For the month of | February | 2017 | |
Commission File Number | 001-37400 | ||
Shopify Inc. | |||
(Translation of registrant’s name into English) | |||
150 Elgin Street, 8th Floor Ottawa, Ontario, Canada K2P 1L4 | |||
(Address of principal executive offices) |
Form 20-F | Form 40-F | x |
Shopify Inc. | |||||
(Registrant) | |||||
Date: | February 15, 2017 | By: | /s/ Joseph A. Frasca | ||
Name: Joseph A. Frasca Title: SVP, General Counsel and Secretary |
• | Total revenue in the fourth quarter was $130.4 million, an 86% increase from the comparable quarter in 2015. Within this, Subscription Solutions revenue grew 63% to $56.4 million. This increase was driven by the continued rapid growth in Monthly Recurring Revenue1 (“MRR”). The number of merchants on the Shopify platform surpassed 375,000 in the fourth quarter, as a record number of merchants joined the platform in the period. Merchant Solutions revenue grew 108% to $74.0 million, driven primarily by the growth of Gross Merchandise Volume2 (“GMV”). |
• | MRR as of December 31, 2016 was $18.5 million, up 63% compared with $11.3 million as of December 31, 2015. |
• | GMV for the fourth quarter was $5.5 billion, an increase of 94% over the fourth quarter of 2015. Gross Payments Volume ("GPV"), which is the amount of GMV processed through Shopify Payments, grew to $2.2 billion, which accounted for 39% of GMV processed in the quarter, versus $1.0 billion, or 37%, for the fourth quarter of 2015. |
• | Gross profit dollars grew 87% to $68.1 million as compared with the $36.5 million recorded for the fourth quarter of 2015. |
• | Operating loss for the fourth quarter of 2016 was $9.3 million, or 7% of revenue, versus $6.5 million, or 9% of revenue, for the comparable period a year ago. |
• | Adjusted operating loss3 for the fourth quarter of 2016 was 1% of revenue, or $0.8 million; adjusted operating loss for the fourth quarter of 2015 was 2% of revenue, or $1.3 million. |
• | Net loss for the fourth quarter of 2016 was $8.9 million, or $0.10 per share, compared with $6.3 million, or $0.08 per share, for the fourth quarter of 2015. |
• | Adjusted net loss3 for the fourth quarter of 2016 was $0.4 million, or $0.00 per share, compared with an adjusted net loss of $1.1 million, or $0.01 per share, for the fourth quarter of 2015. |
• | At December 31, 2016, Shopify had $392.4 million in cash, cash equivalents and marketable securities, compared with $190.2 million on December 31, 2015. |
• | GMV during the holiday shopping weekend spanning Black Friday through Cyber Monday more than doubled over the comparable period last year as the level of activity on the Shopify platform reached a peak of nearly 3 million requests per minute. |
• | Multi-channel continued to prove to be an effective strategy to support merchants, as percentage growth of GMV over social channels far outpaced that of our more traditional retail channels, such as point of sale and the online store. |
• | Mobile traffic to merchants’ stores continued to grow, reaching 69% of traffic and 55% of orders at the end of 2016, versus 61% and 46%, respectively, at the end of 2015. |
• | Shopify’s Sell on Amazon integration was made generally available to merchants in December. Designed to seamlessly connect Shopify store owners to the millions of customers searching for products to buy on Amazon, merchants can now conveniently manage their product catalog for their ecommerce website, retail store, Amazon store, and other sales channels all in one place. |
• | Total revenue for the full year grew 90% to $389.3 million, compared with $205.2 million in 2015. Within this, Subscription Solutions revenue grew 68% to $188.6 million and Merchant Solutions revenue grew 115% to $200.7 million. |
• | GMV for 2016 was $15.4 billion, an increase of 99% over 2015. GPV grew to $5.9 billion in 2016, or 39% of GMV, versus $2.7 billion, or 35% of GMV, for 2015. |
• | Gross profit dollars grew 85% over 2015 to $209.5 million, versus $113.3 million for 2015. |
• | Operating loss for 2016 was $37.2 million, or 10% of revenue, versus $17.8 million, or 9% of revenue, for 2015. |
• | Adjusted operating loss3 for 2016 was 3% of revenue, or $12.1 million; adjusted operating loss for 2015 was 3% of revenue, or $6.7 million. |
• | Net loss was $35.4 million, or $0.42 per share, compared with $18.8 million, or $0.30 per share, for 2015. |
• | Adjusted net loss3 for 2016 was $10.3 million, or $0.12 per share, compared with an adjusted net loss of $7.7 million, or $0.13 per share, for 2015. |
• | More than 133,000 net new merchants began selling on Shopify, which ended the year with approximately 377,500 merchants on the platform. |
• | Merchants on average became more successful on Shopify, as GMV per merchant grew by 25% over last year. |
• | MRR per merchant expanded over 2015, primarily due to strong growth in the number of merchants joining at higher subscription levels. |
• | Average Revenue Per User (ARPU) expanded 15% to $1,243, versus $1,077 for 2015, driven by higher GMV per merchant, increased penetration of Shopify Payments, higher MRR per merchant, and the introduction of new merchant services. |
• | The number of partners referring at least one new merchant to Shopify in 2016 grew to more than 11,000, compared with more than 8,500 in 2015. |
• | Shopify integrated a number of new sales channels for merchants in 2016, including Facebook Messenger and Amazon. Shopify also launched a software development kit for third parties looking to make their sites natively available to Shopify merchants. The addition of Houzz, Wanelo, eBates and others has driven the number of channels over which a merchant can sell to more than a dozen. |
• | Shopify Capital successfully launched, providing merchants with more than $30 million in aggregate in cash advances to help fuel their businesses by providing working capital for growth, such as securing inventory, hiring employees or marketing activities. |
• | Shopify launched Apple Pay for the web, and by year end, more than 150,000 of Shopify’s merchants had elected to offer Apple Pay as a means for checkout. These merchants saw conversion rates approximately double by shoppers who have enabled Apple Pay. |
• | Canada Post joined the US Postal Service as a partner on Shopify Shipping, bringing integrated shipping and tracking to more merchants in North America. |
• | Shopify completed three acquisitions with the aim of expanding its breadth and depth of capabilities for merchants. All are founder-led teams where a focus on merchants, entrepreneurial cultures and product development talent make them strong additions to Shopify. |
• | The percentage of Shopify merchants using Shopify Payments grew every quarter throughout 2016, with 85% of merchants at year end using Shopify Payments in geographies where it is available compared with 76% in the fourth quarter of 2015. This equates to 68% of our global merchant base compared with 62% in the fourth quarter of 2015. |
• | Revenues in the range of $580 million to $600 million |
• | GAAP operating loss in the range of $73 million to $77 million |
• | Adjusted operating loss3 in the range of $18 million to $22 million, which excludes stock-based compensation expenses and related payroll taxes of $55 million |
• | Revenues in the range of $120 million to $122 million |
• | GAAP operating loss in the range of $20 million to $22 million |
• | Adjusted operating loss3 in the range of $9 million to $11 million, which excludes stock-based compensation expenses and related payroll taxes of $11 million |
CONTACT: | ||
INVESTORS: | MEDIA: | |
Katie Keita | Sheryl So | |
Director, Investor Relations | Public Relations Manager | |
613-241-2828 | 416-238-6705 x 302 | |
IR@shopify.com | press@shopify.com | |
SOURCE: Shopify |
Three months ended | Years ended | ||||||||||
December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||
$ | $ | $ | $ | ||||||||
Revenues | |||||||||||
Subscription solutions | 56,387 | 34,608 | 188,606 | 111,979 | |||||||
Merchant solutions | 73,996 | 35,565 | 200,724 | 93,254 | |||||||
130,383 | 70,173 | 389,330 | 205,233 | ||||||||
Cost of revenues | |||||||||||
Subscription solutions | 11,593 | 7,662 | 39,478 | 24,531 | |||||||
Merchant solutions | 50,655 | 26,044 | 140,357 | 67,447 | |||||||
62,248 | 33,706 | 179,835 | 91,978 | ||||||||
Gross profit | 68,135 | 36,467 | 209,495 | 113,255 | |||||||
Operating expenses | |||||||||||
Sales and marketing | 39,016 | 22,527 | 129,214 | 70,374 | |||||||
Research and development | 24,472 | 13,541 | 74,336 | 39,722 | |||||||
General and administrative | 13,952 | 6,918 | 43,110 | 20,915 | |||||||
Total operating expenses | 77,440 | 42,986 | 246,660 | 131,011 | |||||||
Loss from operations | (9,305 | ) | (6,519 | ) | (37,165) | (17,756) | |||||
Other income (expense) | 438 | 212 | 1,810 | (1,034) | |||||||
Net loss | (8,867 | ) | (6,307 | ) | (35,355) | (18,790) | |||||
Other comprehensive loss, net of tax | (1,342 | ) | — | (1,818) | — | ||||||
Comprehensive loss | (10,209 | ) | (6,307 | ) | (37,173) | (18,790) | |||||
Basic and diluted net loss per share attributable to shareholders | (0.10 | ) | (0.08 | ) | (0.42 | ) | (0.30 | ) | |||
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders | 89,137,155 | 77,996,629 | 83,988,597 | 61,716,065 |
As at | |||||
December 31, 2016 | December 31, 2015 | ||||
$ | $ | ||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | 84,013 | 110,070 | |||
Marketable securities | 308,401 | 80,103 | |||
Trade and other receivables | 9,599 | 6,089 | |||
Merchant cash advances receivable, net | 11,896 | — | |||
Other current assets | 8,989 | 6,203 | |||
422,898 | 202,465 | ||||
Long term assets | |||||
Property and equipment | 45,719 | 33,048 | |||
Intangible assets | 6,437 | 5,826 | |||
Goodwill | 15,504 | 2,373 | |||
67,660 | 41,247 | ||||
Total assets | 490,558 | 243,712 | |||
Liabilities and shareholders’ equity | |||||
Current liabilities | |||||
Accounts payable and accrued liabilities | 45,057 | 23,689 | |||
Current portion of deferred revenue | 20,164 | 12,726 | |||
Current portion of lease incentives | 1,311 | 822 | |||
66,532 | 37,237 | ||||
Long term liabilities | |||||
Deferred revenue | 922 | 661 | |||
Lease incentives | 12,628 | 10,497 | |||
13,550 | 11,158 | ||||
Shareholders’ equity | |||||
Common stock, unlimited Class A subordinate voting shares authorized, 77,030,952 and 56,877,089 issued and outstanding; unlimited Class B multiple voting shares authorized, 12,374,528 and 23,212,769 issued and outstanding | 468,494 | 231,452 | |||
Additional paid-in capital | 27,009 | 11,719 | |||
Accumulated other comprehensive loss | (1,818 | ) | — | ||
Accumulated deficit | (83,209 | ) | (47,854 | ) | |
Total shareholders’ equity | 410,476 | 195,317 | |||
Total liabilities and shareholders’ equity | 490,558 | 243,712 |
Years ended | |||||
December 31, 2016 | December 31, 2015 | ||||
$ | $ | ||||
Cash flows from operating activities | |||||
Net loss for the year | (35,355) | (18,790) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||
Amortization and depreciation | 13,967 | 7,236 | |||
Stock-based compensation | 22,896 | 7,805 | |||
Vesting of restricted shares | 202 | 353 | |||
Unrealized foreign exchange (gain) loss | (969) | 1,828 | |||
Changes in operating assets and liabilities: | |||||
Trade and other receivables | (2,356) | 1,176 | |||
Merchant cash advances receivable, net | (11,896) | — | |||
Other current assets | (2,604) | (4,708) | |||
Accounts payable and accrued liabilities | 19,813 | 11,097 | |||
Deferred revenue | 7,699 | 6,218 | |||
Lease incentives | 2,620 | 3,541 | |||
Net cash provided by operating activities | 14,017 | 15,756 | |||
Cash flows from investing activities | |||||
Purchase of marketable securities | (369,208) | (111,154) | |||
Maturity of marketable securities | 139,872 | 48,350 | |||
Acquisitions of property and equipment | (23,773) | (16,525) | |||
Acquisitions of intangible assets | (2,463) | (4,511) | |||
Acquisition of business (net of cash acquired) | (14,114) | — | |||
Net cash used in investing activities | (269,686) | (83,840) | |||
Cash flows from financing activities | |||||
Proceeds from initial public offering, net of issuance costs | — | 136,251 | |||
Proceeds from the exercise of stock options | 4,162 | 1,604 | |||
Proceeds from follow-on public offering, net of issuance costs | 224,423 | — | |||
Net cash provided by financing activities | 228,585 | 137,855 | |||
Effect of foreign exchange on cash and cash equivalents | 1,027 | (1,654) | |||
Net increase (decrease) in cash and cash equivalents | (26,057) | 68,117 | |||
Cash and cash equivalents – Beginning of Year | 110,070 | 41,953 | |||
Cash and cash equivalents – End of Year | 84,013 | 110,070 |
Three months ended | Years ended | ||||||||||
December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||
$ | $ | $ | $ | ||||||||
GAAP Gross profit | 68,135 | 36,467 | 209,495 | 113,255 | |||||||
% of Revenue | 52 | % | 52 | % | 54 | % | 55 | % | |||
add: stock-based compensation | 206 | 84 | 629 | 282 | |||||||
add: payroll taxes related to stock-based compensation | 10 | 63 | 89 | 63 | |||||||
Non-GAAP Gross profit | 68,351 | 36,614 | 210,213 | 113,600 | |||||||
% of Revenue | 52 | % | 52 | % | 54 | % | 55 | % | |||
GAAP Sales and marketing | 39,016 | 22,527 | 129,214 | 70,374 | |||||||
% of Revenue | 30 | % | 32 | % | 33 | % | 34 | % | |||
less: stock-based compensation | 1,300 | 418 | 3,951 | 1,099 | |||||||
less: payroll taxes related to stock-based compensation | 124 | 252 | 493 | 252 | |||||||
Non-GAAP Sales and marketing | 37,592 | 21,857 | 124,770 | 69,023 | |||||||
% of Revenue | 29 | % | 31 | % | 32 | % | 34 | % | |||
GAAP Research and development | 24,472 | 13,541 | 74,336 | 39,722 | |||||||
% of Revenue | 19 | % | 19 | % | 19 | % | 19 | % | |||
less: stock-based compensation | 5,232 | 1,656 | 14,318 | 4,509 | |||||||
less: payroll taxes related to stock-based compensation | 230 | 1,864 | 1,046 | 1,864 | |||||||
Non-GAAP Research and development | 19,010 | 10,021 | 58,972 | 33,349 | |||||||
% of Revenue | 15 | % | 14 | % | 15 | % | 16 | % | |||
GAAP General and administrative | 13,952 | 6,918 | 43,110 | 20,915 | |||||||
% of Revenue | 11 | % | 10 | % | 11 | % | 10 | % | |||
less: stock-based compensation | 1,324 | 721 | 4,200 | 2,268 | |||||||
less: payroll taxes related to stock-based compensation | 72 | 151 | 295 | 151 | |||||||
less: sales and use tax | — | — | — | 566 | |||||||
Non-GAAP General and administrative | 12,556 | 6,046 | 38,615 | 17,930 | |||||||
% of Revenue | 10 | % | 9 | % | 10 | % | 9 | % | |||
GAAP Operating expenses | 77,440 | 42,986 | 246,660 | 131,011 | |||||||
% of Revenue | 59 | % | 61 | % | 63 | % | 64 | % | |||
less: stock-based compensation | 7,856 | 2,795 | 22,469 | 7,876 | |||||||
less: payroll taxes related to stock-based compensation | 426 | 2,267 | 1,834 | 2,267 | |||||||
less: sales and use tax | — | — | — | 566 | |||||||
Non-GAAP Operating Expenses | 69,158 | 37,924 | 222,357 | 120,302 | |||||||
% of Revenue | 53 | % | 54 | % | 57 | % | 59 | % |
Three months ended | Years ended | ||||||||||
December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||
$ | $ | $ | $ | ||||||||
GAAP Operating loss | (9,305 | ) | (6,519 | ) | (37,165 | ) | (17,756 | ) | |||
% of Revenue | (7 | )% | (9 | )% | (10 | )% | (9 | )% | |||
add: stock-based compensation | 8,062 | 2,879 | 23,098 | 8,158 | |||||||
add: payroll taxes related to stock-based compensation | 436 | 2,330 | 1,923 | 2,330 | |||||||
add: sales and use tax | — | — | — | 566 | |||||||
Adjusted Operating loss | (807 | ) | (1,310 | ) | (12,144 | ) | (6,702 | ) | |||
% of Revenue | (1 | )% | (2 | )% | (3 | )% | (3 | )% | |||
GAAP Net loss | (8,867 | ) | (6,307 | ) | (35,355 | ) | (18,790 | ) | |||
% of Revenue | (7 | )% | (9 | )% | (9 | )% | (9 | )% | |||
add: stock-based compensation | 8,062 | 2,879 | 23,098 | 8,158 | |||||||
add: payroll taxes related to stock-based compensation | 436 | 2,330 | 1,923 | 2,330 | |||||||
add: sales and use tax | — | — | — | 566 | |||||||
Adjusted Net loss and comprehensive loss | (369 | ) | (1,098 | ) | (10,334 | ) | (7,736 | ) | |||
% of Revenue | — | % | (2 | )% | (3 | )% | (4 | )% | |||
GAAP net loss per share attributable to shareholders | (0.10 | ) | (0.08 | ) | (0.42 | ) | (0.30 | ) | |||
add: stock-based compensation | 0.09 | 0.04 | 0.28 | 0.13 | |||||||
add: payroll taxes related to stock-based compensation | 0.00 | 0.03 | 0.02 | 0.04 | |||||||
add: sales and use tax | 0.00 | 0.00 | 0.00 | 0.01 | |||||||
Adjusted net loss per share attributable to shareholders(1) | 0.00 | (0.01 | ) | (0.12 | ) | (0.13 | ) | ||||
Weighted average shares used to compute GAAP and non-GAAP net loss per share attributable to shareholders | 89,137,155 | 77,996,629 | 83,988,597 | 61,716,065 |
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