Risk factor changes · SHOP

What changed in Shopify's risk factors

Item 1A (Risk Factors) of Shopify's FY2025 10-K compared with its FY2024 10-K, sentence by sentence.

Newer: 10-K filed 2026-02-11 · Older: 10-K filed 2025-02-11

New in the latest 10-K 23

• Unanticipated changes in tax laws or adverse outcomes from tax examinations;
• We expect to continue to harden our infrastructure to adapt to evolving tactics, techniques and procedures to make us more resilient.
• 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.
• 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 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.
• 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 24 Table of Contents affect our business.
• Furthermore, liquidity in certain of our strategic investments is limited, which may affect our ability to exit such investments in a timely manner.
• We may be unable to achieve or maintain data transmission capacity.
• 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.
• 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.
• Foreign exchange rate fluctuations may negatively affect our results of operations.
• 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.
• 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.

Reworded 142

Removed words are struck through; added words are highlighted.

• This Annual Report 12 Table of C ontents on Form 10-K also contains forward-looking statements that involve risks and uncertainties.
• These risks are discussed more fully below under the headings "Risks Related to Our Business and Industry" and " Risks "Risks Related to Ownership of our Shares" and include, but are not limited to: Risks Related to Our Operations Our ability to attract and retain merchants, increase sales to both new and existing merchants and sustain and manage our growth effectively;
• The impact of worldwide economic conditions, including measures that effect affect international trade, such as tariffs, and the resulting impact on spending by merchants and their buyers;
• The success of our strategic relationships with third parties and the impact of these relationships impact on our growth; 13 Table of Contents Our use of AI and machine learning, including associated risks and the developing regulatory environment;
• Unanticipated changes in tax laws or adverse outcomes from tax examinations; 13 Table of C ontents Financial Risks Our ability to maintain profitability and our intention to continue to make investments in our business in the future to drive future growth, including with respect to key talent, sales and marketing, research and development, new products and our network infrastructure, among others;
• 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 14 Table of Contents 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.
• We may also fail to attract new merchants, retain existing merchants, retain revenue from existing merchants or increase sales to both new and existing merchants as a result of a number of other factors, including: reductions in our current or potential merchants spending levels; a decline in consumer spending, including as a result of deteriorating macroeconomic conditions; 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 14 Table of C ontents growth strategy and operating plans including new solutions offerings; concerns relating to actual or perceived data incidents and security breaches; the frequency and severity of any system outages; technological changes or problems; 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; a decline in our merchants merchants' level of satisfaction with our platform and merchants merchants' usage of our platform; 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 vendors, payment processors; processors and providers of AI technology; the timeliness and success of new products and services we may offer in the future; our ability to integrate emerging technologies into our products; and our focus on long-term value over short-term results, meaning that we may make strategic decisions that may not maximize our short-term revenue or profitability if we believe that the decisions are consistent with our mission and will improve our financial performance over the long-term.
• As we grow, we will be required to continue to improve our financial controls and procedures, and we may not be able to do so effectively. 15 Table of Contents Our business is highly competitive.
• 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 15 Table of C ontents 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: integrating competing platforms, applications or features into products they control; 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 merchants' ability to offer services or adversely impact our results of operations and those of our merchant s. merchants.
• For example, large technology platforms have imposed and are considering imposing, or may provide its their 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 or other business relationships.
• 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. AI.
• We store personal information, credit card 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, credit card payment information and/or other confidential information.
• These service providers and subprocessors may store or access personal information, credit card payment information and/or other confidential information.
• 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 16 Table of Contents merchants, may be unable to anticipate these techniques, detect the attacks for long periods of time or implement adequate preventative measures.
• These laws, which may focus on individuals financial and payment related 16 Table of C ontents 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 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 credit card 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.
• 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 reputation, diminish our competitive position. position and subject us to legal or regulatory action.
• In addition, computer malware, viruses, social engineering (such as spear phishing attacks), scraping and general hacking continue to be prevalent in our industry. industry and could be enhanced or facilitated by artificial intelligence.
• Such attacks may result in an interruption of service on our platform or the loss or unauthorized disclosure of 17 Table of Contents confidential information.
• We expect to continue to harden our infrastructure to adapt to evolving tactics, techniques and procedures to make us more resilient. 17 Table of C ontents 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.
• If we fail to improve and enhance the functionality, performance, reliability, design, security and scalability of our platform and innovate and introduce new solutions in a manner that responds to our merchants merchants' evolving needs, our business may be adversely affected.
• If we fail to anticipate and address merchants' rapidly 18 Table of Contents changing needs and expectations or adapt to emerging trends, our reputation could be harmed and our business, operating results and financial condition could suffer.
• To the extent we are not able to enhance our platform s platform's functionality to satisfy these requirements, our business, operating results, reputation and financial condition could 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 18 Table of C ontents 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.
• Such merchants may be disproportionately affected by economic downturns or disruptions, especially if they sell discretionary goods, and may choose to allocate their spending to items other than our platform, especially in times of economic uncertainty or recessions. 19 Table of Contents Economic downturns, financial market volatility or other negative macroeconomic factors such as tariffs or inflation, have in the past and may in the future impact buyer confidence and spending, and adversely impact consumer spending, which could result in merchants who use our platform going out of business or deciding to stop using our services in order to conserve cash, or otherwise adversely affect the amount of commerce transacting through our platform and our ability to generate revenue.
• Our agreements with cloud hosting, 19 Table of C ontents 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.
• 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, 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 20 Table of Contents that could have an adverse effect on us.
• 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.
• We are making investments 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 or insufficient, contain biased information. information or produce inaccurate outputs.
• AI tools and algorithms may rely on third-party AI data with unclear or disputed intellectual property rights or interests.
• Intellectual property ownership and license rights, including copyright, of generative and other AI output, 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 service AI model providers or our 20 Table of C ontents merchants to comply with such requirements, if applicable, could have an adverse impact on our business.

Removed since the previous 10-K 53

• Our use of AI and machine learning, including associated risks and the developing regulatory environment;
• Our business is highly competitive.
• Such merchants may be disproportionately affected by economic downturns or disruptions, especially if they sell discretionary goods, and may choose to allocate their spending to items other than our platform, especially in times of economic uncertainty or recessions.
• 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.
• Our efforts to expand into new geographic regions may not be successful, which could limit our ability to grow our business.
• Many of our partners also have international operations and are also subject to these risks and if such partners are unable to appropriately manage these risks, our business may be harmed.
• 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.
• 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 be subject to claims by third parties of intellectual property infringement or other third party or governmental claims, litigation, disputes or other proceedings.
• 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.
• Although we believe that our tax payments and accruals are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions and accruals, or the content of our tax filings or tax positions, which could result in additional tax, interest and penalties on us, which could have an impact on our results of operations.
• 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.
• 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; and 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 36 Table of C ontents 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.

Source: SEC EDGAR filings, compared sentence by sentence by EdgarStack. Sentence matching is automated and may pair or split passages imperfectly; check the linked filings before relying on any passage. A software tool, not financial advice. Not affiliated with the U.S. Securities and Exchange Commission.