Shopify Announces First-Quarter 2016 Financial Results
Revenue Grows 95% Year on Year
Gross Merchandise Volume (GMV) Grows 102% Year on Year
Number of Merchants Surpasses 275,000
Shopify reports in U.S. dollars and in accordance with U.S. GAAP
Shopify Inc. (NYSE:SHOP)(TSX:SH), the leading cloud-based, multi-channel commerce platform designed for small and medium-sized
businesses, today announced strong financial results for the quarter ended March 31, 2016.
“The era of mobile commerce has officially arrived: mobile orders from Shopify merchants surpassed those of desktops in
February, and have continued to climb since,” said Tobi Lütke, founder and CEO of Shopify. “Mobile is bringing commerce to places
it’s never been before, it is making it more social, and we are pushing that forward in a big way. With our recent integration with
Facebook’s new Messenger platform and our acquisition of a leader in mobile messaging for commerce, Kit CRM, we’re making it easier
for our merchants to thrive in this new era.”
“Our first quarter delivered a great start to the year,” stated Russ Jones, Shopify’s CFO. “The strong merchant adds in the
quarter, together with GMV once again doubling year on year, highlight the value we bring to merchants of all sizes. Our unique
combination of strengths is clearly meeting a pressing need in commerce right now.”
First-Quarter Financial Highlights
● Total revenue was $72.7 million, a 95% increase from the first quarter of 2015. Within this, Subscription Solutions revenue
grew 73% to $38.7 million, driven primarily by an increase in the number of merchants using our platform; and Merchant Solutions
revenue grew 127% to $34.0 million, primarily driven by an increase in revenue from Shopify Payments.
● Monthly Recurring Revenue1 (“MRR”) as of March 31, 2016 was $12.8 million, up 73% compared with $7.4 million on
March 31, 2015.
● Gross Merchandise Volume2 (“GMV”) for the first quarter was $2.7 billion, an increase of 102% over the first
quarter of 2015.
● Gross profit grew 82% to $39.3 million for the first quarter of 2016, versus $21.6 million for the first quarter of 2015.
● Operating loss for the first quarter of 2016 was $9.7 million, compared with an operating loss of $3.5 million for the first
quarter of 2015.
● Adjusted operating loss3 was $5.9 million, compared with $1.5 million for the first quarter of 2015.
● Net loss was $8.9 million, or $0.11 per share, compared with $4.5 million, or $0.12 per share, for the first quarter of
2015.
● Adjusted net loss3 for the first quarter of 2016 was $5.1 million, or $0.06 per share, compared with an adjusted
net loss of $2.5 million, or $0.06 per share, for the first quarter of 2015.
● At March 31, 2016, Shopify had $189.5 million in cash, cash equivalents and marketable securities, compared with $190.2
million on December 31, 2015.
First-Quarter Business Highlights
● Orders on mobile surpassed those on desktop for the first time ever in the first quarter of 2016, as just over 51% of orders
exiting the quarter came from mobile devices. The share of traffic from mobile devices in the quarter was even higher, at 62%.
● Shopify’s partner ecosystem, a critical component to Shopify’s success, was well represented at Shopify’s first-ever partner
conference, Unite, in San Francisco. More than 650 partners participated in Unite, where we unveiled a number of platform
enhancements, including the Sales Channel SDK, which enables partners to use Shopify’s APIs to build out new channels for Shopify
merchants. Houzz, Wanelo and Ebates have already built channels through which Shopify merchants can list and sell.
Since the close of the first quarter, Shopify made several key announcements:
● Shopify acquired Kit CRM to strengthen our capabilities in messaging and conversational commerce. Kit’s virtual marketing
assistant uniquely interfaces with business owners via messaging to help manage marketing, reporting and other back-office tasks. A
top-rated app in the Shopify app store, Kit helps merchants grow their business by placing targeted ads, posting updates to
merchants’ Facebook Pages, and making recommendations based on shop or business activity.
● Shopify was the first commerce platform to integrate with Facebook’s new Messenger Platform, making it easier for merchants to
engage in conversational commerce with their customers. The integration allows merchants to provide live customer support,
automatically send order confirmations, shipping updates, and push notifications all within Facebook Messenger. Shopify is also
developing commerce Bots for Messenger to allow merchants to have more interactive and engaging conversations with customers who
opt in for these capabilities.
● Shopify announced Shopify Capital, offering merchant cash advances to select merchants, which provide them timely access to
funds to respond quickly to capital needs for their business. During the pilot program, merchants used cash advances to buy
equipment and inventory, launch new products, hire more employees, and add new channels and products.
● Shopify expanded same-day shipping options with its integration with Postmates. Live in over 200 cities across the United
States and serviced by over 25,000 couriers, merchants and customers can track purchases from checkout to delivery.
Financial Outlook
The financial outlook that follows constitutes forward-looking information within the meaning of applicable securities laws and
is based on a number of assumptions and subject to a number of risks. Actual results could vary materially as a result of numerous
factors, including certain risk factors, many of which are beyond Shopify’s control. Please see “Forward-looking Statements”
below.
In addition to the other assumptions and factors described in this press release, Shopify’s outlook assumes the continuation of
growth trends in our industry, our ability to manage our growth effectively and the absence of material changes in our industry or
the global economy. The following statements supersede all prior statements made by Shopify regarding 2016 financial outlook. All
numbers provided in this section are approximate.
For the full year 2016, Shopify currently expects:
● Revenues in the range of $337 million to $347 million
● GAAP operating loss in the range of $41 million to $47 million
● Adjusted operating loss3 in the range of $16 million to $22 million, which excludes stock-based compensation
expenses and related payroll taxes of $25 million
For the second quarter of 2016, Shopify currently expects:
● Revenues in the range of $79 million to $81 million
● GAAP operating loss in the range of $12 million to $13 million
● Adjusted operating loss3 in the range of $6 million to $7 million, which excludes stock-based compensation expenses
and related payroll taxes of $6 million
Quarterly Conference Call
Shopify’s management team will hold a conference call to discuss its first-quarter results today, May 4, 2016, at 8:30 a.m. ET.
The conference call will be webcast on the investor relations section of Shopify’s website at https://investors.shopify.com/events/Events-Presentations/default.aspx. An archived replay of the webcast will be
available following the conclusion of the call.
Shopify’s First-Quarter 2016 Interim Unaudited Condensed Consolidated Financial Statements and Notes and its First-Quarter 2016
Management’s Discussion and Analysis are available on Shopify’s website at www.shopify.com, and will be filed on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov.
About Shopify
Shopify is the leading cloud-based, multi-channel commerce platform designed for small and medium-sized businesses. Merchants
use the software to design, set up and manage their stores across multiple sales channels, including web, mobile, social media,
marketplaces, brick-and-mortar locations and pop-up shops. The platform also provides a merchant with a powerful back-office and a
single view of their business. The Shopify platform was engineered for reliability and scale, making enterprise-level technology
available to businesses of all sizes. Shopify currently powers over 275,000 businesses in approximately 150 countries and is
trusted by big brands including Tesla Motors, Budweiser, Red Bull, the LA Lakers, the New York Stock Exchange, GoldieBlox, and many
more.
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with United States generally
accepted accounting principles (GAAP), Shopify uses certain non-GAAP financial measures to provide additional information in order
to assist investors in understanding its financial and operating performance.
Adjusted operating loss, adjusted net loss and adjusted net loss per share are non-GAAP financial measures that exclude the
effect of share-based compensation expenses and related payroll taxes as well as sales and use tax.
Management uses non-GAAP financial measures internally for financial and operational decision-making and as a means to evaluate
period-to-period comparisons. Shopify believes that these non-GAAP measures provide useful information about operating results,
enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with
respect to key metrics used by management in its financial and operational decision making. Non-GAAP financial measures are not
recognized measures for financial statement presentation under US GAAP and do not have standardized meanings, and may not be
comparable to similar measures presented by other public companies. Such non-GAAP financial measures should be considered as a
supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. See the
financial tables below for a reconciliation of the non-GAAP measures.
Forward-looking Statements
This press release contains certain forward-looking statements within the meaning of applicable securities laws, including
statements regarding Shopify’s financial outlook and future financial performance. Words such as “expects”, “anticipates” and
“intends” or similar expressions are intended to identify forward-looking statements.
These forward-looking statements are based on Shopify’s current projections and expectations about future events and financial
trends that management believes might affect its financial condition, results of operations, business strategy and financial needs,
and on certain assumptions and analysis made by Shopify in light of the experience and perception of historical trends, current
conditions and expected future developments and other factors management believes are appropriate. These projections, expectations,
assumptions and analyses are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause
actual results, performance, events and achievements to differ materially from those anticipated in these forward-looking
statements. Although Shopify believes that the assumptions underlying these forward-looking statements are reasonable, they may
prove to be incorrect, and readers cannot be assured that actual results will be consistent with these forward-looking statements.
Actual results could differ materially from those projected in the forward-looking statements as a result of numerous factors,
including certain risk factors, many of which are beyond Shopify’s control, including but not limited to: (i) merchant acquisition
and retention; (ii) managing our growth; (iii) our history of losses; (iv) our limited operating history; (v) our ability to
innovate; (vi) a disruption of service or security breach; (vii) payments processed through Shopify Payments; (viii) our reliance
on a single supplier to provide the technology we offer through Shopify Payments; (ix) a breach involving personally identifiable
information; (x) serious software errors or defects; (xi) exchange rate fluctuations; (xii) achieving or maintaining data
transmission capacity; and (xiii) other one-time events and other important factors disclosed previously and from time to time in
Shopify’s filings with the U.S. Securities and Exchange Commission and the securities commissions or similar securities regulatory
authorities in each of the provinces or territories of Canada. The forward-looking statements contained in this news release
represent Shopify’s expectations as of the date of this news release, or as of the date they are otherwise stated to be made, and
subsequent events may cause these expectations to change. Shopify undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by
law.
1 Monthly Recurring Revenue, or MRR, is calculated by multiplying the number of merchants by the average monthly
subscription plan fee in effect on the last day of that period and is used by management as a directional indicator of subscription
solutions revenue going forward assuming merchants maintain their subscription plan the following month.
2 Gross Merchandise Volume, or GMV, represents the total dollar value of orders processed on the Shopify platform in the
period, net of refunds, and inclusive of shipping and handling, duty and value-added taxes.
3 Please refer to “Non-GAAP Financial Measures” in this press release.
| Shopify Inc. |
| Condensed Consolidated Statements of Operations and Comprehensive
Loss |
|
(Expressed in US $000's, except share and per share amounts, unaudited)
|
|
|
|
|
|
|
|
Three months ended |
|
|
March 31, 2016 |
|
March 31, 2015 |
|
|
$ |
|
$ |
|
|
|
|
|
| Revenues |
|
|
|
|
| Subscription solutions |
|
|
38,706 |
|
|
22,352 |
| Merchant solutions |
|
|
34,016 |
|
|
14,996 |
|
|
|
72,722 |
|
|
37,348 |
| Cost of revenues |
|
|
|
|
| Subscription solutions |
|
|
8,232 |
|
|
5,033 |
| Merchant solutions |
|
|
25,219 |
|
|
10,749 |
|
|
|
33,451 |
|
|
15,782 |
| Gross profit |
|
|
39,271 |
|
|
21,566 |
|
|
|
|
|
| Operating expenses |
|
|
|
|
| Sales and marketing |
|
|
28,008 |
|
|
13,540 |
| Research and development |
|
|
13,670 |
|
|
7,313 |
| General and administrative |
|
|
7,305 |
|
|
4,189 |
| Total operating expenses |
|
|
48,983 |
|
|
25,042 |
|
Loss from operations
|
|
|
(9,712) |
|
|
(3,476) |
|
Other income (expense)
|
|
|
783 |
|
|
(1,054) |
| Net loss |
|
|
(8,929) |
|
|
(4,530) |
|
|
|
|
|
| Other comprehensive income, net of tax |
|
|
|
|
| Comprehensive loss |
|
|
(8,708) |
|
|
(4,530) |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share attributable
to shareholders
|
|
$ |
(0.11) |
|
$ |
(0.12) |
|
|
|
|
|
|
Weighted average shares used to compute basic
and diluted net loss per share attributable to
shareholders
|
|
|
80,488,495 |
|
|
39,344,619 |
| Shopify Inc. |
| Condensed Consolidated Balance Sheets |
|
(Expressed in US $000's, except share and per share amounts, unaudited)
|
|
|
|
|
|
|
|
As at
|
|
|
March 31, 2016
|
|
December 31, 2015 |
|
|
$
|
|
$
|
|
|
|
|
|
| Assets |
|
|
|
|
| Current Assets |
|
|
|
|
| Cash and cash equivalents |
|
83,864 |
|
110,070 |
| Marketable securities |
|
105,600 |
|
80,103 |
| Trade and other receivables |
|
6,548 |
|
6,089 |
| Other current assets |
|
7,149 |
|
6,203 |
|
|
203,161 |
|
202,465 |
|
Long term assets
|
|
|
|
|
| Property and equipment |
|
34,558 |
|
33,048 |
| Intangible assets |
|
5,182 |
|
5,826 |
| Goodwill |
|
2,373 |
|
2,373 |
|
|
42,113 |
|
41,247 |
| Total assets |
|
245,274 |
|
243,712 |
|
|
|
|
|
| Liabilities and shareholders' equity |
|
|
|
|
| Current liabilities |
|
|
|
|
| Accounts payable and accrued liabilities |
|
27,070 |
|
23,689 |
| Current portion of deferred revenue |
|
14,522 |
|
12,726 |
| Current portion of lease incentives |
|
935 |
|
822 |
|
|
42,527 |
|
37,237 |
|
Long term liabilities
|
|
|
|
|
| Deferred revenue |
|
777 |
|
661 |
| Lease incentives |
|
10,993 |
|
10,497 |
|
|
11,770 |
|
11,158 |
|
|
|
|
|
| Shareholders' equity |
|
|
|
|
|
Common stock, unlimited Class A subordinate voting shares
authorized, 63,814,554 and 56,877,089 issued and outstanding;
unlimited Class B multiple voting shares authorized, 17,215,321
and 23,212,769 issued and outstanding
|
|
233,411
|
|
231,452
|
| Additional paid-in capital |
|
14,128 |
|
11,719 |
| Accumulated other comprehensive loss |
|
221 |
|
- |
| Accumulated deficit |
|
(56,783) |
|
(47,854) |
| Total shareholders' equity |
|
190,977 |
|
195,317 |
| Total liabilities and shareholders' equity |
|
245,274 |
|
243,712 |
| Shopify Inc. |
|
Condensed Consolidated Statements of Cash Flows
|
|
(Expressed in US $000's, except share and per share amounts, unaudited)
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
|
|
|
March 31, 2016 |
|
March 31, 2015 |
|
|
$ |
|
$ |
|
|
|
|
|
| Cash flows from operating activities |
|
|
|
|
| Net loss for the period |
|
(8,929) |
|
(4,530) |
|
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
|
|
|
| Amortization and depreciation |
|
3,058 |
|
1,470 |
| Stock-based compensation |
|
3,374 |
|
1,345 |
| Vesting of restricted shares |
|
86 |
|
95 |
| Unrealized foreign exchange (gain) / loss |
|
(978) |
|
1,191 |
|
Change in lease incentives
|
|
609 |
|
539 |
|
Change in deferred revenue
|
|
1,912 |
|
1,137 |
|
Changes in non-cash working capital items
|
|
1,523 |
|
2,719 |
| Net cash provided by operating activities |
|
655 |
|
3,966 |
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
|
| Purchase of marketable securities |
|
(46,439) |
|
- |
| Maturity of marketable securities |
|
20,700 |
|
4,696 |
| Acquisitions of property and equipment |
|
(2,715) |
|
(2,524) |
| Acquisitions of intangible assets |
|
(330) |
|
(1,020) |
|
Net cash (used in) provided by investing activities
|
|
(28,784) |
|
1,152 |
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
|
| Proceeds from the exercise of stock options |
|
844 |
|
55 |
| Net cash provided by financing activities |
|
844 |
|
55 |
|
|
|
|
|
| Effect of foreign exchange on cash and cash equivalents |
|
1,079 |
|
(978) |
|
|
|
|
|
| Net increase (decrease) in cash and cash equivalents |
|
(26,206) |
|
4,195 |
|
|
|
|
|
| Cash and cash equivalents - Beginning of Period |
|
110,070 |
|
41,953 |
|
|
|
|
|
| Cash and cash equivalents - End of Period |
|
83,864 |
|
46,148 |
| Shopify Inc. |
| Reconciliation from GAAP to Non-GAAP Results |
|
(Expressed in US $000's, except share and per share amounts, unaudited)
|
|
|
|
|
|
|
|
Three months ended |
|
|
March 31, 2016 |
|
March 31, 2015 |
|
|
$ |
|
$ |
| GAAP Gross profit |
|
39,271 |
|
21,566 |
| % of Revenue |
|
54% |
|
58% |
| add: stock-based compensation |
|
105 |
|
59 |
| add: payroll expenses related to stock-based compensation |
|
10
|
|
- |
| Non-GAAP Gross profit |
|
39,386
|
|
21,625 |
| % of Revenue |
|
54% |
|
58% |
|
|
|
|
|
| GAAP Sales and marketing |
|
28,008 |
|
13,540 |
| % of Revenue |
|
39% |
|
36% |
| less: stock-based compensation |
|
564 |
|
174 |
| less: payroll expenses related to stock-based compensation |
|
41 |
|
- |
| Non-GAAP Sales and marketing |
|
27,403 |
|
13,366 |
| % of Revenue |
|
38% |
|
36% |
|
|
|
|
|
| GAAP Research and development |
|
13,670 |
|
7,313 |
| % of Revenue |
|
19% |
|
20% |
| less: stock-based compensation |
|
2,030 |
|
779 |
| less: payroll taxes related to stock-based compensation |
|
261 |
|
- |
| Non-GAAP Research and development |
|
11,379 |
|
6,534 |
| % of Revenue |
|
16% |
|
17% |
|
|
|
|
|
| GAAP General and administrative |
|
7,305 |
|
4,189 |
| % of Revenue |
|
10% |
|
11% |
| less: stock-based compensation |
|
761 |
|
428 |
| less: payroll taxes related to stock-based compensation |
|
20 |
|
- |
| less: Sales and use tax |
|
- |
|
566 |
| Non-GAAP General and administrative |
|
6,524 |
|
3,195 |
| % of Revenue |
|
9% |
|
9% |
|
|
|
|
|
| GAAP Operating expenses |
|
48,983 |
|
25,042 |
| % of Revenue |
|
67% |
|
67% |
| less: stock-based compensation |
|
3,355 |
|
1,381 |
| less: payroll taxes related to stock-based compensation |
|
322
|
|
- |
| less: sales and use tax |
|
- |
|
566 |
| Non-GAAP Operating expenses |
|
45,306
|
|
23,095 |
| % of Revenue |
|
62% |
|
62% |
|
|
|
|
|
| GAAP Operating loss |
|
(9,712) |
|
(3,476) |
| % of Revenue |
|
(13)% |
|
(9)% |
| add: stock-based compensation |
|
3,460 |
|
1,440 |
| add: payroll taxes related to stock-based compensation |
|
332 |
|
- |
| add: sales and use tax |
|
- |
|
566 |
| Non-GAAP Operating loss |
|
(5,920) |
|
(1,470) |
| % of Revenue |
|
(8)% |
|
(4)% |
|
|
|
|
|
| GAAP Net loss |
|
(8,929) |
|
(4,530) |
| % of Revenue |
|
(12)% |
|
(12)% |
| add: stock-based compensation |
|
3,460 |
|
1,440 |
| add: payroll expenses related to stock-based compensation |
|
332 |
|
- |
| add: sales and use tax |
|
- |
|
566 |
| Non-GAAP Net loss and comprehensive loss |
|
(5,137) |
|
(2,524) |
| % of Revenue |
|
(7)% |
|
(7)% |
|
|
|
|
|
| GAAP Net loss per share attributable to shareholders |
|
(0.11) |
|
(0.12) |
| add: stock-based compensation |
|
0.04 |
|
0.04 |
| add: payroll taxes related to stock-based compensation |
|
-
|
|
-
|
| add: sales and use tax |
|
- |
|
0.01 |
|
Non-GAAP net loss per share attributable to shareholders(1)
|
|
(0.06) |
|
(0.06) |
|
Weighted average shares used to compute GAAP and non-
GAAP net loss per share attributable to shareholders
|
|
80,488,495 |
|
39,344,619 |
|
|
|
|
|
| (1) Totals may not foot due to rounding differences. |
|
|
Shopify
INVESTORS:
Katie Keita, 613-241-2828
Director, Investor Relations
IR@shopify.com
or
MEDIA:
Sheryl So, 416-238-6705 x 302
Public Relations Manager
press@shopify.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20160504005423/en/