Fourth-Quarter Revenue Grows 71% Year on
YearFourth-Quarter Gross Profit Grows 78% Year on YearGMV Exceeds
$9 Billion for the Fourth Quarter and $26 Billion for 2017
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, 2017.
“That our merchants sold more in the fourth quarter than in all
of 2015, achieving one billion dollars of this in just four days,
speaks to how far we have come in the past few years,” stated Russ
Jones, Shopify’s CFO. “Our leadership role in commerce, together
with the scale we have achieved, position us well to invest in our
next phase of growth: one marked by expansion of our capabilities
upmarket and down, in retail, in our ecosystem, and
internationally.”
Fourth-Quarter Financial Highlights
- Total revenue in the fourth quarter was
$222.8 million, a 71% increase from the comparable quarter in 2016.
Within this, Subscription Solutions revenue grew 67% to $93.9
million, driven by rapid growth in Monthly Recurring Revenue1
(“MRR”). Merchant Solutions revenue grew 74% to $128.9 million,
driven primarily by the growth of Gross Merchandise Volume2
(“GMV”).
- MRR as of December 31, 2017 was
$29.9 million, up 62% compared with $18.5 million as of
December 31, 2016. Shopify Plus contributed $6.3 million, or
21%, of MRR compared with 17% of MRR as of December 31,
2016.
- GMV for the fourth quarter was $9.1
billion, an increase of $3.6 billion, or 65% over the fourth
quarter of 2016. Gross Payments Volume3 (“GPV”) grew to $3.5
billion, which accounted for 39% of GMV processed in the quarter,
versus $2.2 billion, or 39%, for the fourth quarter of 2016.
- Gross profit grew 78% to $121.1 million
as compared with the $68.1 million recorded for the fourth quarter
of 2016.
- Operating loss for the fourth quarter
of 2017 was $6.1 million, or 3% of revenue, versus $9.3 million, or
7% of revenue, for the comparable period a year ago.
- Adjusted operating income4 for the
fourth quarter of 2017 was 5% of revenue, or $11.6 million;
adjusted operating loss for the fourth quarter of 2016 was 1% of
revenue, or $0.8 million.
- Net loss for the fourth quarter of 2017
was $3.0 million, or $0.03 per share, compared with $8.9 million,
or $0.10 per share, for the fourth quarter of 2016.
- Adjusted net income4 for the fourth
quarter of 2017 was $14.7 million, or $0.15 per share, compared
with an adjusted net loss of $0.4 million, or $0.00 per share, for
the fourth quarter of 2016.
- At December 31, 2017, Shopify had
$938.0 million in cash, cash equivalents and marketable securities,
compared with $392.4 million on December 31, 2016.
Fourth-Quarter Business Highlights
- Merchants using Shopify’s platform
achieved their biggest holiday season yet, with the four days
comprising the Black Friday Cyber Monday weekend accounting for $1
billion of GMV with a peak of $1 million of orders processed per
minute.
- In November, Shopify made UPS premium
services available as part of Shopify Shipping. Competitive,
pre-negotiated domestic and international rates from UPS are now
available to all U.S. merchants directly within the Shopify
platform.
- The majority of purchasing from
merchants’ stores came from mobile devices in the quarter,
accounting for 73% of traffic and 61% of orders for the three
months ended December 31, versus 69% and 55%, respectively, for the
fourth quarter of 2016.
- Shopify Capital issued $39.7 million in
merchant cash advances in the fourth quarter of 2017, more than
twice the $14.7 million issued in the fourth quarter of last year.
Shopify Capital grew to over $170 million in cumulative cash
advanced since its launch in April 2016 through December 31,
2017.
Full-Year Financial Highlights
- Total revenue for the full year 2017
was $673.3 million, a 73% increase over 2016. Within this,
Subscription Solutions revenue grew 64% to $310.0 million, while
Merchant Solutions revenue grew 81% to $363.3 million.
- GMV2 for 2017 was $26.3 billion, an
increase of 71% over 2016. GPV3 grew to $10.0 billion, which
accounted for 38% of GMV processed versus $5.9 billion, or 38%, for
2016.
- Gross profit grew 82% to $380.3 million
as compared with $209.5 million for 2016.
- Operating loss for 2017 was $49.2
million, or 7% of revenue, versus $37.2 million, or 10% of revenue,
for 2016.
- Adjusted operating income4 for 2017 was
1% of revenue, or $6.0 million; adjusted operating loss for 2016
was 3% of revenue, or $12.1 million.
- Net loss for 2017 was $40.0 million, or
$0.42 per share, compared with $35.4 million, or $0.42 per share,
for 2016.
- Adjusted net income4 for 2017 was $15.2
million, or $0.16 per share, compared with an adjusted net loss of
$10.3 million, or $0.12 per share, for 2016.
2017 Business Highlights
Our rapid growth in 2017 allowed Shopify to grow its ranks by
approximately 50%, ending the year with nearly 3,000 employees, and
enabling us to offer more value to more merchants. In 2017, we:
- Added new channels: Instagram, Lyst,
BuzzFeed, and eBay joined Facebook, Pinterest, and Amazon in
offering Shopify merchants multiple selling venues from one
integrated back office, and a wholesale channel was launched for
Shopify Plus merchants. More importantly, merchants continued to
expand their use of channels beyond the online store to grow their
sales.
- Improved existing channels: Shopify’s
point-of-sale solution was enhanced with the launch of our own Chip
and Swipe card reader, designed specifically for the needs of
Shopify’s merchants. We also expanded the number of categories
available for merchants to sell on Amazon.
- Added new shipping partners and
features: DHL and UPS both joined USPS and Canada Post as options
available directly from within the Shopify platform, and
functionality evolved to meet the needs of more merchants with the
launch of bulk label printing and carrier-calculated rates.
- Explored new frontiers: Augmented
reality for shopping, in-game purchases of physical products, and
bridging online and in-person purchasing were a few areas where
Shopify tested the possibilities ahead for commerce.
- Expanded our global footprint: Shopify
grew its share of merchants outside its core English-speaking
geographies; launched Shopify Payments in New Zealand and
Singapore; began work on additional space in all four of the
Canadian cities where it currently has offices: Toronto, Ottawa,
Montreal and Waterloo, as well as in its San Francisco office;
added offices in Vilnius and Berlin, with the acquisition of
Oberlo; and began exploring product/market fit in certain emerging
geographies.
- Increased our value to merchants:
Shopify expanded its share of wallet as merchants adopted new
offerings and expanded their use of existing offerings in 2017.
Shopify Capital quadrupled the amount of cash advanced to merchants
in 2017; penetration rates for shipping expanded to 30% and 20% for
eligible merchants shipping from the U.S. and Canada, respectively;
Shopify Pay facilitated 4.8 million transactions from 2.1 million
consumers since its launch in the second quarter of 2017; and app
spend per user continued to increase, demonstrating the growing
value of our app ecosystem.
With its easy-to-use platform, Shopify aims to flatten the
learning curve and allow more entrepreneurs to participate in and
help shape the future of commerce.
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 $970 million
to $990 million
- GAAP operating loss in the range of $95
million to $105 million
- Adjusted operating income4 in the range
of $(5) million to $5 million, which excludes stock-based
compensation expenses and related payroll taxes of $100
million
For the first quarter of 2018, Shopify currently expects:
- Revenues in the range of $198 million
to $202 million
- GAAP operating loss in the range of $25
million to $27 million
- Adjusted operating loss4 in the range
of $6 million to $8 million, which excludes stock-based
compensation expenses and related payroll taxes of $19 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, 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 Audited Consolidated Financial Statements and
accompanying Notes, Management’s Discussion and Analysis, and
Annual Information Form for the year ended December 31, 2017 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, 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. Shopify currently
powers over 600,000 businesses in approximately 175 countries and
is trusted by brands such as Nestle, Red Bull, Rebecca Minkoff, and
Kylie Cosmetics.
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 investment plans, 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.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, 2017 December 31, 2016
December 31, 2017 December 31, 2016 $
$ $ $ Revenues Subscription solutions
93,918 56,387 310,031 188,606 Merchant solutions 128,896
73,996 363,273 200,724 222,814 130,383
673,304 389,330
Cost of revenues Subscription solutions
19,867 11,593 61,267 39,478 Merchant solutions 81,802 50,655
231,784 140,357 101,669 62,248 293,051
179,835
Gross profit 121,145 68,135 380,253
209,495
Operating expenses Sales and marketing 67,174 39,016
225,694 129,214 Research and development 40,339 24,472 135,997
74,336 General and administrative 19,745 13,952
67,719 43,110 Total operating expenses 127,258 77,440
429,410 246,660
Loss from operations (6,113 ) (9,305 )
(49,157) (37,165)
Other income
3,126 438 9,162 1,810
Net loss (2,987 ) (8,867
) (39,995) (35,355)
Other comprehensive income (loss), net of
tax (3,419 ) (1,342 ) 5,253 (1,818 )
Comprehensive loss
(6,406 ) (10,209 ) (34,742) (37,173) Basic and diluted net loss per
share attributable to shareholders (0.03 ) (0.10 ) (0.42 ) (0.42 )
Weighted average shares used to compute basic and diluted net loss
per share attributable to shareholders 99,551,791 89,137,155
95,774,897 83,988,597
Shopify Inc.Consolidated Balance
Sheets(Expressed in US $000’s except share amounts,
unaudited)
As at December 31, 2017 December 31,
2016 $ $ Assets Current assets Cash
and cash equivalents 141,677 84,013 Marketable securities 796,362
308,401 Trade and other receivables 21,939 9,599 Merchant cash
advances receivable, net 47,101 11,896 Other current assets 18,598
8,989 1,025,677 422,898
Long-term
assets Property and equipment, net 50,360 45,719 Intangible
assets, net 17,210 6,437 Goodwill 20,317 15,504
87,887 67,660
Total assets 1,113,564
490,558
Liabilities and shareholders’ equity
Current liabilities Accounts payable and accrued liabilities
62,576 45,057 Current portion of deferred revenue 30,694 20,164
Current portion of lease incentives 1,484 1,311
94,754 66,532
Long-term liabilities Deferred
revenue 1,352 922 Lease incentives 14,970 12,628 Deferred tax
liability 1,388 — 17,710 13,550
Shareholders’ equity
Common stock, unlimited Class A
subordinate voting shares authorized, 87,067,604 and
77,030,952issued and outstanding; unlimited Class B multiple voting
shares authorized, 12,810,084 and 12,374,528 issued and
outstanding
1,077,477 468,494 Additional paid-in capital 43,392 27,009
Accumulated other comprehensive income (loss) 3,435 (1,818 )
Accumulated deficit (123,204 ) (83,209 )
Total shareholders’
equity 1,001,100 410,476
Total liabilities and
shareholders’ equity 1,113,564 490,558
Shopify Inc.Consolidated Statements
of Cash Flows(Expressed in US $000’s, unaudited)
Years ended December 31, 2017
December 31, 2016 $ $ Cash flows from
operating activities Net loss for the year (39,995) (35,355)
Adjustments to reconcile net loss to net cash provided by operating
activities: Amortization and depreciation 23,382 13,967 Stock-based
compensation 49,163 22,896 Provision for uncollectible receivables
related to merchant cash advances 2,606 1,028 Vesting of restricted
shares — 202 Unrealized foreign exchange gain (1,604) (969) Changes
in operating assets and liabilities: Trade and other receivables
(13,037) (2,356) Merchant cash advances receivable (37,811)
(12,924) Other current assets (3,706) (2,604) Accounts payable and
accrued liabilities 15,428 19,813 Deferred revenue 10,960 7,699
Lease incentives 2,515 2,620 Net cash provided by operating
activities 7,901 14,017
Cash flows from investing activities
Purchase of marketable securities (1,129,263) (369,208) Maturity of
marketable securities 642,073 139,872 Acquisitions of property and
equipment (20,043) (23,773) Acquisitions of intangible assets
(4,219) (2,463) Acquisition of businesses, net of cash acquired
(15,718) (14,114) Net cash used in investing activities (527,170)
(269,686)
Cash flows from financing activities Proceeds from
the exercise of stock options 14,774 4,162 Proceeds from public
offering, net of issuance costs 560,057 224,423 Net cash
provided by financing activities 574,831 228,585 Effect of
foreign exchange on cash and cash equivalents 2,102 1,027
Net
increase (decrease) in cash and cash equivalents 57,664
(26,057)
Cash and cash equivalents – Beginning of Year
84,013 110,070
Cash and cash equivalents – End of Year
141,677 84,013
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, 2017 December 31, 2016
December 31, 2017 December 31, 2016 $
$ $ $ GAAP Gross profit 121,145 68,135 380,253
209,495 % of Revenue 54 % 52 % 56 % 54 % add: stock-based
compensation 309 206 1,102 629 add: payroll taxes related to
stock-based compensation 61 10 179 89
Non-GAAP Gross profit 121,515 68,351 381,534
210,213 % of Revenue 55 % 52 % 57 % 54 % GAAP Sales
and marketing 67,174 39,016 225,694 129,214 % of Revenue 30 % 30 %
34 % 33 % less: stock-based compensation 2,936 1,300 8,986 3,951
less: payroll taxes related to stock-based compensation 246
124 890 493 Non-GAAP Sales and marketing
63,992 37,592 215,818 124,770 % of
Revenue 29 % 29 % 32 % 32 % GAAP Research and development
40,339 24,472 135,997 74,336 % of Revenue 18 % 19 % 20 % 19 % less:
stock-based compensation 9,653 5,232 31,338 14,318 less: payroll
taxes related to stock-based compensation 1,190 230
3,222 1,046 Non-GAAP Research and development 29,496
19,010 101,437 58,972 % of Revenue 13 %
15 % 15 % 15 % GAAP General and administrative 19,745 13,952
67,719 43,110 % of Revenue 9 % 11 % 10 % 11 % less: stock-based
compensation 2,080 1,324 7,737 4,200 less: payroll taxes related to
stock-based compensation 1,222 72 1,748 295
Non-GAAP General and administrative 16,443 12,556
58,234 38,615 % of Revenue 7 % 10 % 9 % 10 %
GAAP Operating expenses 127,258 77,440 429,410 246,660 % of
Revenue 57 % 59 % 64 % 63 % less: stock-based compensation 14,669
7,856 48,061 22,469 less: payroll taxes related to stock-based
compensation 2,658 426 5,860 1,834
Non-GAAP Operating Expenses 109,931 69,158 375,489
222,357 % of Revenue 49 % 53 % 56 % 57 %
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, 2017 December 31, 2016
December 31, 2017 December 31, 2016 $
$ $ $ GAAP Operating loss (6,113 ) (9,305 )
(49,157 ) (37,165 ) % of Revenue (3 )% (7 )% (7 )% (10 )% add:
stock-based compensation 14,978 8,062 49,163 23,098 add: payroll
taxes related to stock-based compensation 2,719 436
6,039 1,923 Adjusted Operating Income (Loss) 11,584
(807 ) 6,045 (12,144 ) % of Revenue 5 % (1 )% 1 % (3
)% GAAP Net loss (2,987 ) (8,867 ) (39,995 ) (35,355 ) % of
Revenue (1 )% (7 )% (6 )% (9 )% add: stock-based compensation
14,978 8,062 49,163 23,098 add: payroll taxes related to
stock-based compensation 2,719 436 6,039 1,923
Adjusted Net Income (Loss) 14,710 (369 ) 15,207
(10,334 ) % of Revenue 7 % — % 2 % (3 )% GAAP net
loss per share attributable to shareholders (0.03 ) (0.10 ) (0.42 )
(0.42 ) add: stock-based compensation 0.15 0.09 0.51 0.28 add:
payroll taxes related to stock-based compensation 0.03 —
0.06 0.02 Adjusted net income (loss) per share
attributable to shareholders(1) 0.15 — 0.16
(0.12 ) Weighted average shares used to compute GAAP and non-GAAP
net income (loss) per share attributable to shareholders 99,551,791
89,137,155 95,774,897 83,988,597
(1) Totals may not foot due to rounding differences.
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version on businesswire.com: http://www.businesswire.com/news/home/20180215005281/en/
INVESTORS:Katie KeitaDirector, Investor Relations613-241-2828 x
1024IR@shopify.comorMEDIA:Sheryl SoPublic Relations
Manager416-238-6705 x 302press@shopify.com
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