Second-Quarter Revenue Grows 48% Year on Year
Second-Quarter GMV Grows 51% 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 June 30, 2019.
“It should be easier than ever to start a business, but
entrepreneurship is still too hard,” said Tobi Lütke, Shopify’s
CEO. “Our job is to keep innovating on behalf of entrepreneurs so
they can compete in an ever-changing retail landscape. Every
announcement we made at Unite, especially the Shopify Fulfillment
Network, is designed to democratize commerce and make it easier for
our merchants to reach for independence.”
"Our strong performance in the second quarter reflects the
success of our ongoing activities and investments to help merchants
start selling, sell more, and sell globally," said Amy Shapero,
Shopify’s CFO. "The appeal of entrepreneurship is universal, which
is why more entrepreneurs everywhere are attracted to Shopify. Our
powerful yet easy-to-use retail operating system helps level the
playing field, providing expansive opportunities for our merchants
and Shopify around the world."
Second-Quarter Financial Highlights
- Total revenue in the second quarter was $362.0 million, a 48%
increase from the comparable quarter in 2018.
- Subscription Solutions revenue grew 38% to $153.0 million. This
increase was driven primarily by growth in Monthly Recurring
Revenue1 ("MRR"), largely due to an increase in the number of
merchants joining the Shopify platform.
- Merchant Solutions revenue grew 56%, to $208.9 million, driven
primarily by the growth of Gross Merchandise Volume2 ("GMV"), as
well as by growth in Shopify Capital and Shopify Shipping.
- MRR as of June 30, 2019 was $47.1 million, up 34% compared with
$35.3 million as of June 30, 2018. Shopify Plus contributed $12.4
million, or 26%, of MRR compared with 23% of MRR as of June 30,
2018.
- GMV for the second quarter was $13.8 billion, an increase of
$4.6 billion, or 51%, over the second quarter of 2018. Gross
Payments Volume3 ("GPV") grew to $5.8 billion, which accounted for
42% of GMV processed in the quarter, versus $3.6 billion, or 40%,
for the second quarter of 2018.
- Gross profit dollars were $204.8 million, or 50% growth
compared with $137.0 million recorded for the comparable quarter
last year, a faster rate than year-over-year revenue growth
principally due to new partner pricing terms, which included a
one-time benefit.
- Operating loss for the second quarter of 2019 was $39.6
million, or 11% of revenue, versus a loss of $30.8 million, or 13%
of revenue, for the comparable period a year ago.
- Adjusted operating income4 for the second quarter of 2019 was
1.3% of revenue, or $4.8 million; adjusted operating loss for the
second quarter of 2018 was 1.7% of revenue, or $4.3 million.
- Net loss for the second quarter of 2019 was $28.7 million, or
$0.26 per share, compared with $24.0 million, or $0.23 per share,
for the second quarter of 2018.
- Adjusted net income4 for the second quarter of 2019 was $15.8
million, or $0.14 per share, compared with adjusted net income of
$2.5 million, or $0.02 per share, for the second quarter of
2018.
- At June 30, 2019, Shopify had $2.01 billion in cash, cash
equivalents and marketable securities, compared with $1.97 billion
on December 31, 2018.
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.
Second-Quarter Business Highlights
- Shopify hosted partners from around the world in Toronto at its
4th annual Shopify Unite conference, where we unveiled new
innovations to transform commerce for merchants and consumers
globally, including:
- Shopify Fulfillment Network, available now for early access,
which will provide merchants with a network of distributed
fulfillment centers and utilize machine learning to ensure timely
deliveries and lower shipping costs, putting their brand and
customer experience front and center. Since the announcement, both
merchants and partners have expressed very strong interest in
participating.
- The new Shopify Plus platform, which helps enterprise merchants
manage their businesses at the organizational level, with greater
control and wider visibility across multiple stores, through a
single view.
- The next-generation Shopify POS software, which is a faster,
more intuitive, and more scalable point- of-sale software for
retailers to grow their brick-and-mortar businesses.
- New ways for merchants to reach international shoppers,
including a Translations API to store translated buyer-facing
content such as products, collections, and blog posts, and enabling
merchants to sell in multiple currencies with Shopify
Payments.
- An upgraded online store design experience, which enables
merchants to better customize the look and feel of their store
without having to edit the code.
- Shopify launched native language capabilities in eleven more
languages (Traditional Chinese, Simplified Chinese, Danish, Dutch,
Finnish, Hindi, Malay, Norwegian, Swedish, Korean and Thai),
bringing the total number of languages in which the Shopify Admin
is available to 18.
- Shopify launched Shopify Payments in the Netherlands enabling
iDEAL as a local online banking payment method in addition to
credit card payments, and in Denmark, Shopify Payments will support
Visa Dankort’s debit payments expanding the availability of Shopify
Payments to 13 countries.
- Shopify launched a new integration for Shopify Ping with Apple
Business Chat as a new way for merchants to talk to, support, and
create a personal connection with customers, increasing trust and
conversion to sales.
- Shopify Shipping adoption continued to climb, with more than
42% of eligible merchants in the United States and Canada using
Shopify Shipping in the quarter.
- Purchases from merchants’ stores coming from mobile devices
versus desktop continued to climb in the quarter, accounting for
nearly 80% of traffic and 70% of orders for the three months ended
June 30, 2019, versus 76% and 66%, respectively, for the second
quarter of 2018.
- Shopify Capital issued $93.0 million in merchant cash advances
and loans in the second quarter of 2019, an increase of 36% versus
the $68.5 million issued in the second quarter of last year.
Shopify Capital has grown to approximately $638 million in
cumulative cash advanced since its launch in April 2016 through the
second quarter of 2019, approximately $115.6 million of which was
outstanding on June 30, 2019.
Subsequent to the close of our second quarter, Shopify expanded
Shopify Capital to merchants not on Shopify Payments, providing
access to simple, fast, and convenient working capital to
accelerate the growth of their business.
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.
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 2019, Shopify currently expects:
- Revenues in the range of $1.51 billion to $1.53 billion
- GAAP operating loss in the range of $145 million to $155
million
- Adjusted operating income4 in the range of $20 to $30 million,
which excludes stock-based compensation expenses and related
payroll taxes of $175 million
For the third quarter of 2019, Shopify currently expects:
- Revenues in the range of $377 million to $382 million
- GAAP operating loss in the range of $44 million to $47
million
- Adjusted operating income4 in the range of $0 to $3 million,
which excludes stock-based compensation expenses and related
payroll taxes of $47 million
Quarterly Conference Call
Shopify’s management team will hold a conference call to discuss
our second-quarter results today, August 1, 2019, 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 Second-Quarter 2019 Interim Unaudited Condensed
Consolidated Financial Statements and Notes and its Second-Quarter
2019 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 multi-channel commerce platform.
Merchants use Shopify to design, set up, and manage their stores
across multiple sales channels, including mobile, web, 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, from payments to shipping. 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
800,000 businesses in approximately 175 countries and is trusted by
brands such as Unilever, Kylie Cosmetics, Allbirds, MVMT, and many
more.
Non-GAAP Financial Measures
To supplement our 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 our financial and
operating performance.
Adjusted operating income (loss), non-GAAP operating expenses,
adjusted net income and adjusted net 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", "continue", "will",
"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) the security of personal
information we store relating to merchants and their customers, and
consumers with whom we have a direct relationship; (x) evolving
privacy laws and regulations, cross-border data transfer
restrictions, data localization requirements and other domestic or
foreign regulations; (xi) our potential inability to hire, retain
and motivate qualified personnel; (xii) international sales and the
use of our platform in various countries; 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
Six months ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
$
$
$
$
Revenues
Subscription solutions
153,047
110,721
293,498
210,919
Merchant solutions
208,932
134,242
388,963
248,384
361,979
244,963
682,461
459,303
Cost of revenues
Subscription solutions
29,538
24,524
57,523
47,684
Merchant solutions
127,676
83,484
239,882
150,822
157,214
108,008
297,405
198,506
Gross profit
204,765
136,955
385,056
260,797
Operating expenses
Sales and marketing
119,210
87,487
224,232
163,271
Research and development
85,520
54,305
161,875
102,021
General and administrative
39,655
25,924
74,359
46,599
Total operating expenses
244,385
167,716
460,466
311,891
Loss from operations
(39,620
)
(30,761
)
(75,410
)
(51,094)
Other income
10,942
6,808
22,581
11,239
Net loss
(28,678
)
(23,953
)
(52,829
)
(39,855)
Other comprehensive income (loss), net
of tax
6,746
(4,398
)
16,020
(11,232
)
Comprehensive loss
(21,932
)
(28,351
)
(36,809
)
(51,087)
Basic and diluted net loss per share
attributable to shareholders
(0.26
)
(0.23
)
(0.47
)
(0.38
)
Weighted average shares used to compute
basic and diluted net loss per share attributable to
shareholders
112,013,409
105,978,076
111,470,359
104,127,640
Shopify Inc. Condensed Consolidated Balance
Sheets (Expressed in US $000’s except share amounts,
unaudited)
As at
June 30, 2019
December 31, 2018
$
$
Assets
Current assets
Cash and cash equivalents
668,990
410,683
Marketable securities
1,344,341
1,558,987
Trade and other receivables, net
45,840
41,347
Merchant cash advances and loans
receivable, net
115,556
91,873
Other current assets
36,438
26,192
2,211,165
2,129,082
Long-term assets
Property and equipment, net
84,159
61,612
Intangible assets, net
25,314
26,072
Right-of-use assets
98,285
—
Goodwill
48,375
38,019
256,133
125,703
Total assets
2,467,298
2,254,785
Liabilities and shareholders’
equity
Current liabilities
Accounts payable and accrued
liabilities
142,000
96,956
Deferred revenue
45,707
39,180
Lease liabilities
5,644
2,552
193,351
138,688
Long-term liabilities
Deferred revenue
2,092
1,881
Lease liabilities
108,873
22,316
Deferred tax liability
1,798
1,132
112,763
25,329
Commitments and contingencies
Shareholders’ equity
Common stock, unlimited Class A
subordinate voting shares authorized, 100,282,712 and 98,081,889
issued and outstanding; unlimited Class B multiple voting shares
authorized, 12,247,861 and 12,310,800 issued and outstanding
2,313,198
2,215,936
Additional paid-in capital
76,393
74,805
Accumulated other comprehensive income
(loss)
3,804
(12,216
)
Accumulated deficit
(232,211
)
(187,757
)
Total shareholders’ equity
2,161,184
2,090,768
Total liabilities and shareholders’
equity
2,467,298
2,254,785
Shopify Inc. Condensed Consolidated
Statements of Cash Flows (Expressed in US $000’s,
unaudited)
Six months ended
June 30, 2019
June 30, 2018
$
$
Cash flows from operating
activities
Net loss for the period
(52,829)
(39,855)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Amortization and depreciation
14,207
15,008
Stock-based compensation
70,432
42,116
Provision for uncollectible receivables
related to merchant cash advances and loans receivable
7,539
4,072
Unrealized foreign exchange loss
1,917
369
Changes in operating assets and
liabilities:
Trade and other receivables
(20,540)
(16,426)
Merchant cash advances and loans
receivable
(31,222)
(36,952)
Other current assets
(5,910)
(5,532)
Accounts payable and accrued
liabilities
55,908
27,285
Deferred revenue
6,345
4,617
Lease assets and liabilities
1,555
2,501
Net cash provided (used) by operating
activities
47,402
(2,797)
Cash flows from investing
activities
Purchase of marketable securities
(1,022,814)
(1,297,346)
Maturity of marketable securities
1,249,319
744,406
Acquisitions of property and equipment
(30,437)
(15,107)
Acquisitions of intangible assets
(1,935)
(9,353)
Acquisition of businesses, net of cash
acquired
(12,476)
(3,718
)
Net cash provided (used) by investing
activities
181,657
(581,118)
Cash flows from financing
activities
Proceeds from the exercise of stock
options
27,624
16,140
Proceeds from public offering, net of
issuance costs
—
646,984
Net cash provided by financing
activities
27,624
663,124
Effect of foreign exchange on cash and
cash equivalents
1,624
(1,085)
Net increase in cash and cash
equivalents
258,307
78,124
Cash and cash equivalents – Beginning
of Period
410,683
141,677
Cash and cash equivalents – End of
Period
668,990
219,801
Shopify Inc. Reconciliation from GAAP to
Non-GAAP Results (Expressed in US $000’s, except share and per
share amounts, unaudited)
Three months ended
Six months ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
$
$
$
$
GAAP Gross profit
204,765
136,955
385,056
260,797
% of Revenue
57
%
56
%
56
%
57
%
add: stock-based compensation
894
584
1,608
1,010
add: payroll taxes related to stock-based
compensation
132
53
232
116
Non-GAAP Gross profit
205,791
137,592
386,896
261,923
% of Revenue
57
%
56
%
57
%
57
%
GAAP Sales and marketing
119,210
87,487
224,232
163,271
% of Revenue
33
%
36
%
33
%
36
%
less: stock-based compensation
8,409
5,722
15,244
9,760
less: payroll taxes related to stock-based
compensation
1,102
527
1,912
1,258
Non-GAAP Sales and marketing
109,699
81,238
207,076
152,253
% of Revenue
30
%
33
%
30
%
33
%
GAAP Research and development
85,520
54,305
161,875
102,021
% of Revenue
24
%
22
%
24
%
22
%
less: stock-based compensation
22,983
13,639
41,098
24,504
less: payroll taxes related to stock-based
compensation
3,465
1,582
5,273
2,633
Non-GAAP Research and development
59,072
39,084
115,504
74,884
% of Revenue
16
%
16
%
17
%
16
%
GAAP General and administrative
39,655
25,924
74,359
46,599
% of Revenue
11
%
11
%
11
%
10
%
less: stock-based compensation
6,982
4,246
12,482
6,842
less: payroll taxes related to stock-based
compensation
462
140
993
485
Non-GAAP General and administrative
32,211
21,538
60,884
39,272
% of Revenue
9
%
9
%
9
%
9
%
GAAP Operating expenses
244,385
167,716
460,466
311,891
% of Revenue
68
%
68
%
67
%
68
%
less: stock-based compensation
38,374
23,607
68,824
41,106
less: payroll taxes related to stock-based
compensation
5,029
2,249
8,178
4,376
Non-GAAP Operating Expenses
200,982
141,860
383,464
266,409
% of Revenue
56
%
58
%
56
%
58
%
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
Six months ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
$
$
$
$
GAAP Operating loss
(39,620
)
(30,761
)
(75,410
)
(51,094
)
% of Revenue
(11
)%
(13
)%
(11
)%
(11
)%
add: stock-based compensation
39,268
24,191
70,432
42,116
add: payroll taxes related to stock-based
compensation
5,161
2,302
8,410
4,492
Adjusted Operating income (loss)
4,809
(4,268
)
3,432
(4,486
)
% of Revenue
1
%
(2
)%
1
%
(1
)%
GAAP Net loss
(28,678
)
(23,953
)
(52,829
)
(39,855
)
% of Revenue
(8
)%
(10
)%
(8
)%
(9
)%
add: stock-based compensation
39,268
24,191
70,432
42,116
add: payroll taxes related to stock-based
compensation
5,161
2,302
8,410
4,492
Adjusted Net income
15,751
2,540
26,013
6,753
% of Revenue
4
%
1
%
4
%
1
%
GAAP net loss per share attributable to
shareholders
(0.26
)
(0.23
)
(0.47
)
(0.38
)
add: stock-based compensation
0.35
0.23
0.63
0.40
add: payroll taxes related to stock-based
compensation
0.05
0.02
0.08
0.04
Adjusted net income per share attributable
to shareholders
0.14
0.02
0.24
0.06
Weighted average shares used to compute
GAAP and non-GAAP net income (loss) per share attributable to
shareholders
112,013,409
105,978,076
111,470,359
104,127,640
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005215/en/
INVESTORS: Katie Keita Senior Director, Investor Relations
613-241-2828 x 1024 IR@shopify.com MEDIA: Julie Nicholson Director
of Communications 416-238-6705 x 302 press@shopify.com
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