SHOP Shopify Inc

Third-Quarter Revenue Grows 96% on GMV Growth of 109% Year on Year

Shopify reports in U.S. dollars and in accordance with U.S. GAAP

Shopify Inc. (NYSE:SHOP)(TSX:SHOP), a leading global commerce company, announced today strong financial results for the third quarter ended September 30, 2020.

“The accelerated shift to digital commerce triggered by COVID-19 is continuing, as more consumers shop online and entrepreneurs step up to meet demand,” said Harley Finkelstein, Shopify’s President. “Entrepreneurs will be the force in rebuilding economies all over the world, which makes it even more important for Shopify to innovate and build the critical tools that merchants need to succeed in a low-touch retail environment.”

“Shopify’s tremendous third-quarter results reflect the resilience and entrepreneurial spirit of our merchants,” said Amy Shapero, Shopify’s CFO. “More entrepreneurs are signing on to Shopify so they can quickly and easily put their ideas into action. We continue to evolve our global commerce operating system to make it easier for merchants to get online and start selling, get discovered, and get their goods to buyers, while providing a delightful shopping experience.”

Third-Quarter Financial Highlights

• Total revenue in the third quarter was $767.4 million, a 96% increase from the comparable quarter in 2019.
• Subscription Solutions revenue was $245.3 million, up 48% year over year, primarily due to more merchants joining the platform.
• Merchant Solutions revenue growth increased 132%, to $522.1 million, driven primarily by the growth of Gross Merchandise Volume1 ("GMV").
• Monthly Recurring Revenue2 ("MRR") as of September 30, 2020 was $74.4 million. Growth accelerated to 47% year-over-year with MRR up from $50.7 million as of September 30, 2019 as merchants from both the 90-day free trial (offered from March 21, 2020 through May 31, 2020) and standard 14-day free trial (offered from June 1, 2020 onwards) converted into paying merchants in the quarter, creating a ‘double cohort’ effect. Shopify Plus contributed $18.7 million, or 25%, of MRR compared with 27% of MRR as of September 30, 2019 as a result of the significantly higher number of Standard merchants joining the platform in Q3 2020.
• GMV for the third quarter was $30.9 billion, an increase of $16.1 billion, or 109% over the third quarter of 2019. Gross Payments Volume3 ("GPV") grew to $14.0 billion, which accounted for 45% of GMV processed in the quarter, versus $6.2 billion, or 42%, for the third quarter of 2019.
• Gross profit dollars grew 87% to $405.1 million in the third quarter of 2020, compared with $216.7 million for the third quarter of 2019.
• Adjusted gross profit4 grew 88% to $412.6 million in the third quarter of 2020, compared with $219.4 million for the third quarter of 2019.
• Operating income for the third quarter of 2020 was $50.6 million, or 7% of revenue, versus a loss of $35.7 million, or 9% of revenue, for the comparable period a year ago.
• Adjusted operating income4 for the third quarter of 2020 was $130.9 million, or 17% of revenue, compared with adjusted operating income of $10.5 million or 3% of revenue in the third quarter of 2019.
• Net income for the third quarter of 2020 was $191.1 million, or $1.54 per diluted share, compared with a net loss of $72.8 million, or $0.64 per basic and diluted share, for the third quarter of 2019.
• Adjusted net income4 for the third quarter of 2020 was $140.8 million, or $1.13 per diluted share, compared with adjusted net loss of $33.6 million, or $0.29 per basic and diluted share, for the third quarter of 2019. Adjusted net income in the third quarter of 2020 excludes an unrealized gain on an equity investment of $133.2 million or $1.07 per share, stock-based compensation and related payroll taxes of $75.4 million or $0.60 per share, and other adjustments totaling $7.5 million or $0.06 per share.
• At September 30, 2020, Shopify had $6.12 billion in cash, cash equivalents and marketable securities, compared with $2.46 billion on December 31, 2019. The increase reflects $2.03 billion of net proceeds from Shopify’s offering of Class A subordinate voting shares and convertible senior notes in the third quarter of 2020 and $1.46 billion of net proceeds from Shopify's offering of Class A subordinate voting shares in the second quarter of 2020.

Third-Quarter Business Highlights

• Shopify began rolling out to a select number of merchants early access to Shop Pay Installments, a ‘buy now, pay later’ product that lets merchants offer their customers more payment choice and flexibility at checkout, helping merchants boost sales through increased cart size and higher conversion.
• Shopify continued to build the foundation of Shopify Fulfillment Network, including developing the software that connects the network, adding partner nodes and improving their performance, and enhancing the merchant-facing app and merchant support functions. With strong demand for Shopify Fulfillment Network’s services expected heading into the holiday selling season in Q4 2020, we intend to continue to enroll merchants and build volume at a rate where we can maintain high quality standards to achieve product-market fit at this early stage of our fulfillment network’s development.
• 6 River Systems held its second annual user conference, FLOW 2020, a fully interactive online event where several enhancements to its wall-to-wall fulfillment solution were announced, including The Bridge, an overarching tool that connects the data from what’s happening in a physical warehouse operation to an intuitive cloud-based control center, providing more visibility into operations and increasing efficiency.
• Shopify launched Shopify Payments in Belgium, enabling iDEAL as a local payment method and supporting Bancontact debit payments, expanding the availability of Shopify Payments to 17 countries.
• 51% of eligible merchants in the United States and Canada utilized Shopify Shipping in the third quarter of 2020, versus 45% in the third quarter of 2019.
• Merchants in the U.S., Canada, and the U.K. received $252.1 million in merchant cash advances and loans from Shopify Capital in the third quarter of 2020, an increase of 79% versus the $141.0 million received by U.S. merchants in the third quarter of last year. Shopify Capital has grown to approximately $1.4 billion in cumulative capital advanced since its launch in April 2016, with approximately $248.0 million of which was outstanding on September 30, 2020.
• Shopify’s partner ecosystem continued to expand, as approximately 37,400 partners referred a merchant to Shopify over the past 12 months, compared with 23,000 over the 12 months ended September 30, 2019.

Subsequent to Third-Quarter 2020

• Shopify announced a collaboration with Operation HOPE to help the organization’s goal to create one million new Black-owned businesses in the U.S. by 2030. Shopify intends to provide up to $130 million of resources to support Operation HOPE’s efforts to reduce systemic barriers to entry to entrepreneurship historically faced by the Black community.
• Shopify launched the TikTok channel, enabling merchants to market their products using TikTok for Business. Merchants are able to create in-feed video ads that autoplay between videos while users scroll through their For You page. Shopify and TikTok will also collaborate to test new commerce features over the coming months that will further empower merchants to expand their paid and organic reach in video and on profiles.

Financial Outlook

While Shopify expects both sellers and buyers to continue adopting multi-channel commerce for safety as the COVID-19 pandemic continues, and to continue using multi-channel commerce for selection and convenience, near-term demand for our subscription and merchant solutions depends on several external factors that are particularly fluid at present. These include unemployment, fiscal stimulus, and the magnitude and duration of the COVID-19 pandemic, all of which may impact new shop creation on our platform and consumer spending.

Despite the heightened uncertainty surrounding the macro environment, Shopify remains uniquely positioned to level the playing field for entrepreneurs during this period of rapid change in the retail landscape. While Shopify is not providing a financial outlook for Q4 2020 or for full year 2020, as a leading global commerce operating system that can help merchants of all sizes adapt their businesses to this new reality, Shopify expects to continue to attract more independent voices to commerce, and will continue investing to innovate on their behalf.

Quarterly Conference Call

Shopify’s management team will hold a conference call to discuss our third-quarter results today, October 29, 2020, 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/news-and-events/default.aspx#upcoming-events. An archived replay of the webcast will be available following the conclusion of the call.

Shopify’s Third-Quarter 2020 Interim Unaudited Condensed Consolidated Financial Statements and Notes and its Third Quarter 2020 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 a leading global commerce company, providing trusted tools to start, grow, market, and manage a retail business of any size. Shopify makes commerce better for everyone with a platform and services that are engineered for reliability, while delivering a better shopping experience for consumers everywhere. Headquartered in Ottawa, Canada, Shopify powers over one million businesses in more than 175 countries and is trusted by brands such as Allbirds, Gymshark, Heinz, Staples and many more. For more information, visit www.shopify.com.

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 gross profit, adjusted operating income, non-GAAP operating expenses, adjusted net income (loss) and adjusted net income (loss) per share are non-GAAP financial measures that exclude the effect of stock-based compensation expenses and related payroll taxes and amortization of acquired intangibles. Adjusted net income and adjusted net income per share also exclude an unrealized gain on an equity investment, amortization of the debt discount related to Shopify’s convertible senior notes, and tax effects related to non-GAAP adjustments.

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 planned business initiatives and operations and financial outlook, the performance of Shopify's merchants, the impact of Shopify's business on its merchants and other entrepreneurs, and economic activity and consumer spending. Words such as “believe”, "continue", "will", "intends", "support", “allow”, and "expect" 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) uncertainty around the duration and scope of the COVID-19 pandemic and the impact of the pandemic and actions taken in response on global and regional economies and economic activity; (ii) shifting our operations to be “digital-by-default”; (iii) merchant acquisition and retention; (iv) managing our growth; (v) our history of losses; (vi) our limited operating history; (vii) our ability to innovate; (viii) the security of personal information we store relating to merchants and their customers and consumers with whom we have a direct relationship; (ix) a disruption of service or security breach; (x) our potential inability to compete successfully against current and future competitors; (xi) international sales and the use of our platform in various countries; (xii) the reliance of our growth in part on the success of our strategic relationships with third parties; (xiii) our potential failure to effectively maintain, promote and enhance our brand; (xiv) our use of a single cloud-based platform to deliver our services; (xv) our potential inability to achieve or maintain data transmission capacity; (xvi) our reliance on a single supplier to provide the technology we offer through Shopify Payments; (xvii) payments processed through Shopify Payments; (xviii) our potential inability to hire, retain and motivate qualified personnel; (xix) serious errors or defects in our software or hardware or issues with our hardware supply chain; (xx) evolving privacy laws and regulations, cross-border data transfer restrictions, data localization requirements and other domestic or foreign regulations may limit the use and adoption of our services; and (xxi) 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 Income (Loss)

(Expressed in US $000’s, except share and per share amounts, unaudited)

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

September 30, 2020

 

September 30, 2019

 

September 30, 2020

 

September 30, 2019

 

 

$

 

$

 

$

 

$

Revenues

 

 

 

 

 

 

 

 

Subscription solutions

 

245,274

 

165,577

 

629,317

 

459,075

Merchant solutions

 

522,131

 

224,975

 

1,322,430

 

613,938

 

 

767,405

 

390,552

 

1,951,747

 

1,073,013

Cost of revenues

 

 

 

 

 

 

 

 

Subscription solutions

 

52,170

 

33,263

 

134,282

 

90,786

Merchant solutions

 

310,087

 

140,593

 

780,333

 

380,475

 

 

362,257

 

173,856

 

914,615

 

471,261

Gross profit

 

405,148

 

216,696

 

1,037,132

 

601,752

Operating expenses

 

 

 

 

 

 

 

 

Sales and marketing

 

147,608

 

116,546

 

447,320

 

340,778

Research and development

 

143,427

 

90,387

 

393,050

 

252,262

General and administrative

 

51,799

 

38,022

 

179,948

 

103,247

Transaction and loan losses

 

11,753

 

7,399

 

39,202

 

16,533

Total operating expenses

 

354,587

 

252,354

 

1,059,520

 

712,820

Income (loss) from operations

 

50,561

 

(35,658)

 

(22,388)

 

(111,068)

 

 

 

 

 

 

 

 

 

Other income, net

 

135,806

 

11,212

 

152,999

 

33,793

Income (loss) before income taxes

 

186,367

 

(24,446)

 

130,611

 

(77,275)

Recovery of (provision for) income taxes

 

4,701

 

(48,338)

 

65,026

 

(48,338)

Net income (loss)

 

191,068

 

(72,784)

 

195,637

 

(125,613)

Other comprehensive income (loss)

 

4,190

 

(6,097)

 

(1,790)

 

9,923

Comprehensive income (loss)

 

195,258

 

(78,881)

 

193,847

 

(115,690)

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to shareholders:

 

 

 

 

 

 

 

 

Basic

 

1.59

 

(0.64)

 

1.65

 

(1.12)

Diluted

 

1.54

 

(0.64)

 

1.59

 

(1.12)

 

 

 

 

 

 

 

 

 

Shares used to compute net income (loss) per share attributable to shareholders:

 

 

 

 

 

 

 

 

Basic

 

120,511,484

 

113,086,997

 

118,692,898

 

112,015,160

Diluted

 

124,908,279

 

113,086,997

 

123,399,606

 

112,015,160

 

Shopify Inc.

Condensed Consolidated Balance Sheets

(Expressed in US $000’s except share amounts, unaudited)

 

 

 

 

 

As at

 

 

September 30, 2020

 

December 31, 2019

 

 

$

 

$

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

3,089,884

 

 

649,916

 

Marketable securities

 

3,031,277

 

 

1,805,278

 

Trade and other receivables, net

 

109,700

 

 

90,529

 

Merchant cash advances, loans and related receivables, net

 

247,977

 

 

150,172

 

Income taxes receivable

 

71,303

 

 

—

 

Other current assets

 

63,076

 

 

46,333

 

 

 

6,613,217

 

 

2,742,228

 

Long-term assets

 

 

 

 

Property and equipment, net

 

94,698

 

 

111,398

 

Intangible assets, net

 

143,925

 

 

167,282

 

Right-of-use assets, net

 

122,710

 

 

134,774

 

Deferred tax assets

 

5,116

 

 

19,432

 

Equity and other investments

 

170,500

 

 

2,500

 

Goodwill

 

311,865

 

 

311,865

 

 

 

848,814

 

 

747,251

 

Total assets

 

7,462,031

 

 

3,489,479

 

Liabilities and shareholders’ equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued liabilities

 

261,561

 

 

181,193

 

Income taxes payable

 

799

 

 

69,432

 

Deferred revenue

 

96,777

 

 

56,691

 

Lease liabilities

 

10,994

 

 

9,066

 

 

 

370,131

 

 

316,382

 

Long-term liabilities

 

 

 

 

Deferred revenue

 

23,080

 

 

5,969

 

Lease liabilities

 

141,539

 

 

142,641

 

Convertible senior notes

 

750,452

 

 

—

 

Deferred tax liabilities

 

—

 

 

8,753

 

 

 

915,071

 

 

157,363

 

Commitments and contingencies

 

 

 

 

Shareholders’ equity

 

 

 

 

Common stock, unlimited Class A subordinate voting shares authorized, 110,044,179 and 104,518,173 issued and outstanding; unlimited Class B multiple voting shares authorized, 11,868,020 and 11,910,802 issued and outstanding

 

6,035,099

 

 

3,256,284

 

Additional paid-in capital

 

251,061

 

 

62,628

 

Accumulated other comprehensive (loss) income

 

(744

)

 

1,046

 

Accumulated deficit

 

(108,587

)

 

(304,224

)

Total shareholders’ equity

 

6,176,829

 

 

3,015,734

 

Total liabilities and shareholders’ equity

 

7,462,031

 

 

3,489,479

 

 

Shopify Inc.

Condensed Consolidated Statements of Cash Flows

(Expressed in US $000’s, unaudited)

 

 

 

 

 

Nine months ended

 

 

September 30, 2020

 

September 30, 2019

 

 

$

 

$

Cash flows from operating activities

 

 

 

 

Net income (loss) for the period

 

195,637

 

 

(125,613

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

Amortization and depreciation

 

52,167

 

 

22,950

 

Stock-based compensation

 

179,883

 

 

110,464

 

Amortization of debt discount and offering costs

 

1,200

 

 

—

 

Impairment of right-of-use assets and leasehold improvements

 

31,623

 

 

—

 

Provision for transaction and loan losses

 

19,954

 

 

11,186

 

Deferred income taxes

 

5,598

 

 

(15,295

)

Unrealized gain on equity and other investments

 

(133,239

)

 

—

 

Unrealized foreign exchange (gain) loss

 

(1,186

)

 

2,404

 

Changes in operating assets and liabilities:

 

 

 

 

Trade and other receivables

 

(21,053

)

 

(25,153

)

Merchant cash advances, loans and related receivables

 

(112,447

)

 

(84,869

)

Other current assets

 

(17,441

)

 

(3,139

)

Equity and other investments

 

(24,710

)

 

—

 

Accounts payable and accrued liabilities

 

86,067

 

 

53,666

 

Income tax assets and liabilities

 

(139,936

)

 

61,485

 

Deferred revenue

 

57,197

 

 

9,029

 

Lease assets and liabilities

 

278

 

 

612

 

Net cash provided by operating activities

 

179,592

 

 

17,727

 

Cash flows from investing activities

 

 

 

 

Purchase of marketable securities

 

(3,661,092

)

 

(2,003,102

)

Maturity of marketable securities

 

2,436,216

 

 

2,034,933

 

Equity and other investments

 

(10,051

)

 

—

 

Acquisitions of property and equipment

 

(35,377

)

 

(43,357

)

Acquisitions of intangible assets

 

(262

)

 

(5,484

)

Acquisition of businesses, net of cash acquired

 

—

 

 

(12,476

)

Net cash used in investing activities

 

(1,270,566

)

 

(29,486

)

Cash flows from financing activities

 

 

 

 

Proceeds from public equity offerings, net of issuance costs

 

2,578,591

 

 

688,014

 

Proceeds from convertible senior notes, net of underwriting fees and offering costs

 

907,950

 

 

—

 

Proceeds from the exercise of stock options

 

50,076

 

 

37,301

 

Net cash provided by financing activities

 

3,536,617

 

 

725,315

 

Effect of foreign exchange on cash and cash equivalents

 

(5,675

)

 

290

 

Net increase in cash and cash equivalents

 

2,439,968

 

 

713,846

 

Cash and cash equivalents – Beginning of Period

 

649,916

 

 

410,683

 

Cash and cash equivalents – End of Period

 

3,089,884

 

 

1,124,529

 

 

Shopify Inc.

Reconciliation from GAAP to Non-GAAP Results

(Expressed in US $000’s, except share and per share amounts, unaudited)

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

September 30, 2020

 

September 30, 2019

 

September 30, 2020

 

September 30, 2019

 

 

$

 

$

 

$

 

$

GAAP Gross profit

 

405,148

 

 

216,696

 

 

1,037,132

 

 

601,752

 

% of Revenue

 

53

%

 

55

%

 

53

%

 

56

%

add: stock-based compensation

 

2,667

 

 

928

 

 

5,003

 

 

2,536

 

add: payroll taxes related to stock-based compensation

 

247

 

 

113

 

 

764

 

 

345

 

add: amortization of acquired intangibles

 

4,531

 

 

1,649

 

 

14,956

 

 

4,804

 

Non-GAAP Gross profit

 

412,593

 

 

219,386

 

 

1,057,855

 

 

609,437

 

% of Revenue

 

54

%

 

56

%

 

54

%

 

57

%

 

 

 

 

 

 

 

 

 

GAAP Sales and marketing

 

147,608

 

 

116,546

 

 

447,320

 

 

340,778

 

% of Revenue

 

19

%

 

30

%

 

23

%

 

32

%

less: stock-based compensation

 

10,094

 

 

8,707

 

 

31,914

 

 

23,951

 

less: payroll taxes related to stock-based compensation

 

1,387

 

 

985

 

 

4,432

 

 

2,897

 

less: amortization of acquired intangibles

 

388

 

 

—

 

 

1,164

 

 

—

 

Non-GAAP Sales and marketing

 

135,739

 

 

106,854

 

 

409,810

 

 

313,930

 

% of Revenue

 

18

%

 

27

%

 

21

%

 

29

%

 

 

 

 

 

 

 

 

 

GAAP Research and development

 

143,427

 

 

90,387

 

 

393,050

 

 

252,262

 

% of Revenue

 

19

%

 

23

%

 

20

%

 

24

%

less: stock-based compensation

 

39,407

 

 

23,136

 

 

111,372

 

 

64,234

 

less: payroll taxes related to stock-based compensation

 

8,334

 

 

2,777

 

 

22,615

 

 

8,050

 

less: amortization of acquired intangibles

 

58

 

 

58

 

 

174

 

 

174

 

Non-GAAP Research and development

 

95,628

 

 

64,416

 

 

258,889

 

 

179,804

 

% of Revenue

 

12

%

 

16

%

 

13

%

 

17

%

 

 

 

 

 

 

 

 

 

GAAP General and administrative

 

51,799

 

 

38,022

 

 

179,948

 

 

103,247

 

% of Revenue

 

7

%

 

10

%

 

9

%

 

10

%

less: stock-based compensation

 

11,639

 

 

7,261

 

 

31,594

 

 

19,743

 

less: payroll taxes related to stock-based compensation

 

1,627

 

 

592

 

 

4,121

 

 

1,585

 

less: impairment of right-of-use assets and leasehold improvements

 

—

 

 

—

 

 

31,623

 

 

—

 

Non-GAAP General and administrative

 

38,533

 

 

30,169

 

 

112,610

 

 

81,919

 

% of Revenue

 

5

%

 

8

%

 

6

%

 

8

%

 

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

 

Nine months ended

 

 

September 30, 2020

 

September 30, 2019

 

September 30, 2020

 

September 30, 2019

 

 

$

 

$

 

$

 

$

GAAP Transaction and loan losses

 

11,753

 

 

7,399

 

 

39,202

 

 

16,533

 

% of Revenue

 

2

%

 

2

%

 

2

%

 

2

%

 

 

 

 

 

 

 

 

 

GAAP Operating expenses

 

354,587

 

 

252,354

 

 

1,059,520

 

 

712,820

 

% of Revenue

 

46

%

 

65

%

 

54

%

 

66

%

less: stock-based compensation

 

61,140

 

 

39,104

 

 

174,880

 

 

107,928

 

less: payroll taxes related to stock-based compensation

 

11,348

 

 

4,354

 

 

31,168

 

 

12,532

 

less: amortization of acquired intangibles

 

446

 

 

58

 

 

1,338

 

 

174

 

less: impairment of right-of-use assets and leasehold improvements

 

—

 

 

—

 

 

31,623

 

 

—

 

Non-GAAP Operating expenses

 

281,653

 

 

208,838

 

 

820,511

 

 

592,186

 

% of Revenue

 

37

%

 

53

%

 

42

%

 

55

%

 

 

 

 

 

 

 

 

 

GAAP Operating income (loss)

 

50,561

 

 

(35,658

)

 

(22,388

)

 

(111,068

)

% of Revenue

 

7

%

 

(9

)%

 

(1

)%

 

(10

)%

add: stock-based compensation

 

63,807

 

 

40,032

 

 

179,883

 

 

110,464

 

add: payroll taxes related to stock-based compensation

 

11,595

 

 

4,467

 

 

31,932

 

 

12,877

 

add: amortization of acquired intangibles

 

4,977

 

 

1,707

 

 

16,294

 

 

4,978

 

add: impairment of right-of-use assets and leasehold improvements

 

—

 

 

—

 

 

31,623

 

 

—

 

Adjusted Operating income

 

130,940

 

 

10,548

 

 

237,344

 

 

17,251

 

% of Revenue

 

17

%

 

3

%

 

12

%

 

2

%

 

 

 

 

 

 

 

 

 

GAAP Net income (loss)

 

191,068

 

 

(72,784

)

 

195,637

 

 

(125,613

)

% of Revenue

 

25

%

 

(19

)%

 

10

%

 

(12

)%

add: stock-based compensation

 

63,807

 

 

40,032

 

 

179,883

 

 

110,464

 

add: payroll taxes related to stock-based compensation

 

11,595

 

 

4,467

 

 

31,932

 

 

12,877

 

add: amortization of acquired intangibles

 

4,977

 

 

1,707

 

 

16,294

 

 

4,978

 

add: impairment of right-of-use assets and leasehold improvements

 

—

 

 

—

 

 

31,623

 

 

—

 

add: amortization of debt discount

 

1,130

 

 

—

 

 

1,130

 

 

—

 

less: unrealized gain on equity and other investments

 

(133,239

)

 

—

 

 

(133,239

)

 

—

 

add: provision for income tax effects related to non-GAAP adjustments

 

1,416

 

 

(7,018

)

 

(30,808

)

 

(18,471

)

Adjusted Net income (loss)

 

140,754

 

 

(33,596

)

 

292,452

 

 

(15,765

)

% of Revenue

 

18

%

 

(9

)%

 

15

%

 

(1

)%

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

 

Nine months ended

 

 

September 30, 2020

 

September 30, 2019

 

September 30, 2020

 

September 30, 2019

 

 

$

 

$

 

$

 

$

Basic GAAP Net income (loss) per share attributable to shareholders

 

1.59

 

 

(0.64

)

 

1.65

 

 

(1.12

)

add: stock-based compensation

 

0.53

 

 

0.35

 

 

1.52

 

 

0.99

 

add: payroll taxes related to stock-based compensation

 

0.10

 

 

0.04

 

 

0.27

 

 

0.11

 

add: amortization of acquired intangibles

 

0.04

 

 

0.02

 

 

0.14

 

 

0.04

 

add: impairment of right-of-use assets and leasehold improvements

 

0.00

 

 

0.00

 

 

0.27

 

 

0.00

 

add: amortization of debt discount

 

0.01

 

 

0.00

 

 

0.01

 

 

0.00

 

less: unrealized gain on equity and other investments

 

(1.11

)

 

0.00

 

 

(1.12

)

 

0.00

 

add: provision for income tax effects related to non-GAAP adjustments

 

0.01

 

 

(0.06

)

 

(0.26

)

 

(0.16

)

Basic Adjusted Net income (loss) per share attributable to shareholders

 

1.17

 

 

(0.29

)

 

2.46

 

 

(0.14

)

Weighted average shares used to compute GAAP and non-GAAP basic net income (loss) per share attributable to shareholders

 

120,511,484

 

 

113,086,997

 

 

118,692,898

 

 

112,015,160

 

 

 

 

 

 

 

 

 

 

Diluted GAAP Net income (loss) per share attributable to shareholders

 

1.54

 

 

(0.64

)

 

1.59

 

 

(1.12

)

add: stock-based compensation

 

0.51

 

 

0.35

 

 

1.46

 

 

0.99

 

add: payroll taxes related to stock-based compensation

 

0.09

 

 

0.04

 

 

0.26

 

 

0.11

 

add: amortization of acquired intangibles

 

0.04

 

 

0.02

 

 

0.13

 

 

0.04

 

add: impairment of right-of-use assets and leasehold improvements

 

0.00

 

 

0.00

 

 

0.26

 

 

0.00

 

add: amortization of debt discount

 

0.01

 

 

0.00

 

 

0.01

 

 

0.00

 

less: unrealized gain on equity and other investments

 

(1.07

)

 

0.00

 

 

(1.08

)

 

0.00

 

add: provision for income tax effects related to non-GAAP adjustments

 

0.01

 

 

(0.06

)

 

(0.25

)

 

(0.16

)

Diluted Adjusted Net income (loss) per share attributable to shareholders

 

1.13

 

 

(0.29

)

 

2.37

 

 

(0.14

)

Weighted average shares used to compute GAAP and non-GAAP diluted net income (loss) per share attributable to shareholders

 

124,908,279

 

 

113,086,997

 

 

123,399,606

 

 

112,015,160

 

1. Gross Merchandise Volume, or GMV, represents the total dollar value of orders facilitated through the Shopify platform including certain apps and channels for which a revenue-sharing arrangement is in place in the period, net of refunds, and inclusive of shipping and handling, duty and value-added taxes. 2. 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. 3. Gross Payments Volume, or GPV, is the amount of GMV processed through Shopify Payments. 4. Non-GAAP financial measures exclude the effect of stock-based compensation expenses and related payroll taxes, amortization of acquired intangibles and related taxes, an unrealized gain on an equity investment and related taxes, and amortization of the debt discount related to convertible senior notes and related taxes. Please refer to "Non-GAAP Financial Measures" in this press release for more information.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201029005170/en/

INVESTORS: Katie Keita Senior Director, Investor Relations 613-241-2828 x 1024 IR@shopify.com

MEDIA: Rebecca Feigelsohn Communications Lead 416-238-6705 x 302 press@shopify.com