Fourth-Quarter Revenue Grows 86% Year on
Year
Fourth-Quarter Gross Merchandise Volume
(GMV) Grows 94% 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 and full year ended December 31, 2016.
“Our work at Shopify is to help entrepreneurs thrive in a space
that’s changing all the time, and we did our job especially well
this past holiday season,” stated Tobi Lütke, founder and CEO of
Shopify. “That eight of our ten top sellers over the Black Friday
Cyber Monday weekend were merchants that had upgraded from
lower-priced plans reminds us that today’s startups become
tomorrow’s superstars, at a velocity that appears to be increasing
all the time. As the engine powering the growth of these merchants,
Shopify has an opportunity that stretches years into the
future.”
“That we grew revenue by 90% and GMV by 99% for the full year
2016 speaks to the enormous opportunity in retail right now and our
strategic position within it,” commented Russ Jones, Shopify’s CFO.
“Throughout 2017 we will continue to build out our ability to seize
this opportunity by expanding not only our existing features, such
as channels, payments, shipping and capital, but also our
facilities and infrastructure. These investments are timely, as we
expect the number of merchants on Shopify to continue expanding
rapidly and their collective sales volumes to continue to grow at a
rate several times that of overall retail.”
Fourth-Quarter Financial Highlights
- 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.
Fourth-Quarter Business Highlights
- 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.
Since the start of the year, Shopify launched its inaugural
Build a Bigger Business competition.
The new competition, which augments Shopify’s Build a Business
competition, aims to equip established small and medium-sized
businesses and trend-setting entrepreneurs with the tools and
mentorship needed to achieve their ultimate growth objectives.
Winners in each category will take a once-in-a-lifetime
entrepreneurial getaway at the Namale Resort and Spa in Fiji with
Tony Robbins and other business mentors.
Full-Year Financial Highlights
- 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.
2016 Business Highlights
Shopify expanded considerably in 2016, adding new merchants,
channels, partners, and functionality. Over the past twelve
months:
- 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.
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. All numbers provided in this section
are approximate.
For the full year 2017, Shopify currently expects:
- 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
For the first quarter of 2017, Shopify currently expects:
- 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
Quarterly Conference Call
Shopify’s management team will hold a conference call to discuss
its fourth-quarter and full-year results today, February 15, 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 Audited Consolidated Financial Statements and
accompanying Notes, Management’s Discussion and Analysis, and
Annual Information Form for the year ended December 31, 2016 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. Shareholders may, upon
request, receive a hard copy of the complete audited financial
statements free of charge.
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 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 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.
Please refer to "Non-GAAP Financial
Measures" in this press release.
Shopify Inc.
Consolidated Statements of Operations
and Comprehensive Loss
(Expressed in US $000’s, except share and
per share amounts, unaudited)
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
Shopify Inc.
Consolidated Balance Sheets
(Expressed in US $000’s, except share and
per share amounts, unaudited)
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
Shopify Inc.
Consolidated Statements of Cash
Flows
(Expressed in US $000’s, except share and
per share amounts, unaudited)
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
Shopify Inc.
Reconciliation from GAAP to Non-GAAP
Results
(Expressed in US $000’s, except share and
per share amounts, unaudited)
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 %
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 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
(1) Totals may not foot due to rounding differences.
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ShopifyINVESTORS:Katie Keita, 613-241-2828Director,
Investor RelationsIR@shopify.comorMEDIA:Sheryl So, 416-238-6705 x
302Public Relations Managerpress@shopify.com
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