Shopify Inc. headquarters in Ottawa. The e-commerce company reported earnings on Tuesday and addressed questions about the controversial rapper's store that was selling swastika T-shirts.Sean Kilpatrick/The Canadian Press
Shopify Inc. SHOP-T has removed the online store belonging to controversial hip-hop star Kanye West that was advertising T-shirts emblazoned with swastikas because it did not follow the platform’s policies.
“All merchants are responsible for following the rules of our platform. This merchant did not engage in authentic commerce practices and violated our terms, so we removed them from Shopify,” said Shopify spokesperson Ben McConaghy.
Shopify did not say which terms had been violated.
The Ottawa-based e-commerce company faced criticism online and from former executives Monday for its silence on the matter. Shopify only learned about the store Monday morning, internal Slack messages obtained by The Globe and Mail show.
According to a message sent by the company’s general counsel, Jess Herz, the company removed the store because it presented a heightened risk of fraud, as the store was a “stunt,” The Logic reported. Ms. Herz wrote that the company’s policies exist to remove as much subjectivity as possible from decision-making regarding content moderation.
Mr. West promoted his store in a Super Bowl ad Sunday. During a call with analysts Tuesday for its fourth quarter, one analyst asked how artificial intelligence could help with content or listing moderation, “considering the controversy around the Super Bowl advertisement.” Shopify executives did not respond.
Later, when asked how AI was driving productivity gains, Shopify president Harley Finkelstein referenced the AI tools that help Shopify merchants work more efficiently, such as its AI inbox assistant or search tools, as well help the company’s software developers and streamline customer support.
“I actually think Shopify will very much be one of the major net beneficiaries in this new AI era,” Mr. Finkelstein said.
Shopify’s results exceeded analysts’ consensus forecasts on nearly every metric in its fourth quarter, posting double-digit revenue, sales volume and free cash flow growth.
Shopify reported revenue of US$2.8-billion for the quarter ended Dec. 31, 2024, up 31 per cent year-over-year and beating analysts’ estimates of 27.4 per cent. It reported net income of US$1.29-billion for the quarter, though “other income,” including the fluctuating value of its stakes in other companies, made up about 73 per cent of its total net income.
“The company’s enterprise and international strategic initiatives yielded positive results this quarter and, in our view, provide undervalued growth prospects over the long term,” said Gil Luria, an analyst with U.S.-based investment firm D.A. Davidson, in a note to investors.
However, profitability and growth guidance for the first quarter was weaker than many expected.
Given that it is trading at about 30 times its expected gross profit over the next year, “Shopify’s stock implies high expectations, and we believe this print will modestly disappoint those expectations,” ATB Capital Markets analyst Martin Toner told investors.
Shopify’s management said it will continue to invest in long-term growth initiatives, including the addition of technical talent, and will hold firm on its marketing spend to drive merchant count growth.
The company could be affected by U.S. President Donald Trump’s tariffs – in particular the removal of the de minimis exemption, which allowed businesses to ship packages valued at less than $800 duty-free to the U.S. from China and less than $150 from Canada. It would be a hit to Shopify merchants who are shipping Chinese-made products directly to the U.S., as well as shops shipping to the U.S. from Canada.
The exemption was removed as part of Mr. Trump’s 10-per-cent tariffs on China but was temporarily replaced until the proper systems to collect tariffs are in place, the White House has said. Meanwhile, the Canadian exemption will remain until the beginning of March, when the 30-day pause on tariffs expires.
More than 25 per cent of Shopify Plus stores rely on the de minimis exemption, according to Maggie Barnett, the chief executive officer of LVK, a U.S.- and Canada-based third-party logistics company and subsidiary of ShipHero.
“The policy shift will trigger higher costs and cash flow constraints, putting pressure on small businesses and fast-fashion brands,” Ms. Barnett said in a news release last week.
On Tuesday, Mr. Finkelstein told analysts that de minimis exemptions are crucial for small businesses, allowing entrepreneurs to compete at a larger scale. He said Shopify has put in place tools for merchants to display and collect duties at checkout and for customers to shop locally using the Shop app.
The company’s revenue from subscriptions increased 26 per cent, to US$666-million, and it earned US$1.23-billion from merchant solutions, up 32 per cent, each ahead of estimates.
Gross merchandise value – the total value of orders processed on the Shopify platform – rose 26 per cent to US$94.46-billion after a busy holiday season. Free cash flow was up 37 per cent.