First-Quarter Revenue Grows 68% Year on
Year
Shopify reports in U.S. dollars and in accordance with U.S.
GAAP
Shopify Inc. (NYSE:SHOP)(TSX:SHOP), the leading multi-channel
commerce platform, today announced strong financial results for the
quarter ended March 31, 2018.
"Merchants love Shopify because it allows them to sell anywhere,
anytime. It also helps them with the many tasks that come with
running a retail business,” said Tobi Lütke, Shopify’s CEO. “These
layers of value we offer merchants give us a healthy variety of
growth drivers. One of those drivers is our merchants’ own success.
Helping them get their first sale and keeping them selling is a big
part of what we work on every day.”
First-Quarter Financial Highlights
- Total revenue in the first quarter was
$214.3 million, a 68% increase from the comparable quarter in
2017.
- Subscription Solutions revenue grew 61%
to $100.2 million. This increase was driven by the continued rapid
growth in Monthly Recurring Revenue1 (“MRR”) , driven by an
increase in the number of merchants joining the Shopify
platform.
- Merchant Solutions revenue grew 75% to
$114.1 million, driven primarily by the growth of Gross Merchandise
Volume2 (“GMV”), which includes revenue from payments processing,
transaction fees, Shopify Capital, referral fees from partners and
Shopify Shipping, each of which grew more than 50% over last year’s
first quarter. Increasing penetration of Shopify Capital and
Shopify Shipping also contributed to the slight acceleration in the
year-over-year growth rate of Merchant Solutions revenue.
- MRR as of March 31, 2018 was $32.5
million, up 57% compared with $20.7 million as of March 31, 2017.
Shopify Plus contributed $7.0 million, or 22%, of MRR compared with
17% of MRR as of March 31, 2017.
- GMV for the first quarter was $8.0
billion, an increase of $3.1 billion, or 64% over the first quarter
of 2017. Gross Payments Volume3 (“GPV”) grew to $3.0 billion, which
accounted for 38% of GMV processed in the quarter, versus $1.8
billion, or 38%, for the first quarter of 2017.
- Gross profit dollars grew 71% to $123.8
million as compared with the $72.2 million recorded for the first
quarter of 2017.
- Operating loss for the first quarter of
2018 was $20.3 million, or 9% of revenue, versus a loss of $14.5
million, or 11% of revenue, for the comparable period a year
ago.
- Adjusted operating loss4 for the first
quarter of 2018 was 0.1% of revenue, or $0.2 million; adjusted
operating loss for the first quarter of 2017 was 3.4% of revenue,
or $4.3 million.
- Net loss for the first quarter of 2018
was $15.9 million, or $0.16 per share, compared with $13.6 million,
or $0.15 per share, for the first quarter of 2017.
- Adjusted net income4 for the first
quarter of 2018 was $4.2 million, or $0.04 per share, compared with
an adjusted net loss of $3.5 million, or $0.04 per share, for the
first quarter of 2017.
- At March 31, 2018, Shopify had $1.58
billion in cash, cash equivalents and marketable securities,
compared with $938 million on December 31, 2017. The increase
reflects the proceeds from Shopify’s offering of Class A
subordinate voting shares in the first quarter.
First-Quarter Business Highlights
Shopify continues to expand its feature set to enrich the
platform for merchants upmarket, downmarket, within its partner
ecosystem, and internationally:
- In March, shopping on Instagram was
expanded beyond the US to the UK, Australia, Canada, Germany,
France, Italy, Spain, and Brazil. Merchants in these countries,
plus 35 more countries that were added in April, can now tag
products in their posts, letting consumers complete the entire
buyer journey from discovery to checkout. With over 500 million
daily active users, Instagram is one of the fastest-growing social
apps around, connecting consumers, influencers, and brands.
- Also in March, Shopify launched an
integration with Google Pay on Shopify stores, allowing hundreds of
millions of shoppers to experience an accelerated checkout. With
Google Pay, shoppers will experience a fast checkout involving
fewer steps and a mobile-first design. Shopify is the first
commerce platform enabling Google Pay for its users.
- Shopify Shipping adoption continued to
increase with a third of eligible merchants in the United States
and Canada using Shopify Shipping in March. With the contribution
of carriers added last quarter to the Shopify platform, monthly
billings for Shopify Shipping in the first quarter have already
surpassed the peak achieved at the height of the 2017 retail
season.
- Purchases from merchants’ stores coming
from mobile devices continued to climb in the quarter, accounting
for 75% of traffic and 64% of orders for the three months ended
March 31, 2018, versus 69% and 59%, respectively, for the first
quarter of 2017.
- Shopify Capital issued $60.4 million in
merchant cash advances in the first quarter of 2018, more than
three times the $18.9 million issued in the first quarter of last
year. Shopify Capital has grown to over $230 million in cumulative
cash advanced since its launch in April 2016, $63.5 million of
which was outstanding on March 31, 2018.
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 2018, Shopify currently expects:
- Revenues in the range of $1 billion to
$1.01 billion
- GAAP operating loss in the range of
$105 million to $110 million
- Adjusted operating profit4 in the range
of $0 million to $5 million, which excludes stock-based
compensation expenses and related payroll taxes of $110
million
For the second quarter of 2018, Shopify currently expects:
- Revenues in the range of $230 million
to $235 million
- GAAP operating loss in the range of $32
million to $34 million
- Adjusted operating loss4 in the range
of $5 million to $7 million, which excludes stock-based
compensation expenses and related payroll taxes of $27 million
Quarterly Conference Call
Shopify’s management team will hold a conference call to discuss
its first-quarter results today, May 1, 2018, 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 2018 Interim Unaudited Condensed
Consolidated Financial Statements and Notes and its First-Quarter
2018 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. Merchants can 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 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.
Headquartered in Ottawa, Canada, Shopify currently powers over
600,000 businesses in approximately 175 countries and is trusted by
brands such as Red Bull, Nestle, Rebecca Minkoff, 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/profit, non-GAAP operating expenses,
adjusted net loss/income and adjusted net loss/income 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.
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, 2018
March 31, 2017 $ $ Revenues
Subscription solutions 100,198 62,080 Merchant solutions 114,142
65,299 214,340 127,379
Cost of revenues Subscription
solutions 23,160 12,254 Merchant solutions 67,338 42,884
90,498 55,138
Gross profit 123,842 72,241
Operating
expenses Sales and marketing 75,784 45,334 Research and
development 47,716 26,594 General and administrative 20,675 14,774
Total operating expenses 144,175 86,702
Loss from operations
(20,333) (14,461)
Other income 4,431 863
Net loss (15,902) (13,598)
Other comprehensive income
(loss), net of tax (6,834) 1,437
Comprehensive
loss (22,736) (12,161) Basic and diluted net loss per share
attributable to shareholders (0.16 ) (0.15 )
Weighted average shares used to compute
basic and diluted net loss per shareattributable to
shareholders
102,256,644 90,242,889
Shopify Inc.Condensed Consolidated
Balance Sheets(Expressed in US $000’s except share amounts,
unaudited)
As at March 31, 2018 December 31,
2017 $ $ Assets Current assets Cash
and cash equivalents 196,578 141,677 Marketable securities
1,383,455 796,362 Trade and other receivables, net 28,365 21,939
Merchant cash advances receivable, net 63,528 47,101 Other current
assets 17,551 18,598 1,689,477 1,025,677
Long-term assets Property and equipment, net 51,654
50,360 Intangible assets, net 21,088 17,210 Goodwill 20,317
20,317 93,059 87,887
Total assets
1,782,536 1,113,564
Liabilities and shareholders’
equity Current liabilities Accounts payable and accrued
liabilities 79,053 62,576 Current portion of deferred revenue
32,993 30,694 Current portion of lease incentives 1,530
1,484 113,576 94,754
Long-term
liabilities Deferred revenue 1,480 1,352 Lease incentives
16,355 14,970 Deferred tax liability 1,236 1,388
19,071 17,710
Shareholders’ equity
Common stock, unlimited Class A
subordinate voting sharesauthorized, 92,882,410 and 87,067,604
issued and outstanding;unlimited Class B multiple voting shares
authorized, 12,745,988and 12,810,084 issued and outstanding
1,745,300 1,077,477 Additional paid-in capital 47,094 43,392
Accumulated other comprehensive income (loss) (3,399 ) 3,435
Accumulated deficit (139,106 ) (123,204 )
Total shareholders’
equity 1,649,889 1,001,100
Total liabilities
and shareholders’ equity 1,782,536 1,113,564
Shopify Inc.Condensed Consolidated
Statements of Cash Flows(Expressed in US $000’s, unaudited)
Three months ended March 31, 2018
March 31, 2017 $ $ Cash flows from
operating activities Net loss for the period (15,902) (13,598)
Adjustments to reconcile net loss to net
cash provided by (used in) operatingactivities:
Amortization and depreciation 7,582 4,534 Stock-based compensation
17,925 9,207 Provision for uncollectible receivables related to
merchant cash advances 1,582 592 Unrealized foreign exchange gain
(128) (111) Changes in operating assets and liabilities: Trade and
other receivables (8,161) 557 Merchant cash advances receivable
(18,009) (6,033) Other current assets (2,193) (3,124) Accounts
payable and accrued liabilities 11,571 8,836 Deferred revenue 2,427
3,122 Lease incentives 1,431 17 Net cash provided (used) by
operating activities (1,875) 3,999
Cash flows from investing
activities Purchase of marketable securities (933,307) (97,675)
Maturity of marketable securities 347,902 111,535 Acquisitions of
property and equipment (5,405) (2,633) Acquisitions of intangible
assets (5,447) (924) Net cash provided (used) by investing
activities (596,257) 10,303
Cash flows from financing
activities Proceeds from the exercise of stock options 6,294
2,980 Proceeds from public offering, net of issuance costs 646,984
— Net cash provided by financing activities 653,278
2,980 Effect of foreign exchange on cash and cash equivalents (245)
(27)
Net increase in cash and cash equivalents 54,901 17,255
Cash and cash equivalents – Beginning of Period 141,677
84,013
Cash and cash equivalents – End of Period 196,578
101,268
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, 2018
March 31, 2017 $ $ GAAP Gross profit 123,842
72,241 % of Revenue 58 % 57 % add: stock-based compensation 426 214
add: payroll taxes related to stock-based compensation 63 35
Non-GAAP Gross profit 124,331 72,490 % of
Revenue 58 % 57 % GAAP Sales and marketing 75,784 45,334 %
of Revenue 35 % 36 % less: stock-based compensation 4,038 1,481
less: payroll taxes related to stock-based compensation 731
179 Non-GAAP Sales and marketing 71,015 43,674
% of Revenue 33 % 34 % GAAP Research and development 47,716
26,594 % of Revenue 22 % 21 % less: stock-based compensation 10,865
5,833 less: payroll taxes related to stock-based compensation 1,051
485 Non-GAAP Research and development 35,800
20,276 % of Revenue 17 % 16 % GAAP General and
administrative 20,675 14,774 % of Revenue 10 % 12 % less:
stock-based compensation 2,596 1,679 less: payroll taxes related to
stock-based compensation 345 241 Non-GAAP General and
administrative 17,734 12,854 % of Revenue 8 % 10 %
GAAP Operating expenses 144,175 86,702 % of Revenue 67 % 68
% less: stock-based compensation 17,499 8,993 less: payroll taxes
related to stock-based compensation 2,127 905
Non-GAAP Operating Expenses 124,549 76,804 % of
Revenue 58 % 60 %
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, 2018
March 31, 2017 $ $ GAAP Operating loss (20,333
) (14,461 ) % of Revenue (9 )% (11 )% add: stock-based compensation
17,925 9,207 add: payroll taxes related to stock-based compensation
2,190 940 Adjusted Operating loss (218 ) (4,314 ) %
of Revenue — % (3 )% GAAP Net loss (15,902 ) (13,598 ) % of
Revenue (7 )% (11 )% add: stock-based compensation 17,925 9,207
add: payroll taxes related to stock-based compensation 2,190
940 Adjusted Net income (loss) and comprehensive loss 4,213
(3,451 ) % of Revenue 2 % (3 )% GAAP net loss per
share attributable to shareholders (0.16 ) (0.15 ) add: stock-based
compensation 0.18 0.10 add: payroll taxes related to stock-based
compensation 0.02 0.01 Adjusted net income (loss) per
share attributable to shareholders 0.04 (0.04 )
Weighted average shares used to compute
GAAP and non-GAAP net loss per shareattributable to
shareholders
102,256,644 90,242,889
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.
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ShopifyINVESTORS:Katie Keita, 613-241-2828 x 1024Director,
Investor RelationsIR@shopify.comorMEDIA:Sheryl So, 416-238-6705 x
302Public Relations Managerpress@shopify.com
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