Morning. My name is Lisa. I'll be your conference operator today. At this time, I would like to welcome everyone to the Shopify Q1 2019 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then 1 on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Katie Keita, Head of Investor Relations, you may begin your conference.
Thank you, operator, and g ood morning, everyone. We are glad you can join us for Shopify's 1st quarter 2019 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 filing with U.S. and Canadian regulators. Our commentary today will include adjusted financial measures which are non-GAAP measures.
These should be considered as a supplement to and not a substitute for GAAP financial measures. Reconciliations between the two can be found in our earnings press release, which is available on our website. Finally, note that because we report in U.S. dollars, all amounts discussed today are in U.S. dollars unless otherwise indicated. With that, I turn the call over to Harley.
Thanks, Katie, and g ood morning. Shopify is off to a great start in 2019, delivering strong results in our first quarter. Merchants of all types and at all stages of their commerce journey continue to start, grow, and successfully run businesses on Shopify, from early-stage entrepreneurs to established businesses to merchants in a variety of verticals and geographies. We continue to attract such a wide and diverse range of merchants to our platform because we put the best interest of our merchants at the center of everything we do. Today, I'd like to focus my comments on three areas: Our platform, Shopify Plus, and our partner ecosystem. We continued to strengthen our core platform in the first quarter to help merchants of all sizes sell more and sell more efficiently.
We launched new marketing capabilities focused on smaller merchants, such as Facebook Dynamic Product Ads, a retargeting tool that we've built into merchants' marketing dashboard, which means that smaller merchants can save valuable time creating ads, reach more potential buyers, and increase conversion to sales. We also introduced Store Switcher, a tool that creates a better experience for brands that run multiple shops simultaneously. Similar to marketing, frictionless commerce is another highly effective catalyst for GMV, which is why we support Google Pay, Apple Pay, and of course, why we built Shopify Pay. Shopify Pay, which is our own accelerated checkout product, has expanded rapidly since it launched two years ago. $3.4 billion of GMV has been processed through Shopify Pay since then, with GMV processed in Q1 more than doubling relative to the same period last year.
With nearly 30 million buyers opting in, the number of orders processed on Shop Pay has also more than doubled year-over-year to over 10 million transactions in the quarter. Shop Pay is quickly becoming one of the best ways for buyers to check out online, and more importantly, it's making checkouts faster for our merchants. On a personal note, it took me less than 20 seconds to buy my latest pair of Allbirds using Shop Pay from initial landing on their store to receiving a confirmation of a completed checkout. It is by far the best and fastest checkout I've ever experienced. Multi-channel selling remains one of our core value propositions, one that is evolving with the emerging of online and offline commerce.
Through our partnership with the innovative concept store Showfields, we are powering new retail experiences by giving some of Shopify's rising digital native brands and merchants the opportunity to sell their products in person using Shopify Point-of-Sale. Aligned with our brick-and-mortar efforts, we also released the tap-and-chip point-of-sale reader last week, further enhancing the merchant and buyer physical retail experience. Moving to Shopify Plus, which had a fantastic quarter, benefiting from a strong sales team that's constantly improving, as well as a strong mix of upgrades, validating our strategy of developing the widest funnel for new entrepreneurs that can grow really large on our platform without any limitations. Merchant adds in the first quarter, which is typically a slower period, nearly matched merchant adds in our fourth quarter, typically a stronger period.
This momentum reaffirms the strength of Shopify Plus' value proposition, which more larger volume merchants are beginning to recognize. Brands across a variety of verticals choose Shopify Plus to help them manage the increasing complexity of their businesses while also leveraging the agility, flexibility, and cost-effectiveness of our platform. Shopify Plus brands that launched this quarter included fashion labels such as Betsey Johnson, Levi's, and Hudson Jeans, celebrity brands like Reese Witherspoon's Draper James brand, the toy company Hasbro, publishing house HarperCollins, personal transportation company Segway, and even more brand-specific shops from consumer packaged good companies like Johnson & Johnson and Procter & Gamble. We remain focused on further solving the business complexity experienced by companies selling at scale by understanding the specific needs of these businesses and improving our product market fit.
In our first quarter, we continued to enhance enterprise-level features such as templates for Shopify Flow, our integration tool that connects applications and automates repetitive tasks. We also launched multi-currency for Shopify Plus merchants using Shopify Payments, enabling these merchants to sell in multiple currencies and get paid in their local currency. While it's still early, multi-currency has gotten off to a solid start and is a great example, alongside Shopify Protect, of the multiple ways we're able to add incremental value to our merchants. Finally, turning to our partners. Our partners play an incredibly important role in our merchant success, and our partner ecosystem remains strong and continues to grow. Our partners added more than 200 apps in Q1, bringing the number of apps in our Shopify App Store to more than 2,700.
A growing number of our partners continue to recommend and build on Shopify, with more than 19,000 partners having referred merchants to Shopify over the past 12 months. Over the years, we've built a healthy community of partners that have added tremendous support and value to our merchants. It took us nine years to pay out the first $100 million to app developers and just 12 more months to double that number to $200 million paid out. We continually work to nurture and shape the development of this ecosystem to encourage the best possible merchant experience. As we grow in our core and international markets, our partners will continue to play a vital component in our journey.
We are excited to come together with our partners at our Unite conference in June to share more of our product roadmap and keep working towards a future that empowers merchants all over the world. Placing the merchant at the core of our decision-making is critical in achieving our mission, which is to make commerce better for everyone. This means we will continue to work relentlessly to give merchants the tools, knowledge, opportunities, and support they need to help them make the best decisions for themselves and for their buyers, paving the way towards long-term health and success.
Thanks, Harley, and g ood morning, everyone. Our stellar first quarter results reflect the diversity and strength of our growth drivers and the solid execution of our strategy. We grew revenue approximately 50% year-over-year to $320.5 million. Subscription solutions revenue expanded 40% to $140.5 million, driven by monthly recurring revenue growth of 36% to $44.2 million. We achieved record net new MRR in Q1, driven by strong merchant ads across our core and Plus subscription plans. The pace of merchant ads from international accelerated in Q1, powering net new core MRR, while Plus merchant growth also increased its contribution to MRR, accounting for $11.3 million or 26% compared with 22% of MRR in Q1 of 2018.
Subscription solutions revenue grew faster than MRR in the quarter, due in part to strong growth in app and Plus platform fee revenue, which is not included in MRR. Merchant Solutions revenue grew 58% over the same period in 2018 to $180 million. This growth was driven by GMV expansion, which increased 50% year-over-year to $11.9 billion, benefiting from our ongoing investments in international growth and Plus. Continued penetration of Shopify Payments, Shopify Shipping, and Shopify Capital also contributed to Merchant Solutions revenue growth. $4.9 billion of GMV was processed on Shopify Payments in Q1, an increase of 65% versus the comparable quarter last year.
Shopify Payments penetration of GMV grew to 41% in the first quarter versus 38% in Q1 2018 as Shopify Plus increased its share of gross payments volume and payments adoption increased internationally. Quarter-over-quarter, however, gross payments volume penetration remained relatively flat. This is partly driven by a seasonally lower mix of credit cards in a Q1 versus a Q4, as well as by a greater mix of GMV in the quarter coming from international. In fact, GMV from international was nearly twice what it was in Q1 of 2018. Capital and Shipping also experienced solid year-over-year revenue growth. Shopify Capital had a nice funding milestone in the first quarter, surpassing $500 million in cumulative financing.
Shopify Shipping rolled out pricing that is more favorable to merchants on our USPS offering, which we believe will help our merchants provide a better experience for their buyers and drive shipping adoption over the long term. During the quarter, the percent of eligible merchants using Shopify Shipping grew to above 40% versus one-third of eligible merchants in the comparable period last year. Gross profit dollars grew 46% from Q1 of 2018 to $180.3 million as Merchant Solutions revenue, which carries lower gross margins, grew within the revenue mix from 53% to 56% of total revenues. Adjusted operating loss in Q1 was $1.4 million or 0.4% of revenue, compared with $0.2 million or 0.1% of revenue in the first quarter of 2018.
We achieved a better-than-expected adjusted operating loss in Q1 relative to February guidance, due in part to a later start than we first anticipated of our brand campaign, which I hope you have all gotten to see by now. Adjusted net income for the quarter more than doubled to $10.3 million or $0.09 per share over income of $4.2 million or $0.04 per share the same period last year. Finally, our cash equivalents, and marketable securities balance was approximately $2 billion, generally consistent with the balance at the end of 2018. Inspiring entrepreneurship, removing barriers to commerce, and helping merchants thrive in a competitive environment are core to our merchant-first philosophy, all of which our investment focus areas aim to achieve. Harley spoke about our achievements related to continued investments in platform and Plus.
I will cover our accomplishments in newer investment areas, international and the Shopify brand, starting with international. Momentum continued to build in our international efforts in the first quarter as we further localized the platform to improve product market fit, translated the partner dashboard into six new languages to expand the partner ecosystem, and added tools to reduce the friction presented by cross-border sales. Our efforts are clearly paying off as our mix of international merchants relative to total new merchant adds reached a new high in Q1, and their contribution relative to overall GMV continued to expand. With our international localization efforts just over a year old, we are still very much in learning mode, paying close attention to the idiosyncrasies of each geography and adjusting our approach as needed to optimize product market fit.
Once we achieve that, we can expect GMV and take rate for international merchants to be more comparable with those in our core geographies. We are making progress. This quarter, we plan to launch Shopify Payments in the Netherlands, which features an integrated local payment method that allows for bank transfers, which are more popular there, in addition to credit card payments. Over the past week, we launched a beta of Shopify's platform to some of our existing merchants in simplified Chinese and Dutch. Stay tuned as we plan to introduce several more new languages over the coming months. Turning to brand. On April 15th, Shopify launched its first ever brand campaign in 12 markets across North America. This campaign runs until mid-July and includes television, digital video, radio, social, and out-of-home advertising.
Keep your eye out for our billboard and subway ads on your way to work. We're excited to have kicked off this initiative to reach a far greater number of potential merchants, catalyze the next generation of entrepreneurs, and as a result, increase brand awareness of Shopify. With our campaign launching in April, most of our $30 million of brand spend will now be largely distributed over the last three quarters of the year. Our merchants not only create and sell amazing products, but their journeys to launch and sustain those businesses are truly inspiring. Since launching Shopify Studios in January, we've released a range of pieces featuring the struggles and triumphs of Shopify merchants and exploring themes in commerce, such as women in entrepreneurship and the hidden layers of commerce behind everyday industries and products.
We've had an incredible response to the content published to date, and we're excited to continue telling these stories that demonstrate the spirit and resilience of entrepreneurs. All in, we are pleased with our performance in the first quarter and expect the momentum with which we've kicked off the year to continue throughout 2019. As a result, we are raising our expectations for our financial results for the year. We now expect revenue for the full year to be in the range of $1.48 billion-$1.5 billion and an adjusted operating income ranging between $20 million and $30 million. For the second quarter, we expect revenue of $345 million-$350 million and an adjusted operating loss between $6 million and $8 million.
Stock-based compensation in 2019 is still expected to be approximately $160 million for the full year, with about $40 million of this in the second quarter. Our growth vectors remain strong as entrepreneurs around the world look to Shopify to launch and grow their businesses. Our priority investments this year in international growth, brand, and product expansion are all the right ones that we are confident will continue to attract merchants to Shopify, increase our share of wallet, and power merchant success well into the future. With that, I'll hand the call back to Katie.
Thank you, Amy. Before we launch into your questions, I'd like to remind everyone to please limit yourself to one question. That way, we'll have time to take a question from each listener today. With that, Lisa, can we have our first question?
Thank you. At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. Our first question comes from the line of Brad Zelnick from Credit Suisse. Your line is open.
Excellent. Thanks so much. Congrats on a great start to the year and all the innovation that's happening at Shopify. Harley, we noticed some of your largest customers are now using Instagram Shopping. How should we think about the balance of cooperation and competition with some of your largest partners?
Hey, Brad, t hanks for that question. We've always said this. With every new channel that comes to market, whether it's a social media platform or a new marketplace, what that does is it makes Shopify more valuable as a retail operating system. Again, our entire, you know, objective here is to reduce complexity and simplify running a business, more channels means our merchants can sell in more places. What Shopify does as a retail operating system is allow our merchants to run across as many channels as they want. From an economics perspective, of course, we also make sure that we capture economics through rev shares with our partners that we allow our merchants to sell through, which is important to us.
Again, with every new channel we think the Shopify retail operating system, product and offering gets better and better.
Awesome. Thanks.
Great. Thank you, Brad.
Our next question comes from the line of Ken Wong from Guggenheim Securities. Your line is open.
Great. Thanks a lot for taking my question. you know, I saw you guys launched the new tap-and-chip reader, you know, and also some new POS hardware. Can you maybe just give us a sense for kind of what your strategy is going forward on the physical POS side? Perhaps what are some of the competitive advantages you guys have against competitors such as Square and Clover?
Yeah. Hi. Hi, Ken. This is Tobi. It's a really important part of our business, the second-largest channel after online store, clearly. It's something we wanted to do really well for a long, long time, but you know, we are growing into the size of a company where we can be focused on multiple things at the same time. You saw a lot of things around point of sale, and then you will probably see a lot of other things around this segment in the future.
I think one of the things which was pretty clear pretty early, you know, remember Shopify started after, I, I tried to build an online snowboard store, which was a little bit early for a new business started online, but this is now the norm. We see a lot of our customers starting new businesses. Many of the largest stores are less than 10 years old. As everyone's looking around for opportunities, you know, internet marketing is starting to get pretty pricey. Finally now expanding offline, so to speak, expanding to brick and mortars is starting to look really good from a cost per acquisition perspective. There's lots and lots of reasons that are pushing retailers back to the retail stores.
This is something which is just enormously complicated unless the software really, really makes this easy. To Harley's point, you need a unified system to run a business across multiple channels. It is really, really, really difficult to add a new channel in the old model of single instance software or whatever. Like, just separate software for different channels, as was the norm before Shopify came around. We wanna support this move offline as a business strategy, make this really easy, and allow our merchants to have just, like, look really, really good in their retail stores.
Great. Thanks, Ken.
Our next question comes from the line of Colin Sebastian from Robert Baird. Your line is open.
Thanks. I'll add my congratulations on the strong start to the year. Just a question on the incremental gross margin in merchant solutions that dipped a bit. Was just hoping you could describe some of the moving parts there. I think Amy suggested that there was maybe some pricing changes that occurred, if you could go through those. Thank you very much.
Good morning, Colin. With respect to merchant solutions margins and the first quarter, we did see a pretty consistent performance quarter-over-quarter, but we did see a decline year-over-year from the first quarter of 2018. If you recall, in the first quarter of 2018, we saw a one-time favorable billing adjustment from payment partners that makes comparability year-over-year difficult. We also saw year-over-year a decrease in the Shopify Payments margin as we continue to grow Shopify Plus adoption, which has a smaller margin than the overall. We should see going forward in the second quarter an improvement in merchant solutions margins as we see some volume discounts kick in.
I think you'll see that start to shift in the second quarter.
Thank you.
Our next question comes from the line of Kevin Krishnaratne from Paradigm Capital. Your line is open.
Hey there, g ood morning. Very encouraging pace of ads in international. Are you able to talk about any changes in merchant metrics in your international markets as you are rolling out local payments and language? I'm thinking any commentary on changes to GMV per merchant, ARPU, or even things such as merchant engagement on the platform?
I can talk about some of the metrics. You know, as you can imagine, when you're entering new markets, you know, we're working on product market fit and that's why we've we're investing heavily in localization in some key markets. You know, initially, GMV per merchant is gonna be lower than the average, and take rate will be as well, while the availability of merchant solutions is not, you know, as prevalent. It's limited in some markets or nonexistent in some other markets. Over time, you know, we think those will migrate more towards what we're seeing in our core merchants and our core geographies.
In terms of usage of the platform, I don't know, Harley, if you wanna add anything, but, you know, we are seeing a significant over 100,000 merchants using the platform in a language other than English. We think it's very encouraging, the continued attraction to the platform and the new languages that we've rolled out.
Yeah. I think it's important to remember that Shopify in its core markets is a product that has been working on product market fit for 15 years. In any given market, it might be less than a year. It's gonna take a while to get fully up to speed. I, you know, I use Shopify in German right now, which is cool that I finally can do that. And it's, you know.
It's really good, but every once in a while, I send a little note to the team saying, "Hey, this part is a little bit funnily worded," and so on. It's a process. All the metrics will go up as the product matures in any individual market.
Thank you very much. Again, congrats on a good quarter.
Thanks, Kevin.
Our next question comes from the line of Darren Aftahi from Roth Capital Partners. Your line is open.
Yeah, good morning. Thanks for taking my questions, and congratulations. Just wanted to ask, you kinda called out strength in both existing and upgrades on Plus. I'm just kinda curious whether that mix skewed towards existing client upgrades or new clients on the platform quarter. Thanks.
Hey there. I'll take the question, i t's Harley. As usual, we're seeing majority of the new ads to Plus come from new to the platform. That being said, it's really important that merchants that are doing really well on Shopify do upgrade to Plus, and we have a process and a team in place to ensure that happens. More than half of the new ads to the to Plus in this quarter came new to the platform, which is really exciting for us. The other thing that I mentioned in my earlier remarks is that the variety of merchants coming to Plus now is really interesting.
We're seeing not only large CPGs that are building specific brand stores, but we're seeing companies like Levi's and Betsey Johnson and Hasbro, and, you know, companies like Hasbro have never really sold direct to consumer before. We're seeing that all happen on Shopify Plus, which is really great for us. I think you'll continue to see the majority of the Plus adds come from net new, which is great, but we have a very healthy upgrade path, which is really what, it's really important to us. We wanna make sure that the homegrown success stories have a place to grow into as they get really big on Shopify, so they never have to leave, and I think we've done a good job of that.
Thanks, Darren.
Our next question comes from the line of Justin Furby from William Blair & Company. Your line is open.
Thanks, guys. Nice start to the year.
Thank you.
Harley, I guess maybe for you, it seems like revenue from the third-party apps had another really solid quarter. As that becomes a bigger and more important contributor to growth, I'm just wondering how your discussions with partners around monetizing the platform has evolved over the last few years. Thanks.
Thanks for the question. I would say that the partner ecosystem has never been healthier. It is thriving. The Shopify App Store has become the go-to-market strategy, almost entirely the go-to-market strategy for any applications or third parties that are building applications and software for the retail and for the commerce space. We're really excited about that. One number that, of course, I boasted about earlier was that it took us, you know, a long time to get to, almost nine years to get to $100 million in paid out app rev share, and it's taken us 12 months to get to that second $100 million to get us to $200 million. I think that's really exciting for us.
In terms of the dynamics, I think the relation we have with our partners is really great. I mean, we have some expectations that are all about experience and making sure that the merchant experience is always, you know, the best it can be. Generally, we've had a really great discussion and dialogue with these partners to ensure that that continues. I don't think there'll be any slowdown there. We've added a couple hundred new apps. Again, the idea of the App Store is not to have every app out there on the App Store, but rather to have the most important apps to make every merchant have full product market fit regardless of the intricacies and the complexity of their particular business. In that case, I think we're doing really well.
Of course, on the referral side, we've, you know, in the last 12 months, we've seen 19,000 partners bring in new merchants and refer merchants to Shopify, which is really fantastic. That will continue to grow.
Great. Thank you.
Thank you, Justin.
Our next question comes from the line of Samad Samana from Jefferies. Your line is open.
Hi, good morning, t hanks for taking my questions. Great quarter. Amy , we saw on the company's website that Shopify is paying one and a half times the standard revenue share to partners, 30% into perpetuity instead of 20% for stores in international, I think Germany, France, Japan and Singapore. I'm curious if that's been a factor in driving the acceleration in international adds and how long the company plans on keeping that higher commission payout rate going. Any thoughts will be helpful. Thank you.
Yeah. From a partner perspective, obviously we had mentioned earlier that we've gone ahead, we've done things like translated the partner dashboard inside of Shopify. We want to encourage the creation of new and scale partner communities around the world. Internationally is really important for us for the future of the company. As partners have always been really important to Shopify in our sort of English-speaking countries, we think that's gonna be the case internationally too. We're making it easier for them to not only learn about Shopify, but also to build really big businesses around Shopify. Things, of course, like increased rev share, and obviously making sure that we're talking to them in their language that they speak.
That's all really important. The other thing that you'll probably see is you'll see more experimentation. In certain geographies, we'll decide that we wanna go ahead and we wanna get really aggressive in terms of getting more partners on. In other countries, we feel like we already have pent-up demand and may not need to do that. I would say that generally that sort of growth strategy is young still, and we're continuing to learn more about different partners in different geographies. We want the freedom to experiment as we need.
Great. Thanks, Samad.
Our next question comes from the line of Deepak Mathivanan from Barclays. Your line is open.
Hey, guys, t hanks for taking the questions. Following on Brad's question from earlier, without going into specifics, how different is the economics when a merchant uses Instagram checkout versus your own checkout solutions like Shopify Payments? On a related note, how big is the volume for your merchants generated through Instagram currently? Thank you so much.
Hey, it's Harley. I'll take that question again. As I mentioned earlier, we think more channels, whether they're social media marketplaces or they're, excuse me, social media platforms or they're marketplaces, that means our merchants can sell more. Although it doesn't necessarily come, you know, it's not, it may not be processed through Shopify Payments, what we do is work with these partners who are very excited to work with us because we bring on so many amazing merchants and products to their platforms and to their marketplaces. We ensure that we have economics in place that therefore we can capture upside as well. It doesn't necessarily fall into the same revenue bucket per se, but certainly it does allow us to capture upside when we talk to these partners.
While I can't go into specifics on individual partner agreements, it's important to know that we have economics in place that allow us to grow when our partner sells, when our merchant sells more.
Great. Thanks, Deepak.
Our next question comes from the line of Ross MacMillan from RBC. Your line is open.
Thanks so much, and my congratulations as well.
Thanks for all the detail on international. Amy , I think you mentioned Chinese language, I presume Mandarin support. We noticed that you have been hiring locally in China on a, maybe a limited basis, but nonetheless hiring there. I'm just curious either from Tobi or Harley, if you can just talk to us a little bit about your thoughts around China as a market, given its size, but given how different it is in many ways from other, certainly Western markets. Thanks.
Yeah, o kay I 'll take the question. Where to start, right? What we are seeing basically in I mean, we're seeing a lot of interesting things in China, you know. There's ton of, like, as a product person, I think it's very, very important market to study because I think we increasingly see innovation, especially in our space, come from there. More specifically from a numbers perspective, the thing that's working excellently is export from China, right? There's a lot of Chinese brands now out there which are trying to go global and do so directly. We have worked with them.
They are seeing significant success using the Shopify platform just because, I mean, obviously we are global. People are already using us all around the world, which is exactly the need that Chinese exporters are looking to get fulfilled. This is a market which we are looking at.
Great. Thanks a lot, Ross.
Our next question comes from the line of Josh Beck from KeyBanc. Your line is open.
Thank you for taking the question. I wanted to ask about this multi-currency feature, Shopify Payments that you introduced. Do you see this as an opportunity to increase cross-border sales for merchants? Does this improve your confidence in ramping payments among the Plus category?
That's, I mean, that's pretty much exactly it. What Shopify does, like, best, I think, and usually when Shopify becomes more important for customers and gets more customers over switching and so on, is when we take something that's really, really hard to make it somehow easier. Really, I mean, basically, at a certain point, all merchants want to do the same. They want to run a global, wildly profitable business, right? Especially around global, that's hard. It's, you know, it's hard for us. We have 5,000 people company, something like this, and w e are trying to go global ourselves with our product and our customers are wanting to do it exactly the same thing.
It's a little bit of an different issue, cross-border selling is, you know, a serious challenge. Accepting currencies around the world is a serious challenge, showing up in the right language is always kind of thing. This is new for us, it's not gonna be done overnight. Like, helping our customers go global themselves, and writing the code tests a little bit on everything we've been figuring out on our own journey, is one of those areas where you can take something that would've taken them forever to do themselves or would've been exceptionally labor-intensive or would've been something that they've attempted and then gave up on.
Instead make it easy enough to be viable for more and more merchants, which perhaps helps them grow and which then, because the way our business model works and is so aligned with them, ends up benefiting us again. That's all something we wanna take very seriously, and multi-currency is one of those things. It'll, it's seeing uptake, of course, with plus, and initially because those are the people who need this the most, it'll go from there.
Very helpful. Thanks for the color.
Thank you, Josh.
Our next question comes from the line of Koji Ikeda from Oppenheimer. Your line is open.
Congrats on the quarter, and t hank you for taking my question. I just wanted to follow up on some of Harley's prepared comments. Very early in your comments, Harley, you did talk about Shopify trends in the quarter with 30 million buyers opting in, 10 million transactions in the quarter on Shop Pay, which is a double. That's just really tremendous. Just building on that at a high level, what's the right way to think about those two data points as a mix of overall buyers and overall transactions? Thank you.
I mean, the reason we brought it up is we haven't really talked too much about Shop Pay in the past. What we're trying to do is create as little friction as possible in the checkout for our merchants. What we realized with so many buyers across all the Shopify stores, we do actually have some ways that we can help our merchants capture more sales. That's by allowing these consumers to opt into Shop Pay. 30 million buyers opting in is obviously really great, and we're happy to see that number. $3.4 billion in GMV and 10 million transactions in the past quarter alone, which as you mentioned, is double 2008, is really exciting for us.
I would say Shop Pay is still something that we're excited about. It's something that we're just starting to lean into a little bit. Ultimately, the reason we're doing it is because it makes checkout so frictionless. As I mentioned, even my own experience, I mean, you know, try it yourself. Like go buy a pair of sneakers off the Allbirds shop. It is an amazing experience. I think it actually creates a new bar for how accelerated a checkout can be. I think what will end up happening is merchants will see more sales and consumers will come to expect that that's how good an experience can be when buying off an online store.
I want to add to the Shop Pay thing. You know, there's 800,000 merchants on Shopify. So far we have put that fact to use mostly through negotiation power, like getting really good payment rates, getting really good shipping label printing rates and these kind of things. Increasingly there. We will be super careful with those kind of things. Increasingly there are ways for us to use that grouping of people and the viewpoint we have to advantage of everyone on the platform, because we want increasingly there to be advantage for every individual that there are so many others. I am sort of skirting around the term network effect because this feels a little bit different.
Network effect is sort of more on the social media side, and usually have a lower K factor than what I'm talking about here. Shop Pay is one of those ways that is really works this way, right? Like you start a new store tomorrow, you're selling something really exciting, and we have 30 million people now who, when any of them show up on your store, which didn't exist yesterday, and they decide they would like to buy this product of yours, can check out with a single click. You know, that does something that is simply not accessible anywhere else, and therefore is powerful for our platform.
There are other places like this usually around things like, you know, fraud detecting and so that really benefits every individual store from all the data we see across the system and so on. We are looking for these kind of effects and prioritizing them is very successful so far.
Thank you very much.
Our next question comes from the line of Ygal Arounian from Wedbush. Your line is open.
Hey, good morning, guys. On Shopify Plus new ads, which continues to see strength, just curious what the split is between the new ads. The net new customers that come online, if they're coming from other e-commerce software platforms, if they're new to online, if they're coming from internal platforms or competitor platforms. How do you think about the value you offer merchants versus the ASP of your packages? Maybe both on the non-Plus and the Plus side. Thanks.
Yeah, I mean, I'll start with the second question, which is, sort of the value to cost equation. Certainly when it comes to Shopify Plus, that ratio is heavily on the side of value. We're doing that because we think there's an opportunity for us to take a lot of market share, but also to get a lot more merchants on Shopify Plus. I would say that there, that certainly, that equation is certainly, on the side of value versus cost and t hat's done, intentionally. In terms of where, the source of these customers are coming from, if you just think about some of the stores that I mentioned, a little earlier on.
Some of them, like Betsey Johnson and Levi's, they obviously, they had an existing platform and they were looking to migrate for a bunch of reasons. Some of them are the fact that they wanted functionality that we were offering. The day that they heard about Apple Pay, they wanna be able to use Apple Pay, they may wanna use Shop Pay as well. And they're also looking to do things that are more affordable because some of these large enterprise e-commerce platforms, as you know very well, are very, very expensive. In other cases, like the P&Gs and the Johnson & Johnson, these are big CPGs that for the first time ever are going direct to consumer with individual brands.
We've created a relationship with these big CPGs so that it's very easy for them and almost frictionless for them to stand up new stores on Shopify Plus. I would say there's a variety of those cases where they're coming, they're migrating to us from other existing enterprise platforms. They've never sold before, or perhaps they've only sold offline and now they're beginning to sell online with us as well. I think that is part of the strength of the Shopify Plus business model, where we're getting merchants from a whole bunch of places, including a very new but growing quickly partner network for Shopify Plus.
I would say the same is the case for Shopify, our core offering, which is that it's still, you know, in terms of cost to value, it's still very much on the side of value. We wanna make the onboarding and the starting of a business as easy as possible and as affordable as possible. By making sure that the cost of it is, you know, couple Starbucks a month, it means that anyone that has ambition can start a business on Shopify, and that is really important to us.
Great. Thank you so much.
Our next question comes from the line of David Hynes from Canaccord. Your line is open.
Hey, thanks, guys, and congrats on the quarter. I wanted to ask about some of the content initiatives, right? Shopify Studios, the brand campaign you talked about.
I guess the basic question is, you know, why is now the right time for that? I mean, do you feel like the product's gotten to a certain point where it makes sense to put more money behind the brand? Or, you know, I can't imagine it's being driven by competitive dynamics. But maybe just talk about kind of why now and how you're thinking about measuring ROI on the spend in the early days.
Yeah. You know, why now is we feel confident that can pull it off right now. Like I It's a funny dynamic because it's so little under, like, talked about, but as someone who's built a company from, you know, first line of code, it's one of the underappreciated effects in company building is focus management. Shopify's always been the kind of company which wouldn't have staffed because of a lack of opportunities, but would have died by indigestion of us trying to do too many things at the same time. This is why this is such a fun part of, you know, company building at this point where we are now because we can be focused on multiple things at the same time.
I second time I bring this up now because it actually really does matter. On the studio side and like, we telling these stories about, of what happens, what it looks like, of building some of these businesses is just really important to the business because what we find is so many people would like to be entrepreneurs, but just don't have an understanding of what the entire process looks like. Demystifying this through, you know, age-old approach of storytelling, is just the best way to do this. We think will absolutely increase participation in this market, but just exposing people to other people's stories who've gone through this.
You know, my grandmother had a printing shop, and she started a success. This is where I always spend time when I was a kid, and I just sometimes wonder if I would have ever even thought about starting a business if I wouldn't have been exposed to an entrepreneur by growing up. Most people aren't, right? Finding other ways to do this is, I think, good. Taking this to ROI, yeah, this is the tricky thing, right? Like, brand marketing is hard to quantify. This is precisely the reason why we didn't do it. We are fairly, like we are, we're rather math-heavy company, right? We love feedback loops.
We are confident with long-term feedback loops, which is, I think, has been a advantage of Shopify over the long term. We are okay with fuzzy attribution. We are not falling into the trap of only doing short-term kind of things because they happen to be more trackable. We do really like to be able to back attribute the things that happen. Brand marketing requires a whole lot more faith than this, and then there's a whole lot more fuzzy in attribution, and this is something I have to learn how to deal with in this.
Yeah.
So far it's been good, I would say. It's hard, you know. Just don't know.
Yeah. That's helpful color. Thanks, guys.
Great. Thank you, David.
Our next question comes from the line of Mark Zgutowicz from Rosenblatt Securities. Your line is open.
Good morning. Thank you.
Thank you.
Tobi, maybe just a quick follow-up on that last question. You know, specific to maybe Plus or non-Plus merchants on the branding side, I'm just curious if there might be, you know, two or three specific KPIs you're looking at. You know, obviously, as the last question alluded to, you obviously have considerable brand strength. I'm just curious if there's maybe one or two focal points that branding campaign might be, you know, pointed to.
I'd love to give you something specific there. I mean, maybe Amy can.
Yeah
Can jump in.
Yeah
I can J ump in there a little bit. you know, we've studied our unaided brand awareness and you know, it's not as high as we would like it to be. That's obviously something we're gonna watch carefully to see if it moves the needle. We're very focused on continuing to monitor carefully our fully loaded cost of acquisition, as well as our LTV. you know, our LTV has been moving up over time as we've brought on more Plus merchants, which has offset the more entrepreneurial merchants that have come on board. We feel like we can afford to take this test and learn and see if this helps our top-of-funnel activity.
We're going to be watching very closely to see if our top of funnel widens through the brand campaign and the studio efforts and what the conversion rates look like, and monitoring and, you know, managing our LTV to CAC very, very carefully over time. It may be under a little bit of pressure near term, we're confident over the long term that this sort of investment will pay off. We're also really confident on the international side based on the learnings over the past sort of 18 months, that in the markets where we're localizing, we've seen where our brand awareness is higher, our actual marketing acquisition dollars are more efficient. That's obviously what we're aiming for over the long term is more efficiency on the cost of acquisition side.
Part of the brand campaign is not only, you know, for the domestic, and the core geos where we've been operating for some time, some of that will be for the international growth as well.
Thank you. That's very helpful.
Great, thanks, Mark.
Our next question comes from the line of Brian Peterson from Raymond James. Your line is open.
Hi. Thanks for taking the question. Just wanted to hit on some of your Plus success this quarter. It sounds like you're adding a lot more merchants than you expected. I'm curious, can you bifurcate that a little bit into actually getting in front of more customers, or are we also seeing win rates improve?
You know, I, you know, I'd really attribute the success to a maturing sales team at Plus. You know, as they continue to mature, their reach and their win rates are continuing to improve. We're, you know, we're excited about the number of new merchants that they're reaching and bringing in. You know, as Harley mentioned, the first quarter tends to be a seasonal low, at least historically, for Plus in terms of new merchants. We saw, you know, a very strong growth versus the 1st quarter of last year and maintaining almost at the same level as the fouth quarter. You know, these efforts are working with the Plus team.
Thanks, Brian.
Our next question comes from the line of Todd Coupland from CIBC. Your line is open.
Yeah, good morning, everyone. Just wanna make sure I'm interpreting your international commentary in the right way. You're basically saying it's a, it's a long road to build in these various markets. Would you expect to have enough momentum for it to be a material tailwind later this year? Is it gonna take a couple of years before it starts to materially impact the results? Any color on that would be helpful. Thanks.
We're obviously delighted with our first quarter performance in terms of merchant growth, especially with you know, with just with respect to international. It is new. We've only been investing there for a little over a year. The sustainability of that growth comes down to, you know, how well we continue that momentum. You know, it is early days in international. We're still learning. You know, we feel really positive with our continued investments in international and brand, so we're optimistic, and that is one of the reasons why we increased our guidance for 2019.
Thank you.
Thanks, Todd.
Our next question comes from the line of Brian Essex from Morgan Stanley. Your line is open.
Hi, good morning, and thank you for taking the question. Amy , I wonder if you could maybe dig into international payments a little bit. Just wondering, you know, from the vendor relationship perspective, now that you kinda have an established brand and obviously you're a meaningful vendor in the marketplace relative to kinda when we did the IPO, what are the vendor relationships on the payment side like internationally and the economics that you can bargain for as you penetrate new markets? Do you think that payments market margins internationally might be able to hit much higher margin rates? Maybe if you can throw a commentary on customer mix internationally as well, large versus small, and how that might impact margins specifically on the payment side. Thank you.
Well, just generally on the international payment side, you know, keep in mind it's still early days. We're continuing to add new markets. You know, our vendor relationship has continued to be primarily Stripe, but we have made and will make some exceptions depending on specific local needs to merchants and their buyers in those markets. But generally, I can say that international payment margins in most markets typically are a little bit higher than our core geographies. That's not the case in all markets, but it's typically higher. You know, I think that's kind of where what we're comfortable saying at this point based on learnings.
Any insight on customer mix and how that might affect it?
Large versus small? Well, right now-
Yeah
You know, Plus is primarily focused on the English-speaking geographies while they continue to work on product market fit. Most of the growth that we're seeing internationally is with our standard core subscriptions. They tend to be on the smaller side, which is why.
Right
GMV per merchant and take, you know, take rate is a little bit smaller, and will increase over time. We're seeing nice adoption of international payments by these smaller, more entrepreneurial merchants and, you know, we think we're on a good path forward.
Great. Thank you very much.
Thanks, Brian.
Our final question today comes from the line of Richard Tse from National Bank Financial. Your line is open.
Yes. Thank you. On the international side, do you think those markets that you sort of, you know, learn from the regions that you're in earlier, or are those markets very different?
One of the things we've learned about these markets is there are some that are sort of that look similar. Obviously some places in Western Europe, some have some similarities, but obviously doing things in Germany is very different than doing things in Japan, and that's even as far as, you know, the way that we present a landing page to a prospective merchant in a place like Japan will typically be all on one page as opposed to having it on multiple pages, which we would probably do for a more North American or even a Western Europe type merchant. There are nuances to it. That's one of the reasons that language is not just the only thing we wanna do there. We also wanna make sure we have the right partner ecosystem.
We wanna make sure we have the right payment providers for them in those regions. We also wanna make sure we have the right product for them. For example, their what they wanna sell may be different in terms of new channels may be different than what the North American merchants wanna sell. I would say that there are some similarities between certain countries. Generally, the reason it's important to have deep empathy for merchants in each specific country is because their needs do differ, and we wanna help them with product market fit no matter where we where we're offering our services.
Great. Thank you.
Thanks, Richard.
I'll now turn the call back to the presenters for closing remarks.
All right. Thanks everybody for dialing in today, and have a great rest of your day.
This concludes today's conference call. You may now disconnect.