Shopify Announces First-Quarter 2017 Financial Results
First-Quarter Revenue Grows 75% Year on Year
First-Quarter Gross Merchandise Volume Grows 81% Year on Year
Shopify reports in U.S. dollars and in accordance with U.S. GAAP
Shopify Inc. (NYSE:SHOP)(TSX:SHOP), 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, 2017.
“With our excellent start to the year, it is clear we are becoming the de facto platform for sellers,” stated Russ Jones,
Shopify’s CFO. “In addition to merchant growth and their adoption of both new channels and merchant solutions, we also continue to
see expansion of merchants’ GMV. Retail is shifting headlong toward the vision we laid out two years ago -- of inspiring
entrepreneurship with multi-channel commerce -- and we fully expect to continue leading this industry transition for years to
come.”
First-Quarter Financial Highlights
• Total revenue in the first quarter was $127.4 million, a 75% increase from the comparable quarter in 2016.
Within this, Subscription Solutions revenue grew 60% to $62.1 million. This increase was driven by the continued rapid growth in
Monthly Recurring Revenue1 (“MRR”) as a record number of merchants joined the platform in the period. Merchant Solutions
revenue grew 92% to $65.3 million, driven primarily by the growth of Gross Merchandise Volume2 (“GMV”).
• MRR as of March 31, 2017 was $20.7 million, up 62% compared with $12.8 million as of March 31,
2016. Shopify Plus contributed $3.5 million, or 17%, of MRR compared with 11% of MRR as of March 31, 2016.
• GMV for the first quarter was $4.8 billion, an increase of 81% over the first quarter of 2016. Gross
Payments Volume3 (“GPV”) grew to $1.8 billion, which accounted for 38% of GMV processed in the quarter, versus $1.0
billion, or 37%, for the first quarter of 2016.
• Gross profit dollars grew 80% to $72.2 million as compared with the $40.1 million recorded for the first
quarter of 2016.
• Operating loss for the first quarter of 2017 was $14.5 million, or 11% of revenue, versus $9.7 million, or
13% of revenue, for the comparable period a year ago.
• Adjusted operating loss4 for the first quarter of 2017 was 3.4% of revenue, or $4.3 million;
adjusted operating loss for the first quarter of 2016 was 8.1% of revenue, or $5.9 million.
• Net loss for the first quarter of 2017 was $13.6 million, or $0.15 per share, compared with $8.9 million,
or $0.11 per share, for the first quarter of 2016.
• Adjusted net loss4 for the first quarter of 2017 was $3.5 million, or $0.04 per share, compared
with an adjusted net loss of $5.1 million, or $0.06 per share, for the first quarter of 2016.
• At March 31, 2017, Shopify had $395.7 million in cash, cash equivalents and marketable securities,
compared with $392.4 million on December 31, 2016, and compared with $189.5 million on March 31, 2016.
Business Highlights
• Over one thousand Shopify Partners and Developers from around the world gathered in San Francisco in April
to discuss the future of Shopify, commerce, and technology at our partner conference, Shopify Unite. New product development
discussions included several announcements scheduled for availability in the second quarter, such as:
• Shopify Point-of-Sale Card Reader. The first piece of hardware designed in-house by Shopify, the new
chip-and-swipe reader offers portability and EMV support to merchants looking to sell at markets, pop-up shops or permanent retail
locations. Emblazoned with the Shopify logo, the new reader seamlessly connects a merchant’s in-person sales with those made on
their online store and other channels.
• Shopify Pay. Shopify Pay allows merchants to offer their customers the option to securely save their
shipping and credit card information for future purchases from any participating Shopify store. Shopify Pay is designed to increase
conversion by reducing checkout to a simple 2-step entry: an email address and a unique 6-digit order notification via SMS.
• Wholesale Channel for Plus. Using this channel, Shopify Plus merchants can create a separate,
password-protected storefront, managed within their existing store. Merchants can invite buyers to purchase products at assigned
wholesale prices, creating a more efficient way to manage customer bulk ordering in one place, without two systems or
workarounds.
• New Application Programming Interfaces (“APIs”) for partners. Shopify Partners can now leverage new APIs
across a number of areas to build useful apps that integrate more directly with Shopify. These include the Custom Storefront API,
which enables partners to build for specific audiences, experiences and opportunities; the Marketing Events API, which allows
developers to automatically add tracking to their marketing apps, helping merchants understand the impact of their marketing
efforts; and the Draft Orders API, which lets developers expand how orders are created and completed.
• Mobile traffic to merchants’ stores continued to grow, reaching 69% of traffic and 59% of orders at the end
of March 2017 versus 62% and 51%, respectively, at the end of March 2016.
• Shopify Capital reached $49 million in aggregate cash advances to U.S. merchants using Shopify Payments by
the end of the first quarter. By April 30, 2017, aggregate cash advances had reached more than $60 million.
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 and are based on current expectations.
As these statements are forward-looking, actual results may differ materially.
These statements do not give effect to the potential impact of mergers, acquisitions, divestitures or business combinations that
may be announced or closed after the date hereof. All numbers provided in this section are approximate.
For the full year 2017, Shopify currently expects:
• Revenues in the range of $615 million to $630 million
• GAAP operating loss in the range of $69 million to $73 million
• Adjusted operating loss4 in the range of $14 million to $18 million, which excludes stock-based
compensation expenses and related payroll taxes of $55 million
For the second quarter of 2017, Shopify currently expects:
• Revenues in the range of $142 million to $144 million
• GAAP operating loss in the range of $18 million to $20 million
• Adjusted operating loss4 in the range of $6 million to $8 million, which excludes stock-based
compensation expenses and related payroll taxes of $12 million
Quarterly Conference Call
Shopify’s management team will hold a conference call to discuss its first-quarter results today, May 2, 2017, 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 2017 Interim Unaudited Condensed Consolidated Financial Statements and Notes and its First-Quarter 2017
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
can use the software to design, set up, and manage their stores across multiple sales channels, including web, mobile, social
media, marketplaces and physical retail locations. The platform also provides merchants 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 hundreds of thousands of businesses in approximately 175 countries and is
trusted by brands such as Tesla, Nestle, GE, Red Bull, Kylie Cosmetics, 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, non-GAAP operating expenses, 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.
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 U.S. 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. Gross Payments Volume, or GPV, is the amount of GMV processed through Shopify Payments.
4. 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, 2017 |
|
March 31, 2016 |
|
|
|
$ |
|
$ |
|
| Revenues |
|
|
|
|
|
| Subscription solutions |
|
62,080 |
|
38,706 |
|
| Merchant solutions |
|
65,299 |
|
34,016 |
|
|
|
127,379 |
|
72,722 |
|
| Cost of revenues |
|
|
|
|
|
| Subscription solutions |
|
12,254 |
|
8,232 |
|
| Merchant solutions |
|
42,884 |
|
24,405 |
|
|
|
55,138 |
|
32,637 |
|
| Gross profit |
|
72,241 |
|
40,085 |
|
| Operating expenses |
|
|
|
|
|
| Sales and marketing |
|
45,334 |
|
28,008 |
|
| Research and development |
|
26,594 |
|
13,670 |
|
| General and administrative |
|
14,774 |
|
8,119 |
|
| Total operating expenses |
|
86,702 |
|
49,797 |
|
| Loss from operations |
|
(14,461) |
|
(9,712) |
|
|
|
|
|
|
|
| Other income |
|
863 |
|
783 |
|
| Net loss |
|
(13,598) |
|
(8,929) |
|
|
Other comprehensive income, net
of tax
|
|
1,437 |
|
221 |
|
| Comprehensive loss |
|
(12,161) |
|
(8,708) |
|
|
Basic and diluted net loss per share
attributable to shareholders
|
|
(0.15) |
|
(0.11) |
|
|
Weighted average shares used to
compute basic and diluted net loss per
share attributable to shareholders
|
|
90,242,889 |
|
80,488,495 |
|
|
Shopify Inc.
Condensed Consolidated Balance Sheets
(Expressed in US $000’s, except share and per share amounts, unaudited)
|
|
|
|
|
|
|
|
As at |
|
|
March 31, 2017 |
|
December 31, 2016 |
|
|
$ |
|
$ |
| Assets |
|
|
|
|
| Current assets |
|
|
|
|
| Cash and cash equivalents |
|
101,268 |
|
84,013 |
| Marketable securities |
|
294,422 |
|
308,401 |
| Trade and other receivables |
|
9,161 |
|
9,599 |
| Merchant cash advances receivable, net |
|
17,337 |
|
11,896 |
| Other current assets |
|
12,113 |
|
8,989 |
|
|
434,301 |
|
422,898 |
| Long-term assets |
|
|
|
|
| Property and equipment, net |
|
44,811 |
|
45,719 |
| Intangible assets, net |
|
6,722 |
|
6,437 |
| Goodwill |
|
15,504 |
|
15,504 |
|
|
67,037 |
|
67,660 |
| Total assets |
|
501,338 |
|
490,558 |
|
Liabilities and shareholders’
equity
|
|
|
|
|
| Current liabilities |
|
|
|
|
| Accounts payable and accrued liabilities |
|
52,310 |
|
45,057 |
| Current portion of deferred revenue |
|
23,194 |
|
20,164 |
| Current portion of lease incentives |
|
1,333 |
|
1,311 |
|
|
76,837 |
|
66,532 |
| Long-term liabilities |
|
|
|
|
| Deferred revenue |
|
1,014 |
|
922 |
| Lease incentives |
|
12,623 |
|
12,628 |
|
|
13,637 |
|
13,550 |
| Shareholders’ equity |
|
|
|
|
|
Common stock, unlimited Class A
subordinate voting shares authorized,
78,174,245 and 77,030,952 issued and
outstanding; unlimited Class B multiple
voting shares authorized, 13,151,584
and 12,374,528 issued and outstanding
|
|
478,841 |
|
468,494 |
| Additional paid-in capital |
|
29,211 |
|
27,009 |
| Accumulated other comprehensive loss |
|
(381) |
|
(1,818) |
| Accumulated deficit |
|
(96,807) |
|
(83,209) |
| Total shareholders’ equity |
|
410,864 |
|
410,476 |
|
Total liabilities and shareholders’
equity
|
|
501,338 |
|
490,558 |
|
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, 2017 |
|
March 31, 2016 |
|
|
$ |
|
$ |
|
Cash flows from operating
activities
|
|
|
|
|
| Net loss for the period |
|
(13,598) |
|
(8,929) |
|
Adjustments to reconcile net loss to net
cash provided by operating activities:
|
|
|
|
Amortization and depreciation
|
|
4,534 |
|
3,058 |
| Stock-based compensation |
|
9,207 |
|
3,374 |
|
Provision for uncollectible
receivables related to merchant cash
advances
|
|
592 |
|
— |
| Vesting of restricted shares |
|
— |
|
86 |
| Unrealized foreign exchange gain |
|
(111) |
|
(978) |
|
Changes in operating assets and
liabilities:
|
|
|
|
|
| Trade and other receivables |
|
557 |
|
(53) |
| Merchant cash advances receivable |
|
(6,033) |
|
— |
| Other current assets |
|
(3,124) |
|
(725) |
|
Accounts payable and accrued
liabilities
|
|
8,836 |
|
2,301 |
| Deferred revenue |
|
3,122 |
|
1,912 |
| Lease incentives |
|
17 |
|
609 |
|
Net cash provided by operating
activities
|
|
3,999 |
|
655 |
| Cash flows from investing activities |
|
|
|
|
| Purchase of marketable securities |
|
(97,675) |
|
(46,439) |
| Maturity of marketable securities |
|
111,535 |
|
20,700 |
| Acquisitions of property and equipment |
|
(2,633) |
|
(2,715) |
| Acquisitions of intangible assets |
|
(924) |
|
(330) |
|
Net cash provided by (used in)
investing activities
|
|
10,303 |
|
(28,784) |
| Cash flows from financing activities |
|
|
|
|
|
Proceeds from the exercise of stock
options
|
|
2,980 |
|
844 |
|
Net cash provided by financing
activities
|
|
2,980 |
|
844 |
|
Effect of foreign exchange on cash and
cash equivalents
|
|
(27) |
|
1,079 |
|
Net increase (decrease) in cash
and cash equivalents
|
|
17,255 |
|
(26,206) |
|
Cash and cash equivalents –
Beginning of Period
|
|
84,013 |
|
110,070 |
|
Cash and cash equivalents – End
of Period
|
|
101,268 |
|
83,864 |
|
Shopify Inc.
Reconciliation from GAAP to Non-GAAP Results (continued)
(Expressed in US $000’s, except share and per share amounts, unaudited)
|
|
|
|
|
|
|
|
Three months ended |
|
|
March 31, 2017 |
|
March 31, 2016 |
|
|
$ |
|
$ |
| GAAP Gross profit |
|
72,241 |
|
40,085 |
| % of Revenue |
|
57 % |
|
55 % |
| add: stock-based compensation |
|
214 |
|
105 |
|
add: payroll taxes related to stock-based
compensation
|
|
35 |
|
10 |
| Non-GAAP Gross profit |
|
72,490 |
|
40,200 |
| % of Revenue |
|
57 % |
|
55 % |
|
|
|
|
|
| GAAP Sales and marketing |
|
45,334 |
|
28,008 |
| % of Revenue |
|
36 % |
|
39 % |
| less: stock-based compensation |
|
1,481 |
|
564 |
|
less: payroll taxes related to stock-
based compensation
|
|
179 |
|
41 |
| Non-GAAP Sales and marketing |
|
43,674 |
|
27,403 |
| % of Revenue |
|
34 % |
|
38 % |
|
|
|
|
|
| GAAP Research and development |
|
26,594 |
|
13,670 |
| % of Revenue |
|
21 % |
|
19 % |
| less: stock-based compensation |
|
5,833 |
|
2,030 |
|
less: payroll taxes related to stock-
based compensation
|
|
485 |
|
261 |
| Non-GAAP Research and development |
|
20,276 |
|
11,379 |
| % of Revenue |
|
16 % |
|
16 % |
|
|
|
|
|
| GAAP General and administrative |
|
14,774 |
|
8,119 |
| % of Revenue |
|
12 % |
|
11 % |
| less: stock-based compensation |
|
1,679 |
|
761 |
|
less: payroll taxes related to stock-
based compensation
|
|
241 |
|
20 |
| Non-GAAP General and administrative |
|
12,854 |
|
7,338 |
| % of Revenue |
|
10 % |
|
10 % |
|
|
|
|
|
| GAAP Operating expenses |
|
86,702 |
|
49,797 |
| % of Revenue |
|
68 % |
|
68 % |
| less: stock-based compensation |
|
8,993 |
|
3,355 |
|
less: payroll taxes related to stock-
based compensation
|
|
905 |
|
322 |
| Non-GAAP Operating Expenses |
|
76,804 |
|
46,120 |
| % of Revenue |
|
60 % |
|
63 % |
|
|
|
|
|
| GAAP Operating loss |
|
(14,461) |
|
(9,712) |
| % of Revenue |
|
(11)% |
|
(13)% |
| add: stock-based compensation |
|
9,207 |
|
3,460 |
|
add: payroll taxes related to stock-based
compensation
|
|
940 |
|
332 |
| Adjusted Operating loss |
|
(4,314) |
|
(5,920) |
| % of Revenue |
|
(3)% |
|
(8)% |
|
|
|
|
|
| GAAP Net loss |
|
(13,598) |
|
(8,929) |
| % of Revenue |
|
(11)% |
|
(12)% |
| add: stock-based compensation |
|
9,207 |
|
3,460 |
|
add: payroll taxes related to stock-based
compensation
|
|
940 |
|
332 |
|
Adjusted Net loss and comprehensive
loss
|
|
(3,451) |
|
(5,137) |
| % of Revenue |
|
(3)% |
|
(7)% |
|
|
|
|
|
|
GAAP net loss per share attributable to
shareholders
|
|
(0.15) |
|
(0.11) |
| add: stock-based compensation |
|
0.10 |
|
0.04 |
|
add: payroll taxes related to stock-based
compensation
|
|
0.01 |
|
— |
|
Adjusted net loss per share attributable
to shareholders(1)
|
|
(0.04) |
|
(0.06) |
|
Weighted average shares used to
compute GAAP and non-GAAP net
loss per share attributable to
shareholders
|
|
90,242,889 |
|
80,488,495 |
Shopify
INVESTORS:
Katie Keita, 613-241-2828
Director, Investor Relations
IR@shopify.com
or
MEDIA:
Erin Hochstein, 226-972-1767
Public Relations Manager
press@shopify.com
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