First-Quarter Revenue Growth Accelerates to 110% on GMV Growth of 114% Year on Year
Shopify reports in U.S. dollars and in accordance with U.S. GAAP
Internet, Everywhere--(Newsfile Corp. - April 28, 2021) - Shopify Inc. (NYSE: SHOP) (TSX: SHOP), a leading global commerce company, announced today strong financial results for the quarter ended March 31, 2021.
"More entrepreneurs around the world are choosing Shopify to launch and grow their businesses, and for good reason," said Harley Finkelstein, Shopify's President. "Our singular focus is on making entrepreneurship easier, and making it easier for entrepreneurs to succeed. Merchant sales growth on our platform accelerated in the first quarter as merchants leveraged our modern commerce technology, which helps them compete in any retail environment and engage directly with their customers wherever they are."
"Shopify's momentum continued into 2021 as digital commerce tailwinds remained strong and merchants took advantage of the range of capabilities offered by our platform," said Amy Shapero, Shopify's CFO. "We are focused on building a commerce operating system that will help shape the future of retail. Our merchant-first business model positions us to capture the massive opportunity presented by the growth of digital commerce, benefiting both our merchants and Shopify."
First-Quarter Financial Highlights
First-Quarter Business Highlights
Subsequent to First Quarter 2021
Outlook
The 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, the absence of material changes in our industry or the global economy and other assumptions related to the COVID-19 pandemic, which are described in detail below. 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.
Our full-year 2021 outlook is guided by assumptions that remain unchanged from February: that as countries continue to roll out vaccines in 2021 and populations are able to move about more freely, the overall economic environment will likely improve; some consumer spending will likely rotate back to offline retail and services; and the ongoing shift to ecommerce, which accelerated in 2020, will likely resume a more normalized pace of growth.
In March 2021, the US government passed a coronavirus relief package, and began processing stimulus payments in early March. The benefit to Shopify's GMV from this latest round of stimulus ended in early April.
In view of these factors, we continue to expect to grow revenue rapidly in 2021, but at a lower rate than in 2020. For the full year 2021, we continue to expect the following:
While we expect that the first quarter will likely still contribute the smallest share of full-year revenue and the fourth quarter the largest, the revenue spread may be more evenly distributed across the four quarters than it has been historically if the rollout of a vaccine shifts more consumer spending to services and offline shopping towards the back half of the year.
2020 catapulted commerce into a period of incredibly rapid change, presenting Shopify with unprecedented opportunities in 2021 to accelerate innovation. We continue to expect rapid growth in gross profit dollars in 2021 and plan to reinvest back into our business as aggressively as we can, with the year-over-year growth in operating expenses accelerating each quarter throughout the rest of the year. As such, we expect full year 2021 adjusted operating income to be below the level we achieved in 2020.
For 2021, we now anticipate stock-based compensation expenses and related payroll taxes of $425 million and amortization of acquired intangibles of $21 million.
Quarterly Conference Call
Shopify's management team will hold a conference call to discuss our first-quarter results today, April 28, 2021, 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/. An archived replay of the webcast will be available following the conclusion of the call.
Shopify's First Quarter 2021 Interim Unaudited Condensed Consolidated Financial Statements and Notes and its First Quarter 2021 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. Proudly founded in Ottawa, Shopify powers over 1.7 million businesses in more than 175 countries and is trusted by brands such as Allbirds, Gymshark, Heinz, Staples Canada, 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 and adjusted net income 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 unrealized gains on equity and other investments 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 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", "plan", "anticipate", 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) merchant acquisition and retention; (ii) managing our growth; (iii) our potential inability to compete successfully against current and future competitors; (iv) the security of personal information we store relating to merchants and their customers and consumers with whom we have a direct relationship; (v) our history of losses and our ability to maintain profitability; (vi) a disruption of service or security breach; (vii) our limited operating history in new markets and geographic regions; (viii) our ability to innovate; (ix) international sales and operations and the use of our platform in various countries; (x) our reliance on a single supplier to provide the technology we offer through Shopify Payments; (xi) our potential inability to hire, retain and motivate qualified personnel; (xii) our use of a single cloud-based platform to deliver our services; (xiii) 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; (xiv) the reliance of our growth in part on the success of our strategic relationships with third parties; (xv) complex and changing laws and regulations worldwide; (xvi) our dependence on the continued services of management and other key employees; (xvii) our potential failure to effectively maintain, promote and enhance our brand; (xviii) payments processed through Shopify Payments; (xix) serious errors or defects in our software or hardware or issues with our hardware supply chain; (xx) our potential inability to achieve or maintain data transmission capacity; (xxi) activities of merchants or partners or the contents of merchants' shops; (xxii) 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; (xxiii) changes in tax laws or adverse outcomes related to our taxes; (xiv) 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.
CONTACT:
INVESTORS:
Katie Keita
Senior Director, Investor Relations
613-241-2828 x 1024
[email protected]
SOURCE: Shopify
MEDIA:
Rebecca Feigelsohn
Communications Lead
416-238-6705 x 302
[email protected]
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 | ||||||
March 31, 2021 | March 31, 2020 | |||||
$ | $ | |||||
Revenues | ||||||
Subscription solutions | 320,681 | 187,609 | ||||
Merchant solutions | 667,966 | 282,392 | ||||
988,647 | 470,001 | |||||
Cost of revenues | ||||||
Subscription solutions | 58,382 | 37,712 | ||||
Merchant solutions | 371,549 | 175,339 | ||||
429,931 | 213,051 | |||||
Gross profit | 558,716 | 256,950 | ||||
Operating expenses | ||||||
Sales and marketing | 186,223 | 154,862 | ||||
Research and development | 175,886 | 116,396 | ||||
General and administrative | 67,102 | 44,842 | ||||
Transaction and loan losses | 10,606 | 14,083 | ||||
Total operating expenses | 439,817 | 330,183 | ||||
Income (loss) from operations | 118,899 | (73,233 | ) | |||
Other income, net | 1,250,645 | 13,109 | ||||
Income (loss) before income taxes | 1,369,544 | (60,124 | ) | |||
(Provision for) recovery of income taxes | (111,099 | ) | 28,695 | |||
Net income (loss) | 1,258,445 | (31,429 | ) | |||
Other comprehensive loss | (2,724 | ) | (16,633 | ) | ||
Comprehensive income (loss) | 1,255,721 | (48,062 | ) | |||
Net income (loss) per share attributable to shareholders: | ||||||
Basic | 10.21 | (0.27 | ) | |||
Diluted | 9.94 | (0.27 | ) | |||
Shares used to compute net income (loss) per share attributable to shareholders: | ||||||
Basic | 123,243,650 | 116,806,549 | ||||
Diluted | 126,674,388 | 116,806,549 |
Shopify Inc.
Condensed Consolidated Balance Sheets
(Expressed in US $000's except share amounts, unaudited)
As at | ||||||
March 31, 2021 | December 31, 2020 | |||||
$ | $ | |||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | 2,785,571 | 2,703,597 | ||||
Marketable securities | 5,086,877 | 3,684,370 | ||||
Trade and other receivables, net | 163,461 | 120,752 | ||||
Merchant cash advances, loans and related receivables, net | 312,771 | 244,723 | ||||
Income taxes receivable | 56,572 | 56,067 | ||||
Other current assets | 77,854 | 68,247 | ||||
8,483,106 | 6,877,756 | |||||
Long-term assets | ||||||
Property and equipment, net | 87,152 | 92,104 | ||||
Intangible assets, net | 129,692 | 135,676 | ||||
Right-of-use assets, net | 128,026 | 119,373 | ||||
Deferred tax assets | 54,097 | 52,677 | ||||
Equity and other investments | 1,630,950 | 173,454 | ||||
Goodwill | 311,865 | 311,865 | ||||
2,341,782 | 885,149 | |||||
Total assets | 10,824,888 | 7,762,905 | ||||
Liabilities and shareholders' equity | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | 338,876 | 300,795 | ||||
Income taxes payable | 25,935 | 19,677 | ||||
Deferred revenue | 114,725 | 107,809 | ||||
Lease liabilities | 15,567 | 10,051 | ||||
495,103 | 438,332 | |||||
Long-term liabilities | ||||||
Deferred revenue | 22,417 | 21,006 | ||||
Lease liabilities | 153,918 | 144,836 | ||||
Convertible senior notes | 909,205 | 758,008 | ||||
Deferred tax liabilities | 102,374 | - | ||||
1,187,914 | 923,850 | |||||
Commitments and contingencies | ||||||
Shareholders' equity | ||||||
Common stock, unlimited Class A subordinate voting shares authorized, 112,775,983 and 110,929,570 issued and outstanding; unlimited Class B multiple voting shares authorized, 11,551,329 and 11,599,301 issued and outstanding | 7,760,984 | 6,115,232 | ||||
Additional paid-in capital | 92,913 | 261,436 | ||||
Accumulated other comprehensive income | 6,046 | 8,770 | ||||
Retained earnings | 1,281,928 | 15,285 | ||||
Total shareholders' equity | 9,141,871 | 6,400,723 | ||||
Total liabilities and shareholders' equity | 10,824,888 | 7,762,905 |
Shopify Inc.
Condensed Consolidated Statements of Cash Flows
(Expressed in US $000's, unaudited)
Three months ended | ||||||
March 31, 2021 | March 31, 2020 | |||||
$ | $ | |||||
Cash flows from operating activities | ||||||
Net income (loss) for the period | 1,258,445 | (31,429 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | ||||||
Amortization and depreciation | 15,800 | 14,366 | ||||
Stock-based compensation | 69,156 | 53,752 | ||||
Amortization of debt offering costs | 585 | - | ||||
Provision for transaction and loan losses | 4,236 | 6,103 | ||||
Deferred income tax expense (recovery) | 100,954 | (6,643 | ) | |||
Unrealized gain on equity and other investments | (1,250,944 | ) | - | |||
Unrealized foreign exchange loss (gain) | 1,734 | (3,779 | ) | |||
Changes in operating assets and liabilities: | ||||||
Trade and other receivables | (39,063 | ) | (2,378 | ) | ||
Merchant cash advances, loans and related receivables | (74,561 | ) | (46,478 | ) | ||
Other current assets | (13,205 | ) | (15,349 | ) | ||
Accounts payable and accrued liabilities | 39,756 | 30,621 | ||||
Income tax assets and liabilities | 9,525 | (90,375 | ) | |||
Deferred revenue | 8,327 | 5,804 | ||||
Lease assets and liabilities | 4,938 | 830 | ||||
Net cash provided (used) by operating activities | 135,683 | (84,955 | ) | |||
Cash flows from investing activities | ||||||
Purchase of marketable securities | (2,444,955 | ) | (496,224 | ) | ||
Maturity of marketable securities | 1,038,316 | 913,178 | ||||
Purchase of equity and other investments | (206,552 | ) | - | |||
Acquisitions of property and equipment | (5,188 | ) | (16,740 | ) | ||
Acquisitions of intangible assets | - | (219 | ) | |||
Net cash (used) provided by investing activities | (1,618,379 | ) | 399,995 | |||
Cash flows from financing activities | ||||||
Proceeds from public equity offerings, net of issuance costs | 1,541,168 | - | ||||
Proceeds from the exercise of stock options | 22,925 | 19,427 | ||||
Net cash provided by financing activities | 1,564,093 | 19,427 | ||||
Effect of foreign exchange on cash and cash equivalents | 577 | (15,020 | ) | |||
Net increase in cash and cash equivalents | 81,974 | 319,447 | ||||
Cash and cash equivalents - Beginning of Period | 2,703,597 | 649,916 | ||||
Cash and cash equivalents - End of Period | 2,785,571 | 969,363 |
Shopify Inc.
Reconciliation from GAAP to Non-GAAP Results
(Expressed in US $000's, except share and per share amounts, unaudited)
Three months ended | ||||||
March 31, 2021 | March 31, 2020 | |||||
$ | $ | |||||
GAAP Gross profit | 558,716 | 256,950 | ||||
% of Revenue | 57% | 55% | ||||
add: stock-based compensation | 1,515 | 1,148 | ||||
add: payroll taxes related to stock-based compensation | 336 | 176 | ||||
add: amortization of acquired intangibles | 4,531 | 5,569 | ||||
Non-GAAP Gross profit | 565,098 | 263,843 | ||||
% of Revenue | 57% | 56% | ||||
GAAP Sales and marketing | 186,223 | 154,862 | ||||
% of Revenue | 19% | 33% | ||||
less: stock-based compensation | 8,853 | 11,207 | ||||
less: payroll taxes related to stock-based compensation | 2,032 | 1,227 | ||||
less: amortization of acquired intangibles | 386 | 388 | ||||
Non-GAAP Sales and marketing | 174,952 | 142,040 | ||||
% of Revenue | 18% | 30% | ||||
GAAP Research and development | 175,886 | 116,396 | ||||
% of Revenue | 18% | 25% | ||||
less: stock-based compensation | 44,289 | 32,604 | ||||
less: payroll taxes related to stock-based compensation | 11,738 | 3,817 | ||||
less: amortization of acquired intangibles | 58 | 58 | ||||
Non-GAAP Research and development | 119,801 | 79,917 | ||||
% of Revenue | 12% | 17% | ||||
GAAP General and administrative | 67,102 | 44,842 | ||||
% of Revenue | 7% | 10% | ||||
less: stock-based compensation | 14,499 | 8,793 | ||||
less: payroll taxes related to stock-based compensation | 3,706 | 974 | ||||
Non-GAAP General and administrative | 48,897 | 35,075 | ||||
% of Revenue | 5% | 7% | ||||
GAAP Transaction and loan losses | 10,606 | 14,083 | ||||
% of Revenue | 1% | 3% | ||||
GAAP Operating expenses | 439,817 | 330,183 | ||||
% of Revenue | 44% | 70% | ||||
less: stock-based compensation | 67,641 | 52,604 | ||||
less: payroll taxes related to stock-based compensation | 17,476 | 6,018 | ||||
less: amortization of acquired intangibles | 444 | 446 | ||||
Non-GAAP Operating expenses | 354,256 | 271,115 | ||||
% of Revenue | 36% | 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 | ||||||
March 31, 2021 | March 31, 2020 | |||||
$ | $ | |||||
GAAP Operating income (loss) | 118,899 | (73,233 | ) | |||
% of Revenue | 12% | (16)% | ||||
add: stock-based compensation | 69,156 | 53,752 | ||||
add: payroll taxes related to stock-based compensation | 17,812 | 6,194 | ||||
add: amortization of acquired intangibles | 4,975 | 6,015 | ||||
Adjusted Operating income (loss) | 210,842 | (7,272 | ) | |||
% of Revenue | 21% | (2)% | ||||
GAAP Net income (loss) | 1,258,445 | (31,429 | ) | |||
% of Revenue | 127% | (7)% | ||||
add: stock-based compensation | 69,156 | 53,752 | ||||
add: payroll taxes related to stock-based compensation | 17,812 | 6,194 | ||||
add: amortization of acquired intangibles | 4,975 | 6,015 | ||||
less: unrealized gain on equity and other investments | (1,250,944 | ) | - | |||
add: income tax effects related to non-GAAP adjustments | 154,666 | (12,200 | ) | |||
Adjusted Net income | 254,110 | 22,332 | ||||
% of Revenue | 26% | 5% | ||||
Basic GAAP Net income (loss) per share attributable to shareholders | 10.21 | (0.27 | ) | |||
add: stock-based compensation | 0.56 | 0.46 | ||||
add: payroll taxes related to stock-based compensation | 0.14 | 0.05 | ||||
add: amortization of acquired intangibles | 0.04 | 0.05 | ||||
less: unrealized gain on equity and other investments | (10.15 | ) | 0.00 | |||
add: income tax effects related to non-GAAP adjustments | 1.25 | (0.10 | ) | |||
Basic Adjusted Net income per share attributable to shareholders | 2.06 | 0.19 | ||||
Weighted average shares used to compute GAAP and non-GAAP basic net income (loss) per share attributable to shareholders | 123,243,650 | 116,806,549 | ||||
Diluted GAAP Net income (loss) per share attributable to shareholders | 9.94 | (0.27 | ) | |||
add: stock-based compensation | 0.55 | 0.46 | ||||
add: payroll taxes related to stock-based compensation | 0.14 | 0.05 | ||||
add: amortization of acquired intangibles | 0.04 | 0.05 | ||||
less: unrealized gain on equity and other investments | (9.88 | ) | 0.00 | |||
add: income tax effects related to non-GAAP adjustments | 1.22 | (0.10 | ) | |||
Diluted Adjusted Net income per share attributable to shareholders | 2.01 | 0.19 | ||||
Weighted average shares used to compute GAAP and non-GAAP diluted net income (loss) per share attributable to shareholders | 126,674,388 | 116,806,549 |
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, unrealized gains on equity and other investments, and tax effects related to non-GAAP adjustments. Please refer to "Non-GAAP Financial Measures" in this press release for more information.
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