slack that I think the industry is leaving at the bottom of the market because it just for - we just have better business model alignment with that segment, so that's the main area of focus for us.

Yes, that makes sense. Thank you.

Great, thank you. Next question please?

Our next question comes from Deepak Mathivanan from Barclays Capital. Your line is open.

Hi, guys thanks for taking the question. This is somewhat related to Ross’s question from before, one of the strong bullish trends that you're seeing is actually Payments adoption by the Plus merchants. Can you give some color on where Payments penetration is currently on Plus either as a percent of merchants are as GMV, just trying to get some sense of which inning we're at? Thank you so much.

Yes, in terms of, if you recall in the early days of Plus obviously we had mostly upgrades to the Plus platform or the Plus plan. So a lot of those merchants tended to already be on Payments. Obviously now more than half of the new Plus merchants that came in the quarter are new to the platform and we're seeing some incredible brands and because we are able to offer competitive rates, some of them are coming over. Obviously they are getting much better pricing because of their volume. We will continue to push that of course. Now keep in mind also there are some additional benefits using Shopify Payments. For example things like Capital and Fraud Protection and these sort of products are only available if you Shopify Payments and so there's an inherent incentive beyond the financial incentive because we do have a 15 basis point fee if you don’t use Shopify Payments and it's available in your geography. So I think that will continue to go, again merchants are adopting it for a bunch of different reasons, but over time I think you'll see continued adoption there as we add more products around Payments that will continue.

Great, thank you, Deepak. Next question please?

Our next question comes from the line of Nikhil Thadani from Mackie Research Capital. Your line is open.

Great, thanks guys. I just wanted to go back to some of the previous merchant questions as it seems like you're getting a lot of traction from merchant growth outside your core geos. So, maybe if you could just, give us some nuances of how that works in those new markets perhaps with regards to the merchant acquisition funnel, the lifecycle or maybe even your product roadmap, what's different in these new geographies for these new merchants versus your existing merchant base out there? Thanks guys.

Thanks for the question. What we're learning is, every geography is a little bit different. In some of the geographies we are leaning very heavily on our partner ecosystem and that's why it's an important part of our strategy internationally. In other places, the strategy for getting new merchants and reflect some of the things you've seen in North America. So there's a bit of a mix. On the product side, every geography needs something different, something like compliance certificates which are incredibly important to German merchants are not nearly as important let's say to merchants in a place like Japan. And so what we're trying to do is try to understand the nuances what each country really needs and then building around that. The idea of creating sort of one size fits all or feature parity model, it just doesn't work, if you're going to do a really good job at increasing Shopify's reach around the world. So we're being very thoughtful about that. But I would say from a merchant acquisition perspective those are all different on a per country basis.

Great, thank you Nikhil. Next question please?

Our next question comes from Ygal Arounian from Wedbush Securities. Your line is open.

Hey. Thanks for taking the question. Just a little bit on Plus merchants, a little bit more. So Harley, I think – did you mention, I just want to make sure I heard it correctly that over 50% of your net new Plus merchants are coming organically up the funnel from lower tiers? And then the ones that are coming or replatforming from other tiers, are they are replatforming from other from other platforms that they are the new to e-commerce and what are you seeing as kind of the key drivers of why they choose Shopify Plus over another platform? Thanks.

Yes. So to be clear, more than half of the new Plus merchants in the quarter are brand new to Shopify, so less than 50% are upgrades. So we're seeing lot more merchants that are coming to us for the first time and joining Plus. I think one of the most intriguing parts of where Plus is at right now is all these different verticals. Initially again, it was really just an upgrade path for our most successful merchants. Now what we're seeing is, we're seeing like I mentioned in my prepared remarks, PPG [ph] is coming on. We're seeing more traditional retailers that traditionally only existed in shopping malls that are coming on. And so we're seeing all these different verticals. The sort of celebrity brand vertical is really heating up and we seem to be the platform of choice for them. So that is really exciting to us and some of these verticals we've never anticipated would be verticals that we would be able to attract in the early days and being very successful with that today. In terms of where they're coming from, certainly some of them are migrating to us from more traditional enterprise e-commerce platforms. Usually they're coming to us for one of three reasons, either ease of use, pricing or flexibility. When they hear that Apple is releasing Apple Pay they want to be able to use it right away and not have to wait six months and have a bunch of meetings to talk about that or augmented reality for that. Tobi had mentioned earlier on. So we're actually seeing a bunch of different ways they're coming to us. Some of them for the first time ever are selling direct to consumer and that seems to be a really important piece of retail and the future retail. And for a lot of these direct to consumer brands whether it's Rebecca Minkoff or Steve Madden type brands, Shopify Plus is becoming the ones that they're - that they're choosing. So I would say that for the most part they're coming to us from a wide variety of different types of migration paths. Again some are brand new to market, some are migrating from more enterprise platforms and I think that will continue long into the future. But Shopify Plus has really cemented itself as the go to for the DTC big brands that want major flexibility and they want to be able to scale very quickly.

Great, thank you, so much.

Thank you, Ygal. Next question please?

Our final question today will come from the line of Brian Peterson from Raymond James. Your line is open.

Hi and thanks for the question. So just with the $2 billion on the balance sheet could you just give us an update on how you're thinking about build versus buy or there's been some M&A activity which is probably more tuck-in nature? I'm just curious of your appetite for anything from an M&A perspective may have changed given the capital raising? Thank you.

Yes. I'll take that one. We fully expect the cash on the balance sheet from the capital raises to be used to achieve our business strategies which will likely include M&A. If we see an attractive opportunity to accelerate or our product roadmap we will certainly pursue it. And so, it's really just to maintain optimal flexibility and optionality.

All right, thank you, Brian. Thanks everybody for dialing in and we will talk to you soon.

Thank you for listening. This concludes today's conference call. We will now just connect.