TORONTO — Shopify’s stock see-sawed Tuesday as it revealed it had ended last year on a high. The commerce company is forecasting strong growth, even as the U.S. plots trade wars around the world.

Shopify, which is headquartered in Ottawa, reported US$2.81 billion in revenue in the fourth quarter, up 31.2 per cent year over year and well ahead of analysts’ consensus estimates of US$2.67 billion as compiled by FactSet. Investor enthusiasm was subdued by concerns about the bottom line, however. 

Here’s what you need to know about Shopify’s earnings.

The top line: The fourth quarter is always a big one for Shopify, as holiday shopping drives people to its clients’ stores. Merchants sold US$94.5 billion of products using the firm’s commerce tools in the fourth quarter, up 25.7 per cent from the festive period last year. Consumer spending drove the gains, with clients in health, beauty, food, home goods and clothes having a particularly good quarter, Shopify CFO Jeff Hoffmeister said on the company’s earnings call. 

The firm also reported particularly good results from western Europe, adding a lot of new clients in countries like the U.K., France, Germany, and Denmark even as existing merchants in those markets kept doing good business. “We’ve made a ton of headway in terms of growing our international merchant base,” Shopify president Harley Finkelstein said on the call, adding that half the company’s clients are now outside North America. 

Shopify makes most of its money when its customers make sales, as the company charges fees for transaction-based services like payment processing, shipping and loans. Revenue from that merchant solutions business grew particularly fast—hitting US$2.15 billion, up 32.5 per cent year over year. That translates to a “take rate” of 2.27 cents of every dollar in sales Shopify’s customers made, matching the highest cut the firm has ever taken.

The bottom line: Shopify reported an operating profit of US$585 million, ahead of analysts’ consensus estimate of US$536 million. The firm cut its workforce by about 200 people last year, ending with just under 8,100 employees. It plans to keep its head count “fairly flat” in 2025, Finkelstein said. “We like the size of Shopify.”

The firm is still recruiting for the teams that build AI tools for clients like an automated assistant and search features, as well as software for its own internal use in departments like customer service. Shopify made six small acqui-hire deals last year, buying companies to add workers rather than products, Hoffmeister said on the call. “Those are important sources of AI talent.” 

But investors reacted negatively to Shopify’s forecasts for 2025. The firm estimates its gross profit dollars will grow at “a low-twenties percentage rate” in the first quarter, and its operating expenses will account for up to 42 per cent of revenues. That’s slightly worse than the markets were expecting, ATB Capital Markets analyst Martin Toner wrote in a note Tuesday.

The tariff line: The U.S. is by far Shopify’s biggest market, bringing in US$5.71 billion in revenue last year or 64.3 per cent of its global total. President Donald Trump’s decision to launch trade wars around the world could be a drag on businesses that sell goods that criss-cross the globe.

Companies on Shopify mostly sell within their own countries—only about 14 per cent of its clients’ transaction volume was cross-border in the third quarter of 2024. Trade wars might impact supply chains, though. Shopify merchants may be hit hard by the removal of the de minimis exemption, which lets companies bring shipments valued under US$800 into the U.S. duty-free. On Friday, Shopify published a blog post arguing the carve out is “crucial for small businesses in international trade.” 

Shopify is also watching for the impact trade wars could have on its own bottom line. The firm listed “the imposition of or an increase in tariffs” among the risks to its business for the first time in its annual report published Tuesday. Such measures could affect how much merchants and consumers spend, it noted. 

Stock analysts don’t expect tariffs to stop Shopify in its tracks, however. Merchant sales would drop 4.9 per cent if the U.S. imposed a 10 per cent blanket tariff on all imports plus an extra 50 per cent on Chinese goods as Trump has threatened, according to an estimate by National Bank Financial Markets published last month. That translates to just a 3.6 per cent decrease in Shopify’s projected 2025 revenue. 

The firm is updating its software to help clients manage new duties and trade rules, Martin Toner, managing director of ATB Capital Markets, a financial services firm, said last week. Still, any impact on customers’ sales would ripple through to Shopify, he added.