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Item 1A. Risk Factors

2026-02-11 compared with 2025-02-11 · 158 added, 224 removed, 601 unchanged (39% of the section changed)

In addition to any other risks contained in this Annual Report on Form 10-K, including the section titled "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and our audited financial statements and related notes, the risks described below are the principal risks that could have a material and adverse effect on our business, financial condition, results of operations, cash flows, future prospects or the trading price of our Class A subordinate voting shares.

This Annual Report

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on Form 10-K also contains forward-looking statements that involve risks and uncertainties.

This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties.

Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below.

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• Our ability to compete successfully against current and future competitors;

• The impact of worldwide economic conditions, including measures that effect international trade, such as tariffs, and the resulting impact on spending by merchants and their buyers;

• The impact of worldwide economic conditions, including measures that affect international trade, such as tariffs, and the resulting impact on spending by merchants and their buyers;

• The impact of seasonal fluctuations on our business;

• The success of our strategic relationships with third parties and the impact of these relationships impact on our growth;

• The success of our strategic relationships with third parties and the impact of these relationships on our growth;

• Our use of AI and machine learning, including associated risks and the developing regulatory environment;

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• Unanticipated changes in tax laws or adverse outcomes from tax examinations;

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Financial Risks

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Small and medium-sized businesses tend to be more susceptible than larger businesses to general economic conditions and other business-related risks, which has, and may continue to, contribute to merchant turnover.

These businesses may be particularly susceptible to changes in economic conditions, including pressure from inflation, declines in consumer spending, international trade risks and/or the imposition of trade protection measures (such as the imposition of or an increase in tariffs or import and export licensing and control requirements), global supply chain disruptions and shortages including events impacting shipping and fulfillment all of which may negatively impact a merchant’s business and in turn, negatively impact our business.

and control requirements), global supply chain disruptions and shortages including events impacting shipping and fulfillment all of which may negatively impact a merchant’s business and in turn, negatively impact our business.

Large merchants generally require higher service levels and have more complex needs than small and medium-sized businesses.

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competitive factors affecting the global market for commerce services, including the introduction of competing platforms, discount pricing and other strategies that may be implemented by our competitors;

our ability to execute on our

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growth strategy and operating plans including new solutions offerings;

our ability to execute on our growth strategy and operating plans including new solutions offerings;

concerns relating to actual or perceived data incidents and security breaches;

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our ability to expand into new markets and internationally;

the imposition of new or increased tariffs or other trade protection measures;

a decline in the number of entrepreneurs globally;

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the fact that difficulty and cost to switch to a competitor may not be significant for many of our merchants;

changes in our relationships with third parties, including our partners, app developers, theme designers, referral sources, vendors and payment processors;

changes in our relationships with third parties, including partners, app developers, theme designers, referral sources, vendors, payment processors and providers of AI technology;

the timeliness and success of new products and services we may offer in the future;

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Our potential new or existing competitors may be able to develop products and services better received by merchants or may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, regulations or merchant requirements.

Competition may intensify as our competitors enter into business arrangements or alliances or raise additional capital, or as established companies in other market segments or geographic markets expand

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into our market segments or geographic markets.

For instance, certain competitors could use strong positions in one or more markets to gain a competitive advantage against us in areas where we operate by, among other things:

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making acquisitions;

or making access to our platform more difficult including by changing the terms of service related to their products, which could impact our and our merchants’ ability to offer services or adversely impact our results of operations and those of our merchant s.

For example, large technology platforms have imposed and are considering imposing, or may provide its users the ability to impose, restrictions on the ability of other parties to access or use data from their customers and users.

These practices may impact our merchants' ability to market and sell their offerings, which could affect the demand for our platform and lead to the loss of current or prospective merchants o r other business relationships.

or making access to our platform more difficult including by changing the terms of service related to their products, which could impact our and our merchants' ability to offer services or adversely impact our results of operations and those of our merchants.

For example, large technology platforms have imposed and are considering imposing, or may provide their users the ability to impose, restrictions on the ability of other parties to access or use data from their customers and users.

Competitors may also be more established in international markets with a better understanding of local customs, providing them a competitive advantage.

We also expect new entrants to offer competitive services and merchants may also seek to build their own solutions, including using advanced tools such as AI, and particularly in markets where development costs are lower.

We also expect new entrants to offer competitive services and merchants may also seek to build their own solutions, including using advanced tools such as AI.

If we cannot compete successfully against current and future competitors, our business, results of operations and financial condition could be negatively impacted.

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If the security of this information is compromised or is otherwise accessed without authorization, our reputation may be harmed and we may be exposed to liability and loss of business.

We store personal information, credit card information and other confidential information of our merchants and their buyers, our partners and consumers with whom we have a direct relationship.

Mobile applications integrated with Shopify and the third-party apps available for our platform may also store personal information, credit card information and/or other confidential information.

We store personal information, payment information and other confidential information of our merchants and their buyers, our partners and consumers with whom we have a direct relationship.

Mobile applications integrated with Shopify and the third-party apps available for our platform may also store personal information, payment information and/or other confidential information.

While we use technology to monitor for compliance with eligibility requirements for certain Shopify offerings, we do not proactively and comprehensively monitor all content on all of our merchants’ shops, or the information provided to us through the applications integrated with Shopify, and, therefore, we do not control the substance of the content on our platform, which may include personal information.

Additionally, we use dozens of third-party service providers and subprocessors to help us operate our business and deliver services to merchants and their buyers.

These service providers and subprocessors may store or access personal information, credit card information and/or other confidential information.

These service providers and subprocessors may store or access personal information, payment information and/or other confidential information.

There have been in the past, and may be in the future, successful attempts to obtain or to provide unauthorized access to the personal or confidential information of our partners, our merchants, our merchants’ buyers and consumers with whom we have a direct relationship, including as a result of breaches of a secure network by an unauthorized party, software vulnerabilities or coding errors, human error or malfeasance, including employee, contractor or vendor theft or misuse, or other misconduct.

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In addition, techniques used to obtain unauthorized access to networks in which data is stored or through which data is transmitted change frequently and are becoming increasingly sophisticated.

As a result, we, and third parties we work with, including service providers we use and third-party apps or other services used by our merchants, may be unable to anticipate these techniques, detect the attacks for long periods of time or implement adequate preventative measures.

As a result, we, and third parties we work with, including service providers we use and third-party apps or other services used by our

merchants, may be unable to anticipate these techniques, detect the attacks for long periods of time or implement adequate preventative measures.

The unauthorized release, unauthorized access or compromise of personal or confidential information of our partners, our merchants, our merchants’ buyers and consumers with whom we have a direct relationship could have a material adverse effect on our business, reputation, financial condition and results of operations.

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Additionally, some jurisdictions, as well as our contracts with certain merchants, require us to use industry-standard or reasonable measures to safeguard personal information or confidential information.

These laws, which may focus on individuals’ financial and payment related

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information, are increasingly relevant to us, as we continue to collect and store more payment information from buyers directly through services such as Shop Pay.

These laws, which may focus on individuals’ financial and payment related information, are increasingly relevant to us, as we continue to collect and store more payment information from buyers directly through services such as Shop Pay.

Our failure to comply with legal or contractual requirements around the privacy and security of personal information could lead to significant fines and penalties imposed by regulators, as well as claims by our merchants, their buyers or other relevant stakeholders.

These proceedings or violations could force us to incur significant expenses in defense or settlement of these proceedings, result in the imposition of monetary liability or injunctive relief, divert management’s time and attention, increase our costs of doing business and materially adversely affect our reputation and the demand for our solutions.

In addition, if our security measures fail to protect credit card information adequately, we could be liable to our partners, our merchants, their buyers and consumers with whom we have a direct relationship, for their losses, as well as our payments processing partners under our agreements with them.

These proceedings or violations could force us to incur significant expenses in defense or settlement of these proceedings, result in the imposition of monetary liability or injunctive relief, divert management’s time and attention, increase our costs of doing business and materially and adversely affect our reputation and the demand for our solutions.

In addition, if our security measures fail to protect payment information adequately, we could be liable to our partners, our merchants, their buyers and consumers with whom we have a direct relationship, for their losses, as well as our payments processing partners under our agreements with them.

As a result, we could be subject to fines and higher transaction fees, we could face regulatory or other legal action and our merchants could end their relationships with us.

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Our products and services involve the collection, storage, processing and transmission of a large amount of data.

Failure to prevent or mitigate security breaches and improper access to or disclosure of our data, merchant data and data of buyers shopping with our merchants, including personal information, or payment information from merchants and their customers, could result in the loss, modification, disclosure, destruction or other misuse of such data, which could harm our business and reputation and diminish our competitive position.

In addition, computer malware, viruses, social engineering (such as spear phishing attacks), scraping and general hacking continue to be prevalent in our industry.

In addition, computer malware, viruses, social engineering (such as spear phishing attacks), scraping and general hacking continue to be prevalent in our industry and could be enhanced or facilitated by artificial intelligence.

As a result of our increased visibility, the size of our merchant base and the increasing amount of confidential information we process, we believe that we are increasingly a target for such breaches and attacks, in particular because attackers tend to focus their efforts on popular offerings with a large user base.

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We have experienced such attacks in the past and may experience such attacks in the future.

Such attacks may result in an interruption of service on our platform or the loss or unauthorized disclosure of confidential information.

Such attacks may result in an interruption of service on our platform or the loss or unauthorized disclosure of

confidential information.

For example, we have been subject to system interruptions and delays including as a result of distributed denial of service ("DDoS attacks"), a technique used by hackers to take an internet service offline by overloading its servers.

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We expect to continue to harden our infrastructure to adapt to evolving tactics, techniques and procedures to make us more resilient.

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Moreover, our platform, our apps and third-party apps available for our platform have been in the past, and in the future could be breached if vulnerabilities in our platform or third-party apps are exploited by unauthorized third parties or due to employee, contractor or vendor error, malfeasance, or otherwise.

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Our ability to attract new merchants, retain revenue from existing merchants and increase sales to both new and existing merchants will depend in large part on our ability to continue to improve and enhance the functionality, performance, reliability, design, security and scalability of our platform and to innovate and introduce new solutions.

If we fail to anticipate and address merchants' rapidly changing needs and expectations or adapt to emerging trends, our reputation could be harmed and our business, operating results and financial condition could suffer.

This includes our ability to successfully translate our vision for agentic commerce into solutions that our merchants can effectively adopt and utilize.

If we fail to effectively integrate AI tools into our products, the utility of our platform could diminish relative to our competitors.

If we fail to anticipate and address merchants' rapidly

changing needs and expectations or adapt to emerging trends, our reputation could be harmed and our business, operating results and financial condition could suffer.

Furthermore, we expect adoption of our platform and solutions by Shopify Plus merchants and enterprise-level businesses to increase.

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We may make significant investments in new solutions or enhancements that may not achieve expected returns and such solutions or enhancements may not result in our ability to recoup our investments in a timely manner, or at all.

The improvement and enhancement of the functionality, performance, reliability, design, security and scalability of our platform is expensive and complex, and to the extent we are not

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able to execute on these efforts in a manner that responds to our merchants’ evolving needs, our business, operating results and financial condition will be adversely affected.

The improvement and enhancement of the functionality, performance, reliability, design, security and scalability of our platform is expensive and complex, and to the extent we are not able to execute on these efforts in a manner that responds to our merchants’ evolving needs, our business, operating results and financial condition will be adversely affected.

Our use of AI and machine learning may present additional risks, including risks associated with the use of AI algorithms and tools, the data sets used to train AI-powered models, the content produced by AI and the complex, developing regulatory environment.

Shopify does not currently develop its own foundational AI models.

Instead we incorporate AI-powered tools and capabilities licensed from third parties into select merchant products, in order to support elements of their business operations, and into certain of our own internal business operations.

We are investing in expanding the AI capabilities available in our products, including through the ongoing deployment and improvement of existing machine learning and AI technologies.

AI algorithms may be flawed and datasets may be insufficient, contain biased information or produce inaccurate outputs.

AI tools and algorithms may rely on third-party data with unclear or disputed intellectual property rights or interests.

Intellectual property ownership and license rights, including copyright, of generative and other AI outputs, have not been fully interpreted by courts or lawmakers, and we cannot predict how future interpretations may impact our business.

Certain jurisdictions have enacted, or are considering the enactment, of comprehensive legal compliance frameworks specifically related to AI.

Any failure or perceived failure by us, our AI model providers or our merchants to comply with such requirements, if applicable, could have an adverse impact on our business.

Additionally, AI decisions or outputs that are based, partially or solely, on automated processing or profiling or inappropriate or controversial data practices, or that include insufficient disclosures regarding AI-generated content, may:

undermine the decisions, predictions, analyses or solutions AI tools produce;

lead to unintentional bias or discrimination;

or impair the acceptance of AI solutions, which in turn, could subject Shopify to legal liability, regulatory action, or competitive, reputational or other harm, all of which could negatively impact the value of our business, intellectual property and brand.

The rapid evolution of AI and machine learning may require us to allocate additional resources to help implement AI and machine learning in a manner that minimizes unintended or harmful impacts, and may also require us to make investments in the development of proprietary datasets, machine learning models or other systems, which could be costly and negatively impact our profitability.

The impact of worldwide economic conditions, including the resulting effect on spending by merchants or their buyers, may adversely affect our business, operating results and financial condition.

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Some of the third parties that sell our services, or provide additional services on our platform, have direct contractual relationships with our merchants, and therefore we risk the loss of such merchants if the third parties fail to perform their obligations.

Our agreements with cloud hosting,

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technology, content and consulting providers are typically non-exclusive and do not prohibit such service providers from working with our competitors or from offering competing services.

These third-party providers may choose to terminate their relationship with us or to make material changes to their businesses, products or services.

Our agreements with cloud hosting, technology, content and consulting providers are typically non-exclusive and do not prohibit such service providers from working with our competitors or from offering competing services.

These third-party providers may choose to terminate their relationship with us or make material changes to their businesses, products or services.

The success of our platform depends, in part, on our ability to integrate third-party apps, themes and other offerings into our third-party ecosystem.

Third-party developers and partners may change the features of their apps, themes and other offerings or alter the terms governing the use of their offerings in a manner that is adverse to us and our merchants.

If third-party apps and themes change such that we do not or cannot maintain the compatibility of our platform with these apps and themes, or if we fail to ensure there are third-party apps and themes that our merchants desire to add to their shops, demand for our platform could decline and merchants may see decreased sales, which in turn would impact our operating results.

These third-party apps can be subject to disruptions for reasons beyond our control that could have an adverse effect on us.

If third-party apps and themes change such that we do not or cannot maintain the compatibility of our platform with these apps and themes, or if we fail to ensure there are third-party apps and themes that our merchants desire to utilize, demand for our platform could decline and merchants may see decreased sales, which in turn would impact our operating results.

These third-party apps can be subject to disruptions for reasons beyond our control

that could have an adverse effect on us.

We are also dependent on the interoperability of our platform with third-party mobile devices and mobile operating systems, as well as web browsers and application stores that we do not control.

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If we fail to integrate our platform with new third-party offerings that our merchants want or need, or do not adapt to the data transfer requirements of such third-party offerings, we may not be able to offer the functionality that our merchants and their buyers expect, which would negatively impact our offerings and, as a result, harm our business.

We do not currently develop foundational AI models and instead rely on third‑party models to power certain AI features and tools.

If the providers of such models decline to partner with us, refuse to provide or continue access on acceptable terms, or if we cannot maintain technical interoperability, we could experience disruptions to our AI offerings, incur significant re‑engineering costs, or be unable to provide these features effectively, which could adversely affect our business, financial condition and results of operations.

We also rely on third parties to manufacture certain of our POS products.

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If we lose access to products or services from a particular supplier, or experience a significant disruption in the supply of products or services from a current supplier, especially a single-source supplier, it could have an adverse effect on our business and operating results.

Shopify does not currently develop its own foundational AI models, rather, we develop ways to incorporate AI-powered tools into select products we offer to merchants, in order to support elements of their business operations as well as into certain of our internal business operations.

We are making investments in expanding the AI capabilities available in our products, including the ongoing deployment and improvement of existing machine learning and AI technologies.

AI algorithms may be flawed and datasets may be insufficient or contain biased information.

AI tools and algorithms may rely on third-party AI with unclear intellectual property rights or interests.

Intellectual property ownership and license rights, including copyright, of generative and other AI output, have not been fully interpreted by courts or lawmakers, and we cannot predict how future interpretations may impact our business.

Certain jurisdictions have enacted, or are considering the enactment, of comprehensive legal compliance frameworks specifically related to AI.

Any failure or perceived failure by us, our service providers or our

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merchants to comply with such requirements, if applicable, could have an adverse impact on our business.

Additionally, AI decisions or output that are based (partially or solely) on automated processing or profiling, inappropriate or controversial data practices, or insufficient disclosures regarding AI-generated content, may:

undermine the decisions, predictions, analysis or solutions AI tools produce;

lead to unintentional bias or discrimination;

or impair the acceptance of AI solutions, subjecting us to legal liability, regulatory investigations, or competitive, reputational or other harm, which may negatively impact the value of our business, our intellectual property and our brand.

The rapid evolution of AI and machine learning may require us to allocate additional resources to help implement AI and machine learning in a responsible and ethical way, in order to minimize unintended or harmful impacts, and may also require us to make investments in the development of proprietary datasets, machine learning models or other systems, which could be costly and negatively impact our profitability.

Our limited operating history in new and developing markets and new geographic regions may increase the risk that our growth and expansion efforts will not be successful.

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• differing technology standards and different strategic priorities for merchants in various jurisdictions and costs and difficulties associated with localizing our platform and solutions including developing products in multiple languages and tailored for local preferences including challenges supporting our merchants as we implement new products and solutions to enable them to sell internationally;

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• changes in tax laws, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents or adverse outcomes resulting from tax examinations;

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Our compensation arrangements may not always be successful in attracting new employees and retaining and motivating our existing employees.

Our Flex Comp compensation system provides

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employees with a single total compensation amount that is allocated between cash and equity awards at the discretion of the employees, subject to certain restrictions.

Our Flex Comp compensation system provides employees with a single total compensation amount that is allocated between cash and equity awards at the discretion of the employees, subject to certain restrictions.

While we believe Flex Comp will help to attract, retain and motivate qualified personnel, there can be no assurance that this system will result in the benefits we expect, and we may be required to grant additional awards or offer alternative forms of compensation to attract and retain highly skilled personnel.

In addition, the ability of employees to choose the allocation of their compensation between cash and equity may result in variability in our cash and stock-based expenses from quarter to quarter, which may introduce some volatility in our reported financial results.

In addition, we believe that our corporate culture plays an instrumental role in our success, as it fosters innovation and teamwork, as well as technologically advanced and well-crafted software and products.

In order to support our growth, we must effectively integrate, develop and motivate employees working remotely in various countries around the world, while at the same time preserving the benefits created by our corporate culture.

Over time, it may become harder to maintain our corporate culture and we may be forced to change it in response to unexpected circumstances beyond our control.

It may become harder to maintain our corporate culture and we may be forced to change it in response to unexpected circumstances beyond our control.

Such changes could limit our ability to innovate and operate effectively.

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Our third-party cloud service providers do not guarantee that access to our platform will be uninterrupted or error-free.

Any damage to, or failure of, our providers' systems could result in interruptions to our platform.

Interruptions in our services would reduce our revenue, subject us to potential liability and adversely affect our ability to retain our merchants or attract new merchants and would also impact our relationships with partners and consumers using applications integrated into our platform.

Any damage to, or failure of, our providers' systems could result in

interruptions to our platform.

Interruptions in our services could reduce our revenue, subject us to potential liability, adversely affect our ability to retain our merchants or attract new merchants and impact our relationships with partners and consumers using applications integrated into our platform.

The performance, reliability and availability of our platform is critical to our reputation and our ability to attract and retain merchants, partners and consumers with whom we have a direct relationship.

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These costs could adversely impact our business and financial condition.

Our business is subject to complex and changing laws and regulations worldwide, which may expose us to liability, increase costs or have other adverse effects that could harm our business.

We are subject to varied and complex laws, regulations and customs around the world.

These laws and regulations may relate to data privacy and data localization laws, copyright or similar laws, anti-spam laws, competition laws and laws related to online platform liability, content moderation, consumer protection, counterfeiting, financial services, cross-border and domestic money transmission, product liability, employment, taxation, anti-money laundering, sanctions, anti-corruption, securities laws and export control, among others.

Compliance with such laws is costly and can require changes to our business practices and significant management time and effort.

These laws are continuously evolving, particularly as they relate to internet and multi-channel commerce platforms.

Additionally, many of these laws do not address the unique issues raised by online platforms and ecommerce and those that do are often intended to target consumer-facing marketplaces that are differently situated than Shopify's core services.

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ability to operate our platform or offer some of our products, which could in turn place us at a competitive disadvantage, subject our partners to restrictions that may impact our operations, or otherwise negatively impact our business.

Additionally, if one of our products is found to violate applicable laws or is perceived negatively by regulatory authorities or if merchants, partners or third parties with whom we work violate applicable laws or our policies, those violations could result in other liabilities for us and could harm our business.

Such violations may also negatively impact our reputation and brand in ways that could cause additional harm to our business, for example creating a negative consumer or regulatory perception around use of our products.

Payments processed through Shopify Payments, Shop Pay Installments or payments processed or funds managed through Shopify Balance may subject us to regulatory requirements, additional fees and other risks that could be costly and difficult to comply with or that could harm our business.

These financial products may also increase the risk of fraud and expose Shopify or our merchants to additional costs or liabilities.

These financial products may also pose the risk of fraud and expose Shopify or our merchants to additional costs or liabilities.

We are subject to risks related to payments processed through Shopify Payments, Shop Pay Installments and Shopify Balance.

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• increased costs and diversion of management time and effort and other resources to deal with fraudulent transactions or chargeback disputes, which may increase in an economic downturn;

• potential fraudulent or otherwise illegal activity by merchants, their buyers, developers, employees, consultants or third parties which could lead to increased fines or liabilities, in particular there is a risk of unauthorized account access and unauthorized transactions for Shopify Balance where funds cannot be recovered or reversed, which may lead to increased costs or liabilities for Shopify;

• potential fraudulent or otherwise illegal activity by merchants, their buyers, developers, employees, consultants or third parties, in particular with respect to unauthorized account access and unauthorized transactions for Shopify Balance where funds cannot be recovered or transactions reversed, which could lead to increased costs, fines or liabilities for Shopify;

• exposure to transaction losses on Shopify Payments, Shop Pay Installments and Shopify Balance as a result of unrecovered merchant transactions due to returns and disputes;

• restrictions on funds or required reserves related to payments;

• additional disclosure and other requirements, including new onboarding authentication, reporting regulations and new credit card network rules.

We are required by our payment processors to comply with payment card network operating rules and we have agreed to reimburse our payment processors for any fees or fines they are assessed by payment card networks as a result of any rule violations by us or our merchants.

• compliance with evolving payment industry rules and legal requirements, including the Payment Card Industry Data Security Standard ("PCI-DSS").

We are required by our payment processors to comply with payment card network operating rules and we have agreed to reimburse our payment processors for certain fees or fines they are assessed by payment card networks as a result of any rule violations by us or our merchants.

The payment card networks have discretion to both set and interpret the card rules.

In addition, we face the risk that one or more payment card networks or other processors may, at any time, assess penalties against us, against our merchants, or terminate our ability to accept credit card payments or other forms of online payments from buyers, which would have an adverse effect on our business, financial condition and operating results.

If we fail to comply with the payment card network rules, including the Payment Card Industry Data Security Standard, we would be in breach of our contractual obligations to our payment processors, financial institutions, partners and merchants.

In addition, we face the risk that one or more payment card networks or payment processors may, at any time, assess penalties against us, against our merchants, or terminate our ability to accept credit card payments or other forms of online payments from buyers, which would have an adverse effect on our business, financial condition and operating results.

If we fail to comply with the payment card network rules, including the PCI-DSS, we would be in breach of our contractual obligations to our payment processors, financial institutions, partners and merchants.

Such failure to comply may subject us to fines, penalties, damages, higher transaction fees and civil liability, and could eventually prevent us from processing or accepting payment cards or could lead to a loss of payment processor partners, even if there is no compromise of customer information.

We or our partners are currently subject to a variety of laws and regulations in various jurisdictions related to payment processing, including those governing cross-border and domestic money transmission, prepaid and other payment access instruments, electronic funds transfers, foreign exchange, anti-money laundering, counter-terrorist financing, banking and import and export restrictions.

Depending on how Shopify Payments, Shop Pay Installments, Shopify Balance and our other merchant solutions evolve, we may be subject to additional laws, either in existing or new jurisdictions.

We or our partners are currently subject to a variety of laws and regulations in various jurisdictions related to payment processing, including those governing cross-border and domestic money transmission, prepaid and other payment access instruments, electronic funds transfers, buy now pay later products, foreign exchange, anti-money laundering, counter-terrorist financing, banking and import and export restrictions.

Many of these laws and regulations are still evolving and could be interpreted in ways that could constrain our ability to offer or expand our financial products or otherwise adversely

affect our business.

Depending on how Shopify Payments, Shop Pay Installments, Shopify Balance and our other merchant solutions evolve, we may become subject to additional laws, either in existing or new jurisdictions.

In some jurisdictions, the application or interpretation of these laws and regulations is not clear.

Our efforts to comply with these laws and regulations could be costly and result in diversion of management time

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and effort and may still not guarantee compliance.

Our efforts to comply with these laws and regulations could be costly and result in diversion of management time and effort and may still not guarantee compliance.

In the event that we are found to be in violation of any such legal or regulatory requirements, we may be subject to monetary fines or other penalties such as a cease and desist order, or we may be required to make changes to our platform, any of which could have an adverse effect on our business, financial condition and results of operations.

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We may introduce new solutions or terms of service that our merchants and their buyers do not like, which may negatively affect our brand.

Additionally, if our merchants or their buyers have a negative experience using our solutions or third-party solutions integrated with Shopify, or if our merchants do not receive a consistently high level of customer service from our support team, such experiences may affect our brand.

Our Shopify Partner Directory enables independent designers, developers and marketers to offer their services to merchants who engage them directly.

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Any unfavorable media coverage or negative publicity about our industry or our company including, without limitation, the quality and reliability of our platform, our level of customer service, privacy and security practices, product changes, our business operations, litigation, or regulatory activity, or regarding the actions of our partners or merchants, could seriously harm our reputation.

Critics have in the past and may in the future utilize the internet, the press and other means to publish negative views of our industry, our company and our competitors, our employees, or make allegations regarding our business and operations, or the business and operations of our competitors.

We may be the recipient of similar negative publicity or allegations in the future, which could adversely affect the size, demographics, engagement and loyalty of our merchants, result in decreased revenues, divert the attention of management, cause fluctuations in the market price of our Class A subordinate voting shares and negatively impact our business and reputation.

Critics have in the past and may in the future utilize the internet, the press and other means to publish negative views of our industry, our company, our competitors, and our employees, or make allegations regarding our business and operations, or the business and operations of our competitors.

We may be the recipient of similar negative publicity or allegations in the future, which could adversely affect the retention, engagement and loyalty of our existing merchants and our ability to attract new merchants, and decrease revenues, divert the attention of management, cause fluctuations in the market price of our Class A subordinate voting shares and negatively impact our business and reputation.

We believe that the importance of brand recognition will continue to increase as competition in our market increases.

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These losses and accumulated deficit were a result of the substantial investments we made to grow our business and we expect to make significant investments in our business in the future, including with respect to key talent, sales and marketing, research and development, the creation and implementation of new products and services, the functionality of our platform, merchant service and support, security and operational requirements, our network infrastructure, acquisitions and the expansion of our international operations.

Historically, our costs have increased each year due to these factors and we expect to continue to incur increasing costs to support our anticipated future growth.

Historically, our costs have increased each year due to these factors and we expect to continue to incur

increasing costs to support our anticipated future growth.

While we are focused on our costs relative to our future revenue growth, certain costs may be more difficult to predict or outside of our control and increased investments and expenditures may make it difficult for us to maintain profitability.

For example, if the costs associated with acquiring new merchants materially rise in the future, including the fees we pay to third parties to market our platform, our expenses may rise significantly.

Therefore, we

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cannot predict if we will maintain profitability over time.

Therefore, we cannot predict if we will maintain profitability over time.

If we are unable to generate adequate revenue growth and manage our expenses, we may incur significant losses in the future and we may not be able to maintain our profitability on a consistent basis.

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We could incur significant expenses, lost revenue and reputational harm as a result of recalls, safety alerts, product liability claims or regulatory actions, particularly if we fail to prevent, detect or address such issues through design, testing or warranty repairs.

Our business is subject to complex and changing laws and regulations worldwide, which may expose us to liability, increase costs or have other adverse effects that could harm our business.

We are subject to varied and complex laws, regulations and customs around the world.

Compliance with such laws is costly and can require changes to our business practices and significant management time and effort.

These laws are continuously evolving, particularly as they relate to internet and multi-channel commerce platforms.

New laws, including those governing the internet, online platforms, AI and competition, potential amendments to existing laws and ongoing regulatory and judicial interpretation of existing laws may be interpreted in a manner that restricts the scope of applicable protections, creates liability, costs or uncertainty for us and our merchants, or limits our ability to operate our platform or offer some of our products, which could in turn place us at a competitive disadvantage, subject our partners to restrictions that may impact our operations, or otherwise negatively impact our business.

Such violations may also negatively impact our reputation and brand in ways that could cause additional harm to our business, for example by creating a negative consumer or regulatory perception around use of our products.

Evolving data protection and privacy laws and regulations, cross-border data transfer restrictions, data localization requirements and other domestic or foreign laws or regulations may limit the use and adoption of our services, expose us to liability, or otherwise adversely affect our business.

Laws and regulations related to data protection and privacy, and their interpretations, concerning the collection, processing and disclosure of consumer personal information are constantly evolving.

Many of these laws and regulations, including Canada’s Personal Information Protection and Electronic Documents Act, the European Union’s General Data Protection Regulation ("GDPR"), the European Union’s ePrivacy Directive, the United Kingdom’s General Data Protection Regulation, the California Consumer Privacy Act ("CCPA"), the California Consumer Privacy Rights Act, applicable provincial and state laws and regulations, as well as those of other applicable jurisdictions contain detailed requirements regarding collecting and processing personal information, and impose certain limitations on how such information may be used, the length for which it may be stored, with whom it may be shared and the effectiveness of consumer consent.

Many of these laws and regulations, including Canada's Personal Information Protection and Electronic Documents Act, the European Union's General Data Protection Regulation ("GDPR"), the European Union's ePrivacy Directive, the United Kingdom's General Data Protection Regulation, the California Consumer Privacy Act ("CCPA"), as amended by the California Consumer Privacy Rights Act, the California Invasion of Privacy Act ("CIPA"), and other applicable provincial and state laws and regulations, as well as those of other applicable jurisdictions, contain detailed requirements regarding collecting and processing personal information, and impose certain limitations on how such information may be used, the length for which it may be stored, with whom it may be shared and the effectiveness of consumer consent.

In addition to comprehensive U.S.

state privacy laws and regulations that have gone into effect or will go into effect in the future, similar laws are being proposed elsewhere, which impose additional obligations such as additional rights processes, new contractual requirements, opt outs for certain uses and disclosures of sensitive personal information and opt outs from sharing personal information for targeted advertising.

state privacy laws and regulations that have gone into effect or will go into effect in the future, similar laws are being proposed elsewhere, which impose additional obligations such as additional rights processes, new contractual requirements, opt outs for certain uses and disclosures of sensitive personal information, opt outs from sharing personal information for targeted advertising, and disclosures and other requirements with respect to the use of AI and automated decision-making.

Such laws and regulations could restrict our ability to store and process personal data (in particular, our ability to use certain data for purposes such as risk or fraud avoidance, marketing or advertising), to control our costs by using certain vendors or service providers and to offer certain services in certain jurisdictions.

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Additionally, such laws and regulations are often inconsistent and may be subject to amendment or re-interpretation, which may cause us to incur significant costs and expend significant effort to ensure compliance.

Given that requirements may be inconsistent and evolving, how

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we choose to respond to these requirements globally may not meet the expectations of individual merchants, their buyers or other stakeholders, which could thereby reduce the demand for our services.

Given that requirements may be inconsistent and evolving, how we choose to respond to these requirements globally may not meet the expectations of individual merchants, their buyers or other stakeholders, which could thereby reduce the demand for our services.

Finally, some merchants, partners or service providers may respond to these evolving laws and regulations by asking us to make certain privacy or data related contractual commitments that we are unable or unwilling to make or by placing restrictions on how data may be used.

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Other laws and regulations, like the GDPR, generally prohibit cross-border data transfers and onward transfers unless specific conditions are met, such as a determination that a jurisdiction provides an "adequate" level of data protection or the existence of other "appropriate safeguards" that provide some assurances as to the treatment and protection of such data.

We rely on a variety of these mechanisms, including the European Commission Decision 2002/2/EC regarding the adequacy of Canadian law and Standard Contractual Clauses, and eventually intend to rely on Binding Corporate Rules for transfers between Shopify entities, to strengthen our ability to efficiently provide our services around the globe at scale.

We rely on a variety of these mechanisms,

including the European Commission Decision 2002/2/EC regarding the adequacy of Canadian law and Standard Contractual Clauses, and Binding Corporate Rules for transfers between Shopify entities, to strengthen our ability to efficiently provide our services around the globe at scale.

If we are no longer able to rely on a particular transfer mechanism or are otherwise unable to transfer personal information across borders, we may not be able to operate in certain jurisdictions, which may reduce the demand for our services and limit our opportunities for international growth.

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Beyond impacting the demand for our services, our failure to comply with applicable privacy and data protection laws or regulations could expose us to significant fines and penalties as well as injunctions imposed by regulators, and has in the past and could in the future expose us to legal claims by our merchants, or their buyers, or other relevant stakeholders.

Some of these laws, such as the CCPA, permit individual or class action claims for certain alleged violations, increasing the likelihood of such legal claims.

Some of these laws, such as CIPA and the CCPA, permit individual or class action claims for certain alleged violations, increasing the likelihood of such legal claims.

Similarly, many of these laws require us to maintain internal and external documentation, such as an online privacy policy, data protection impact assessments, records of processing activities, and other informational pages or documents that disclose or record our practices regarding the collection, processing and disclosure of personal information.

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• use of resources that are needed in other areas of our business;

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• in the case of an acquisition:

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◦ difficulty integrating the operations of the acquired company;

◦ coordination of product, engineering and sales and marketing functions, as applicable, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company, as applicable, difficulties associated with supporting new products or services, difficulty converting the customers of the acquired company onto our platform, as applicable, and difficulties associated with contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company;

◦ coordination of product, engineering and sales and marketing functions, as applicable, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company, as applicable, difficulties associated with supporting new products or services, difficulties converting the customers of the acquired company onto our platform, as applicable, and difficulties associated with contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company;

◦ retention and integration of employees from the acquired company;

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In conjunction with our strategic investments, we have pursued, and expect to continue to pursue, strategic partnerships to enhance our platform's functionality, introduce new solutions and generate incremental revenue opportunities.

If the parties with which we partner fail to perform their obligations to the expected standard or our strategic objectives, this could erode merchant trust, damage our reputation, make it more difficult for us to sell our solutions to new or existing merchants, and adversely affect our revenue.

If the parties with which we partner fail to perform their obligations to the expected standard or are unable to advance our strategic objectives, this could erode merchant trust, damage our reputation, make it more difficult for us to sell our solutions to new or existing merchants, and adversely affect our revenue.

Additionally, a number of our strategic investments are in early-stage companies, some of which may not be revenue-generating and which are at a higher risk of winding down.

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Furthermore, liquidity in certain of our strategic investments is limited, which may affect our ability to exit such investments in a timely manner.

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Shopify Capital and other financing and lending solutions are subject to additional risks relating to the availability of capital to fund merchants, the ability of our merchants to generate sales to remit receivables or make payments, general macroeconomic conditions, legal and regulatory risks and the risk of fraud.

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In addition, if we are unable to properly manage the risks of offering lending products or MCAs to merchants or if we fail to correctly predict the likelihood of timely repayment of lending products or likely remittances for MCAs, our business may be materially and adversely affected.

We may sell a percentage of Shopify Capital loans originated in the United States to third party investors.

It is not possible for us to predict the future level of demand for the purchase of loans and, based on the terms of Shopify Capital's current and contemplated transactions, purchasers may terminate the purchase of these loans at any time.

Purchases of loans may fluctuate based on a number of factors, some of which may be outside of our control, including, but not limited to, economic conditions, changes in the regulatory environment in the United States, the availability of alternative investments, changes in the terms of the loans, loans offered by other entities and prevailing interest rates.

If any purchasers significantly reduce the dollar amount of the loans they purchase from us, we may be unable to sell those loans to another purchaser on favorable terms or at all.

In addition, these loans are typically sold at a premium to par, and in excess of our costs.

Our loan premiums fluctuate from time to time and are sold at variable prices, and we are not guaranteed a gain on all or any of our loan sales.

If we are unable to sell loans on terms that are acceptable to us, we may need to secure additional sources of funding, use our balance sheet cash or reduce our origination of Shopify Capital loans.

These actions may have an adverse effect on our results of operations, cash and liquidity position and future prospects.

We may provide guarantees, indemnities and backstop repurchases for certain representation and covenant breaches related to the loans themselves as well as related to the servicing of those loans.

We have sold in the past, and may in the future sell, a percentage of Shopify Capital loans and MCA receivables to third party investors.

It is not possible for us to predict the future level of demand for the purchase of these receivables and, based on the terms of any such transactions, purchasers could

terminate the purchase of these receivables at any time.

Sales of receivables may fluctuate based on a number of factors, some of which may be outside of our control, including, but not limited to, economic conditions, changes in the regulatory environment, the availability of alternative investments, changes in the terms of the receivables, loans and receivables offered by other entities and prevailing interest rates.

If we were to resume such sales and any purchasers significantly reduced the dollar amount of the receivables they purchase from us, we may be unable to sell those receivables to another purchaser on favorable terms or at all.

In addition, these receivables have typically been sold at a premium to par, and in excess of our costs.

However, premiums fluctuate from time to time and receivables are sold at variable prices, and we are not guaranteed a gain on any of the sales we undertake.

In addition, we may provide guarantees, indemnities and backstop repurchases for certain representation and covenant breaches related to the receivables themselves as well as related to the servicing of those receivables.

We currently fund lending products including Shopify Credit using our balance sheet cash.

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Should we fail to expand and evolve our lending and financing products in this manner, or should new products, models, structures or markets or new regulations or interpretations of existing regulations, impose requirements on us that are impractical or that we cannot satisfy, the future growth and success of our lending products may be materially and adversely affected.

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We may be unable to achieve or maintain data transmission capacity.

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If one of these third parties suffers from capacity constraints, our business may be adversely affected.

In addition, because we and our merchants generate a disproportionate amount of revenue in the fourth quarter, any disruption in our merchants’ ability to process and fulfill customer orders in the fourth quarter could have a disproportionately negative effect on our operating results.

In addition, because we and our merchants generate a substantial amount of revenue in the fourth quarter, any disruption in our merchants’ ability to process and fulfill customer orders in the fourth quarter could have a disproportionately negative effect on our operating results.

We may be subject to claims by third parties of intellectual property infringement or other third party or governmental claims, litigation, disputes or other proceedings.

The industries in which we operate are characterized by the existence of a large number of patents and frequent claims and related litigation regarding patents and other intellectual property rights.

Third parties have in the past asserted, and may in the future assert, that our platform, hardware, solutions, technology, methods or practices, or hardware, solutions, technology, methods or practices of third parties we use such as open source software, infringe, misappropriate or otherwise violate their intellectual property or other proprietary rights.

Third parties have in the past asserted, and may in the future assert, that our platform, hardware, solutions, technology, methods or practices, or the hardware, solutions, technology, methods or practices of third parties we use, such as open source software, infringe, misappropriate or otherwise violate their intellectual property or other proprietary rights.

Such claims may be made by our competitors seeking to obtain a competitive advantage or by other parties.

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The risk of claims may increase as the number of merchants and partners using our services, and the variety of solutions that we offer increases.

We expect to continue to expand internationally, and laws or legal doctrines regarding secondary liability for, and the availability of safe harbors from, intellectual property infringement claims resulting from merchant or partner activities may differ.

The risk of being the subject of claims of secondary intellectual property infringement in a given jurisdiction in which we operate may vary in correspondence with differences in relevant intellectual property law between jurisdictions.

Any such claims, regardless of merit, that result in litigation could result in substantial expenses, divert the attention of management, cause significant delays in introducing new or enhanced services or technology, materially disrupt the conduct of our business and have a material and adverse effect on our brand, business, financial condition and results of operations.

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We may also be obligated to indemnify our merchants or partners or pay substantial settlement costs, including royalty payments, in connection with any such claim or litigation and to obtain licenses, modify applications or refund fees, which could be costly.

If it appears necessary, we may seek to secure license rights to intellectual property that we are alleged to infringe at a

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significant cost, potentially even if we believe such claims to be without merit.

If it appears necessary, we may seek to secure license rights to intellectual property that we are alleged to infringe at a significant cost, potentially even if we believe such claims to be without merit.

If required licenses cannot be obtained, or if existing licenses are not renewed, litigation could result.

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Activities of merchants or partners or the content of our merchants' shops could damage our brand, subject us to liability and harm our business and financial results.

Our terms of service and acceptable use policy prohibit our merchants and our partners from using our platform to engage in illegal or otherwise prohibited activities and our terms of service and acceptable use policy permit us to terminate a merchant’s shop or a partner's account if we become aware of such use.

Merchants or partners may nonetheless engage in prohibited or illegal activities on our platform in violation of our terms, policy and applicable laws and regulations, which could harm our reputation and may subject us to legal or regulatory claims or actions.

Our terms of service and acceptable use policy prohibit our merchants and our partners from using our platform to engage in illegal or otherwise prohibited activities and our terms of service and acceptable use policy permit us to take a variety of restrictive actions, including terminating a merchant’s shop or a partner's account if we become aware of such use.

Merchants or partners may nonetheless engage in prohibited or illegal activities on our platform in violation of our terms, policy and applicable laws and regulations, and new technologies could be leveraged to enable such activities at scale, which in turn could harm our reputation and may subject us to legal or regulatory claims or actions.

Furthermore, our brand may be negatively impacted by the actions of merchants or partners that are deemed to be hostile, offensive or inappropriate.

While we use technology to monitor for compliance with or eligibility for certain Shopify offerings, we do not proactively and comprehensively monitor or review the appropriateness of all content on all our merchants’ shops in connection with our services, and we do not have control over merchant activities or the activities in which our merchants’ buyers engage.

The safeguards we have in place may not be sufficient for us to avoid regulatory action, liability or avoid harm to our brand, especially if such hostile, offensive, inappropriate or illegal use is high profile, which could adversely affect our business and financial results.

The safeguards we have in place may not be sufficient for us to avoid regulatory action or liability or avoid harm to our brand, especially if such hostile, offensive, inappropriate or illegal use is high profile, which could adversely affect our business and financial results.

Merchants using the platform may also operate businesses in regulated industries, which are subject to additional scrutiny, increasing the potential scrutiny and potential liability we could incur.

In addition, due to our international expansion, we may be subject to international actions alleging that merchants’ store content violate laws in foreign jurisdictions, which could negatively affect our business and operations.

The laws relating to the liability of online service providers are evolving and subject to challenge including claims related to defamation, product liability, libel, breach of contract, invasion of privacy, negligence, copyright or trademark infringement.

In addition, due to our international expansion, we may be subject to international actions alleging that certain merchant store content violates laws in foreign jurisdictions, which could negatively affect our business and operations.

The laws relating to the liability of online service providers, including with respect to defamation, product liability, libel, breach of contract, invasion of privacy, negligence, copyright or trademark infringement, are evolving.

Developments in these laws in various jurisdictions could subject us to liability, penalties or restrictions on our business.

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We may also be unsuccessful in our efforts to enforce our policies or otherwise remediate any such incidents.

Consequences of any of the foregoing developments include negative effects on merchant and buyer trust and engagement, harm to our reputation and brands, changes to our business practices in a manner adverse to our business and adverse effects on our business and financial results.

Consequences of any of the foregoing developments include negative effects on merchant and buyer trust and engagement, harm to our reputation and brand, changes to our practices in a manner adverse to our business and adverse effects on our business and financial results.

Any such developments may also subject us to litigation and regulatory inquiries, which could divert management's time and attention and subject us to monetary penalties and damages or other remedies.

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With sales and operations in various countries, we are subject to multiple forms of taxation in many jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain.

The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have an adverse impact on our liquidity

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and results of operations.

In particular, the application of tax laws to solutions provided over the internet is unclear and continuously evolving.

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• future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated earnings in countries where we have higher statutory tax rates;

• changes in gain or loss on investments that are subject to a lower tax rate;

• negative outcomes from tax audits.

We currently conduct activities in the United States, Ireland, Singapore and other jurisdictions through our subsidiaries pursuant to transfer pricing arrangements that require affiliated companies to deal on an arm's length basis.

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If we are subject to liability for past or future sales by our merchants, it could harm our results of operations.

The application of indirect taxes, such as sales and use taxes, value-added taxes, goods and services taxes, digital service taxes, economic presence taxes and gross receipt taxes, to businesses like ours and to our merchants and their buyers is a complex and evolving issue.

The application of indirect taxes, such as sales and use taxes, value-added taxes, goods and services taxes, digital service taxes, significant economic presence taxes and gross receipt taxes, to businesses like ours and to our merchants and their buyers is a complex and evolving issue.

Many of the statutes and regulations that impose these taxes were established before the adoption and growth of the Internet and online commerce.

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Each jurisdiction has different rules and regulations governing indirect sales and use taxes, and these rules and regulations are subject to varying interpretations that change over time.

Various jurisdictions (including Canada and European Union member states) are seeking to impose additional reporting,

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record-keeping or indirect tax collection and remittance obligations on certain platforms that facilitate online commerce.

Various jurisdictions (including Canada and European Union member states) are seeking to impose additional reporting, record-keeping or indirect tax collection and remittance obligations on certain platforms that facilitate online commerce.

In June 2018, the U.S.

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Wayfair, Inc.

states may require collection of sales tax by companies that have no physical presence in the taxing state, and since the decision, many states have adopted or started to enforce laws relating to the collection and remittance of sales taxes in their jurisdiction by remote vendors and online marketplaces.

states may require collection of sales tax by companies that have no physical presence in the taxing state, and since the decision, states have adopted and started to enforce laws relating to the collection and remittance of sales or use taxes in their jurisdiction by remote vendors and online marketplaces.

The adoption and enforcement of such laws could require our merchants or us to incur substantial costs in order to comply, which could adversely affect buyer behavior, adversely affect some of our merchants and indirectly harm our business.

Similar laws are being considered and/or implemented in other jurisdictions, where the application of value-added tax or other indirect taxes on online commerce is complex and evolving.

When we believe we are subject to indirect taxes in a particular state or jurisdiction we undertake necessary steps to comply with the applicable rules and regulations.

When we believe we are subject to indirect taxes in a particular state or

jurisdiction we undertake necessary steps to comply with the applicable rules and regulations.

If a tax authority asserts that distribution of our solutions is subject to such taxes or additional reporting or record-keeping obligations, we or our merchants may need to incur additional costs and such additional costs may decrease the likelihood that merchants would purchase our solutions or continue to renew their subscriptions.

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New obligations to collect or pay taxes of any kind would increase our cost of doing business.

Our business and prospects would be harmed if changes to technologies used in our platform or new versions or upgrades of operating systems and internet browsers adversely impact the process by which merchants and buyers interface with our platform.

We believe the simple and straightforward interface for our platform has helped us to expand and offer our solutions to merchants with limited technical expertise.

In the future, providers of internet browsers could introduce new features that would make it difficult for merchants to use our platform.

In addition, internet browsers for desktop or mobile devices could introduce new features, change existing browser specifications such that they would be incompatible with our platform, or prevent buyers from accessing our merchants’ shops.

Any changes to technologies used in our platform, to existing features that we rely on, or to operating systems or internet browsers that make it difficult for our merchants or their buyers to access our solutions, may make it more difficult for us to maintain or increase our revenues and could adversely impact our business and prospects.

Our business and prospects would be harmed if changes to technologies or new versions or upgrades of operating systems and internet browsers adversely impact the process by which merchants and buyers interface with our platform and other product offerings.

We believe the simple and straightforward interface for our platform and other product offerings has helped facilitate our expansion.

In the future, providers of internet browsers, operating systems or application stores could introduce new features, change their terms of service or modify their technical requirements in ways that could make it difficult for merchants or buyers to use our products or otherwise degrade the functionality or accessibility of our platform or other product offerings.

Any changes to technologies used in our platform or other product offerings, to existing features that we rely on, or to operating systems or internet browsers that make it difficult for merchants or buyers to access our solutions, may make it more difficult for us to maintain or increase our revenues and could adversely impact our business and prospects.

We may be unable to obtain, maintain and protect our intellectual property rights and proprietary information or prevent third parties from making unauthorized use of our technology.

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Further, we hold a number of issued patents but, in many cases, would not be entitled to exclude or prevent our competitors from using our proprietary technology, methods and processes to the extent the patents we own are not infringed by our competitors.

We expect to continue to expand internationally and, in some foreign countries, the mechanisms to enforce intellectual property rights may be inadequate to protect our technology, which could harm our business.

We expect to continue to expand internationally and, in some foreign countries, the mechanisms to register or enforce intellectual property rights may be inadequate to protect our technology, which could harm our business.

In addition, we may not be able to acquire or maintain appropriate domain names in all countries in which we do business, or prevent third parties from acquiring domain names that may be used to impersonate us, our partners, or our merchants or that are similar to, infringe upon, or diminish the value of our trademarks and other proprietary rights.

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We enter into confidentiality and intellectual property agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances.

No assurance can be given that these agreements will be effective in securing

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ownership of our intellectual property or controlling access to our proprietary information and trade secrets.

No assurance can be given that these agreements will be effective in securing ownership of our intellectual property or controlling access to our proprietary information and trade secrets.

The confidentiality agreements on which we rely to protect certain technologies may be breached, may not be adequate to protect our confidential information, trade secrets and proprietary technologies and may not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information, trade secrets or proprietary technology.

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In addition, others may independently discover our trade secrets and confidential information, and in such cases, we likely would not be able to assert any trade secret rights against such parties.

Additionally, we may from time to time be subject to opposition or similar proceedings with respect to applications for registrations of our intellectual property, including our trademarks.

Additionally, we may from time to time be subject to opposition or similar

proceedings with respect to applications for registrations of our intellectual property, including our trademarks.

While we aim to acquire adequate protection of our brand through trademark registrations in key markets, occasionally third parties may have already registered or otherwise acquired rights to identical or similar marks for services that also address our market.

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Our use of open source software could negatively affect our ability to sell our solutions and subject us to possible litigation.

Our solutions incorporate and are dependent to a significant extent on the use and development of open source software and we intend to continue our use and development of open source software in the

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Our solutions incorporate and are dependent to a significant extent on the use and development of open source software and we intend to continue our use and development of open source software in the future.

Such open source software is generally licensed by its authors or other third parties under open source licenses and is typically freely accessible, usable and modifiable.

Pursuant to such open source licenses, we may be subject to certain conditions, including requirements that we offer our proprietary software that incorporates the open source software for no cost, that we make available source code for modifications or derivative works we create based upon, incorporating or using the open source software and that we license such modifications or derivative works under the terms of the particular open source license.

If an author or other third party that uses or distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of our solutions that contained or are dependent upon the open source software, and required to comply with the foregoing conditions, which could disrupt the distribution and sale of some of our solutions.

to significant damages, enjoined from the sale of our solutions that contained or are dependent upon the open source software, and required to comply with the foregoing conditions, which could disrupt the distribution and sale of some of our solutions.

Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our platform.

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Our operating results are subject to seasonal fluctuations.

Our merchant solutions revenues are directionally correlated with the level of GMV that merchants facilitate through our platform.

Our merchant solutions revenues are directionally correlated with the level of GMV that merchants transact through our platform.

Our merchants typically process additional GMV during the fourth quarter holiday season.

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Fluctuations in quarterly results may adversely affect the predictability of our business and the price of our Class A subordinate voting shares.

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Foreign exchange rate fluctuations may negatively affect our results of operations.

While most of our revenues are denominated in U.S.

dollars, a significant portion of our operating expenses are incurred in Canadian dollars.

As a result, our results of operations will be adversely impacted by an increase in the value of the Canadian dollar relative to the U.S.

The value of the Canadian dollar relative to the U.S.

dollars, a significant portion of our operating expenses are incurred in foreign currencies, including the Canadian dollar, Euro and British pound sterling.

As a result, our results of operations will be adversely impacted by an increase in the value of these foreign currencies relative to the U.S.

The value of these foreign currencies relative to the U.S.

dollar has varied significantly in the past and investors are cautioned that past and current foreign exchange rates are not indicative of future foreign exchange rates.

Foreign exchange rate fluctuations may also affect our merchant solutions.

For example, we generate revenue through Shopify Payments in the local currency of the country in which the applicable merchant is located.

For example, in select countries we generate revenue from Shopify Payments, Shopify Capital, and other subscriptions and billings in the local currency of the country in which the applicable merchant is located.

As a result, we will be further exposed to foreign currency fluctuations to the extent non-U.S.

dollar revenues from Shopify Payments increase.

dollar revenues from these offerings increase.

As our operations continue to expand internationally, we may observe additional risk in other foreign currencies as a result of offering local currency billing options and additional operating expenses.

We are dependent upon buyers’ and merchants’ continued and unimpeded access to the internet, and upon their willingness to use the internet for commerce.

Our success depends upon the general public’s ability to access the internet and its continued willingness to use the internet as a means to pay for purchases, communicate, access social media, research and conduct commercial transactions, including through mobile devices.

The adoption of any laws or regulations that adversely affect the growth, popularity or use of the internet, including changes to laws or regulations impacting internet neutrality, or restrictions imposed by companies with significant market power in the broadband and internet marketplace could decrease the demand for our products, increase our operating costs, or otherwise adversely affect our business.

Given uncertainty around these rules, we could experience discriminatory or anti-competitive practices that could impede both our and our merchants’ growth, increase our costs or adversely affect our business.

If buyers or merchants become unable, unwilling or less willing to use the internet for commerce for any reason, including lack of access to high-speed communications equipment, congestion of traffic on the internet, internet outages or delays, disruptions or other damage to merchants’ and buyers’ computers, increases in the cost of accessing the internet and security and privacy risks or the perception of such risks, our business could be adversely affected.

Provisions of our financial instruments may restrict our ability to pursue our business strategies or to pay cash upon conversion or purchase of the Notes and we may not have funds necessary to settle the Notes in cash, to purchase the Notes upon a fundamental change or repay the Notes at maturity.

Under the indenture governing the Notes, we are not restricted from paying dividends, incurring additional indebtedness or issuing or purchasing securities (by us or any of our subsidiaries).

However, any debt instruments we may enter into in the future may require us, to comply with various covenants that limit our ability to, among other things:

• dispose of assets;

• complete mergers or acquisitions;

• incur indebtedness;

• encumber assets;

• pay dividends or make other distributions to holders of our shares;

• make specified investments;

• change certain key management personnel;

• engage in any business other than the businesses we currently engage in;

• engage in transactions with our affiliates.

Furthermore, the indenture for the Notes prohibits us from engaging in certain consolidations, mergers, amalgamations, arrangements, binding share exchanges or transfers or leases of all or substantially all of our assets unless, among other things, the resulting or surviving entity assumes our obligations under the Notes.

Even if such transactions are permitted, they may be considered a fundamental change under the indenture.

These restrictions could inhibit our ability to pursue our business strategies.

We may incur additional indebtedness in the future, some of which may be secured debt.

The instruments governing such indebtedness could contain provisions that are as, or more, restrictive than our existing debt instruments, including the indenture governing the Notes.

Any such restrictions could have the effect of further restricting our ability to pursue business strategies and diminishing our ability to make payments

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on the Notes when due.

If we are unable to repay, refinance or restructure additional future indebtedness when payment is due, the lenders could proceed against the collateral granted to them to secure such indebtedness, as applicable, or force us into bankruptcy or liquidation.

In certain events of bankruptcy, or liquidation involving us or our assets, 100% of the principal of and accrued and unpaid interest on the Notes will automatically become due and payable.

We will, subject to limited exceptions, be required to offer to purchase all of the outstanding Notes upon the occurrence of a fundamental change before the maturity date of the Notes at a purchase price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest, if any.

Upon conversion of the Notes, we will pay or deliver, as the case may be, cash, our Class A subordinate voting shares or a combination thereof, at our election.

We are also required to repay the Notes at maturity, unless earlier converted or repurchased.

We may not have sufficient funds available to purchase the Notes or pay cash on conversion as required.

Our failure to offer to purchase Notes (or to purchase such Notes) when required by the indenture or to pay cash upon conversions of Notes as required by the indenture would constitute a default under the indenture.

A default under the indenture or the fundamental change itself could also lead to a default under agreements governing any future indebtedness.

Moreover, the occurrence of a fundamental change under the indenture could constitute an event of default under any agreement for future indebtedness and if such event of default is not cured or waived, future lenders could terminate commitments to lend and cause all amounts outstanding to be due and payable immediately.

If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and purchase the Notes or to pay cash upon conversions of Notes and, if applicable, lenders could proceed against any collateral granted to them to secure such indebtedness or force us into bankruptcy or liquidation.

We may need to raise additional funds to pursue our growth strategy or continue our operations, and we may be unable to raise capital when needed or on acceptable terms.

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The Founder Share provides a variable number of votes that represents, when combined with the votes attached to certain other voting shares of Shopify beneficially owned or controlled by Tobias Lütke, his immediate family and affiliates, at least 40% of the aggregate voting power attached to all of Shopify's outstanding voting shares, provided that such variable number of votes does not cause the aggregate voting power of Tobias Lütke and his immediate family and affiliates to exceed 49.9% of the aggregate voting power attached to all of the Shopify's outstanding voting shares.

Tobias Lütke also holds the substantial majority of our outstanding Class B restricted voting shares, each of which carries 10 votes per share, and as at December 31, 2024, held 631,611 Class A subordinate voting shares, representing

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0.03% of the aggregate voting power attached to all of Shopify's outstanding voting shares.

Tobias Lütke also holds the substantial majority of our outstanding Class B restricted voting shares, each of which carries 10 votes per share, and as at December 31, 2025, held 1,800,000 Class A subordinate voting shares, representing 0.09% of the aggregate voting power attached to all of Shopify's outstanding voting shares.

As a result, as at December 31, 2025, Tobias Lütke owned, directly or indirectly, or exercised control or direction over shares representing 40.09% of the aggregate voting power attached to all of the Shopify's outstanding voting shares and therefore has significant influence over our management and affairs and over all matters requiring shareholder approval, including the election of directors and significant corporate transactions.

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or (2) create a new class of shares equal or superior to the shares of such class, which rights are otherwise provided for in paragraphs (a) and (e) of subsection 176(1) of the CBCA.

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articles of incorporation to effect an exchange, reclassification or cancellation of all or part of the shares of such class pursuant to Section 176(1)(b) of the CBCA unless such exchange, reclassification or cancellation:

Pursuant to our restated articles of incorporation, neither holders of our Class A subordinate voting shares nor holders of our Class B restricted voting shares are entitled to vote separately as a class on a proposal to amend our restated articles of incorporation to effect an exchange, reclassification or cancellation of all or part of the shares of such class pursuant to Section 176(1)(b) of the CBCA unless such exchange, reclassification or cancellation:

(a) affects only the holders of that class;

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• breaches of security or privacy incidents, and the costs associated with any such breaches and remediation;

• investors’ general perception of us and the public’s reaction to our press releases, our other public announcements and our filings with the U.S.

SEC and Canadian securities regulators;

• investors' general perception of us and the public's reaction to our press releases, our other public announcements and our filings with U.S.

and Canadian securities regulators;

• fluctuations in quarterly results;

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In addition, the stock markets have historically experienced substantial price and volume fluctuations, particularly in the case of shares of technology companies, and such fluctuations may be driven by factors other than our operations or results.

Such fluctuations and other broad market and industry

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factors may harm the market price of our Class A subordinate voting shares.

Such fluctuations and other broad market and industry factors may harm the market price of our Class A subordinate voting shares.

Hence, the price of our Class A subordinate voting shares could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce the share price of our Class A subordinate voting shares regardless of our operating performance.

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If we were involved in any similar litigation, we could incur substantial costs, our management's attention and resources could be diverted and it could harm our business, operating results and financial condition.

The trading volume of the Notes, the terms of the Notes including the conversion feature, if triggered, and the applicable accounting treatment thereof may impact the trading price of the Class A subordinate voting shares and adversely affect our financial condition and operating results.

The market price of our Class A subordinate voting shares could also be affected by possible sales of our Class A subordinate voting shares by investors who view the Notes as a more attractive means of equity participation in us and by hedging or arbitrage trading activity that we expect to develop involving the Notes.

Additionally, the market price of the Class A subordinate voting shares could adversely impact the trading price of the Notes.

In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to convert their Notes at any time during specified periods at their option.

If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely our Class A subordinate voting shares (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.

If we elect to satisfy our conversion obligation by delivering Class A subordinate voting shares, the issuance could cause dilution to our existing shareholders and cause the market price of our Class A subordinate voting shares to decline.

In addition, the accounting method for reflecting the Notes on our balance sheet, accruing interest expense for the Notes and reflecting the underlying Class A subordinate voting shares in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.

Sales of substantial amounts of our Class A subordinate voting shares in the public market, or the perception that these sales may occur, could cause the market price of our shares to decline.

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Further, we cannot predict the size of future issuances of our Class A subordinate voting shares or the effect, if any, that future issuances and sales of our Class A subordinate voting shares will have on the market price of our Class A subordinate voting shares.

Sales of substantial amounts of our shares, or the perception that such sales could occur, may adversely affect prevailing market prices for our Class A subordinate voting shares.

Sales of substantial amounts of our shares, or the

perception that such sales could occur, may adversely affect prevailing market prices for our Class A subordinate voting shares.

If we are unable to maintain an effective system of internal controls over financial reporting, our operations, financial reporting and results of operations could be adversely impacted.

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If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely impacted.

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Because we do not expect to pay any dividends on our Class A subordinate voting shares for the foreseeable future, investors may never receive a return on their investment.

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We do not have any present intention to pay cash dividends on our Class A subordinate voting shares and we do not anticipate paying any cash dividends on our Class A subordinate voting shares in the foreseeable future.

We currently intend to invest our future earnings, if any, to fund our growth.

Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our Board of Directors and will depend on our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our Board of Directors may deem relevant.

We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term shareholder value.

In February 2026, our Board of Directors authorized the repurchase of up to $2 billion of our Class A subordinate voting shares, provided that the number of Class A subordinate voting shares repurchased does not exceed 5% of our issued and outstanding Class A subordinate voting shares.

The repurchase program has no fixed expiration date.

Although our Board of Directors has authorized the share repurchase program, the program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.

The program could affect the trading price of our Class A subordinate voting shares and increase volatility, and any announcement of a modification, suspension, or termination of this program may result in a decrease in the trading price of our Class A subordinate voting shares.

In addition, the program could diminish our cash reserves.

As a foreign private issuer, we are exempt from certain provisions of the Exchange Act that are applicable to U.S.

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domestic public companies, including:

(i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (iii) Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material non-public information.

(i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act imposing liability for insiders who profit from trades made in a short period of time and (iii) Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material non-public information.

In addition, as a foreign private issuer, we have the option to follow certain Canadian corporate governance practices, except to the extent that such laws would be contrary to U.S.

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Certain matters of procedure will also be governed by Canadian law.

As a result of the difficulty associated with enforcing a judgement against us or these persons in Canada, you may be able to collect only limited, or may be unable to collect any, damages awarded by either a U.S.

As a result of the difficulty associated with enforcing a judgment against us or these persons in Canada, you may be able to collect only limited, or may be unable to collect any, damages awarded by either a U.S.

or foreign court.

Our by-laws provide that any derivative actions, actions relating to breach of fiduciary duties and other matters relating to our internal affairs will presumptively be litigated in Canada, which could limit investors' ability to obtain a preferred judicial forum for disputes with us.

We have adopted a forum selection by-law that provides that, unless we consent in writing to the selection of an alternative forum, the Superior Court of Justice of the Province of Ontario, Canada and appellate Courts therefrom (or, failing such Court, any other "court" as defined in the CBCA having jurisdiction, and the appellate Courts therefrom), will be the sole and exclusive forum for (1) any

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derivative action or proceeding brought on our behalf;

(2) any action or proceeding asserting a breach of fiduciary duty owed by any of our directors, officers or other employees to us;

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If a court were to find our forum selection by-law inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions and we may not obtain the benefits of limiting jurisdiction to the courts selected.

Provisions of our charter documents, certain Canadian legislation and the indenture governing the Notes could delay or deter a change of control, limit attempts by our shareholders to replace or remove our current senior management and affect the market price of our Class A subordinate voting shares.

Provisions of our charter documents and certain Canadian legislation could delay or deter a change of control, limit attempts by our shareholders to replace or remove our current senior management and affect the market price of our Class A subordinate voting shares.

Our restated articles of incorporation authorize our Board of Directors to issue an unlimited number of preferred shares without shareholder approval and to determine the rights, privileges, restrictions and conditions granted to or imposed on any unissued series of preferred shares.

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If we were to issue a significant number of preferred shares, these issuances could deter or delay an attempted acquisition of us or make the removal of management more difficult, particularly in the event that we issue preferred shares with special voting rights.

Issuances of preferred shares, or the perception that such issuances may occur, could cause the trading price of our Class A subordinate voting shares to drop.

Issuances of preferred shares, or the perception

that such issuances may occur, could cause the trading price of our Class A subordinate voting shares to drop.

In addition, provisions in the CBCA and in our restated articles of incorporation and by-laws may have the effect of delaying or preventing changes in our senior management, including provisions that:

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• require the approval of a two-thirds majority of the votes cast by shareholders present in person or by proxy in order to amend certain provisions of our restated articles of incorporation, including, in some circumstances, by separate class votes of holders of our Class A subordinate voting shares and Class B restricted voting shares.

Furthermore, the indenture governing the Notes prohibits us from engaging in certain consolidations, mergers, amalgamations, arrangements, binding share exchanges or transfers or leases of all or substantially all of our assets unless, among other things, the resulting or surviving entity assumes our obligations under the Notes.

These provisions may frustrate or prevent any attempts by our shareholders to launch a proxy contest or replace or remove our current senior management by making it more difficult for shareholders to replace members of our Board of Directors, which is responsible for appointing the members of our senior management.

Any of these provisions could have the effect of delaying, preventing or deferring a change in control which could limit the opportunity for our Class A subordinate voting shareholders to receive a

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premium for their Class A subordinate voting shares, and could also affect the price that investors are willing to pay for Class A subordinate voting shares.

Our restated articles of incorporation permits us to issue an unlimited number of Class A subordinate voting shares and Class B restricted voting shares.

Any of these provisions could have the effect of delaying, preventing or deferring a change in control, which could limit the opportunity for our Class A subordinate voting shareholders to receive a premium for their Class A subordinate voting shares, and could also affect the price that investors are willing to pay for Class A subordinate voting shares.

Our restated articles of incorporation permit us to issue an unlimited number of Class A subordinate voting shares and Class B restricted voting shares.

We anticipate that we will, from time to time, issue additional Class A subordinate voting shares in the future.

Subject to the requirements of the NYSE and the Toronto Stock Exchange ("TSX"), we will not be required to obtain the approval of shareholders for the issuance of additional Class A subordinate voting shares.

Although the rules of the TSX generally prohibit us from issuing additional Class B restricted voting shares, there may be certain circumstances where additional Class B restricted voting shares may be issued, including upon receiving shareholder approval and pursuant to the exercise of stock options under our fourth amended and restated option plan (the "Legacy Option Plan") that were granted prior to our initial public offering.

Subject to the requirements of the Nasdaq Global Select Market ("NASDAQ") and the Toronto Stock Exchange ("TSX"), we will not be required to obtain the approval of shareholders for the issuance of additional Class A subordinate voting shares.

Any further issuances of Class A subordinate voting shares or Class B restricted voting shares will result in immediate dilution to existing shareholders and may have an adverse effect on the value of their shareholdings.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors