SHOPIFY INC. (Form: 6-K, Received: 04/30/2019 07:26:31)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934



For the month of	April	2019
Commission File Number	001-37400
Shopify Inc.
(Translation of registrant’s name into English)
150 Elgin Street, 8th Floor Ottawa, Ontario, Canada K2P 1L4
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:



Form 20-F	Form 40-F	X

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

DOCUMENTS INCLUDED AS PART OF THIS REPORT

Exhibit



99.1	Shopify Inc. – Interim Financial Statements for the First Quarter ended March 31, 2019

99.2	Shopify Inc. – Interim Management’s Discussion and Analysis for the First Quarter ended March 31, 2019

99.3	Shopify Inc. – Form 52-109F2 Certificate of Interim Filings by CEO (pursuant to Canadian regulations)

99.4	Shopify Inc. – Form 52-109F2 Certificate of Interim Filings by CFO (pursuant to Canadian regulations)

Documents 99.1 and 99.2 of this Report on Form 6-K are incorporated by reference into the Registration Statement on Form F-10 of the Registrant, which was originally filed with the Securities and Exchange Commission on July 30, 2018 (File No. 333‐226444), the Registration Statement on Form S-8 of the Registrant, which was originally filed with the Securities and Exchange Commission on May 29, 2015 (File No. 333-204568) and the Registration Statement on Form S-8 of the Registrant, which was originally filed with the Securities and Exchange Commission on May 12, 2016 (File No. 333-211305).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		Shopify Inc.
		(Registrant)
Date:	April 30, 2019	By:	/s/ Joseph A. Frasca
			Name: Joseph A. Frasca Title: Chief Legal Officer and Corporate Secretary

EXHIBIT 99.1

Condensed Consolidated

Financial Statements

(unaudited)

March 31, 2019

Shopify Inc.

Condensed Consolidated Balance Sheets

(unaudited)

Expressed in US $000’s except share amounts



		As at
		March 31, 2019		December 31, 2018
	Note	$		$
Assets
Current assets
Cash and cash equivalents	4	410,446		410,683
Marketable securities	4	1,586,568		1,558,987
Trade and other receivables, net	5	40,413		41,347
Merchant cash advances and loans receivable, net	6	106,834		91,873
Other current assets		29,701		26,192
		2,173,962		2,129,082
Long-term assets
Property and equipment, net		70,833		61,612
Intangible assets, net		24,156		26,072
Right-of-use assets	7	90,128		—
Goodwill	8	43,672		38,019
		228,789		125,703
Total assets		2,402,751		2,254,785
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities		125,025		96,956
Deferred revenue	5	42,746		39,180
Lease liabilities	7	5,243		2,552
		173,014		138,688
Long-term liabilities
Deferred revenue	5	2,011		1,881
Lease liabilities	7	98,863		22,316
Deferred tax liability		945		1,132
		101,819		25,329
Commitments and contingencies	7, 10
Shareholders’ equity
Common stock, unlimited Class A subordinate voting shares authorized, 99,192,227 and 98,081,889 issued and outstanding; unlimited Class B multiple voting shares authorized, 12,290,300 and 12,310,800 issued and outstanding	11	2,265,240		2,215,936
Additional paid-in capital		69,153		74,805
Accumulated other comprehensive loss	12	(2,942	)	(12,216	)
Accumulated deficit	3	(203,533	)	(187,757	)
Total shareholders’ equity		2,127,918		2,090,768
Total liabilities and shareholders’ equity		2,402,751		2,254,785

The accompanying notes are an integral part of these condensed consolidated financial statements.

Shopify Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

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



		Three months ended
		March 31, 2019			March 31, 2018
	Note	$			$
Revenues
Subscription solutions		140,451			100,198
Merchant solutions		180,031			114,142
		320,482			214,340
Cost of revenues
Subscription solutions		27,985			23,160
Merchant solutions		112,206			67,338
		140,191			90,498
Gross profit		180,291			123,842
Operating expenses
Sales and marketing		105,022			75,784
Research and development		76,355			47,716
General and administrative		34,704			20,675
Total operating expenses		216,081			144,175
Loss from operations		(35,790		)	(20,333		)
Other income
Interest income, net		12,078			4,649
Foreign exchange loss		(439		)	(218		)
		11,639			4,431
Net loss		(24,151		)	(15,902		)
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on cash flow hedges	12	9,274			(6,834		)
Comprehensive loss		(14,877		)	(22,736		)

Basic and diluted net loss per share attributable to shareholders	13	$	(0.22	)	$	(0.16	)
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders	13	110,921,276			102,256,644

The accompanying notes are an integral part of these condensed consolidated financial statements.

Shopify Inc.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(unaudited)

Expressed in US $000’s except share amounts



	Note	Common Stock		Additional Paid-In Capital $		Accumulated Other Comprehensive Income (Loss) $		Accumulated Deficit $		Total $
		Shares	Amount $	Additional Paid-In Capital $		Accumulated Other Comprehensive Income (Loss) $		Accumulated Deficit $		Total $
As at December 31, 2017		99,877,688	1,077,477	43,392		3,435		(123,204	)	1,001,100
Exercise of stock options		707,866	10,111	(3,817	)	—		—		6,294
Stock-based compensation		—	—	18,247		—		—		18,247
Vesting of restricted share units		242,844	10,728	(10,728	)	—		—		—
Issuance of Class A subordinate voting shares, net of offering costs of $10,616		4,800,000	646,984	—		—		—		646,984
Net loss and comprehensive loss for the period		—	—	—		(6,834	)	(15,902	)	(22,736	)
As at March 31, 2018		105,628,398	1,745,300	47,094		(3,399	)	(139,106	)	1,649,889



	Note	Common Stock		Additional Paid-In Capital $		Accumulated Other Comprehensive Income (Loss) $		Accumulated Deficit $		Total $
		Shares	Amount $	Additional Paid-In Capital $		Accumulated Other Comprehensive Income (Loss) $		Accumulated Deficit $		Total $
As at December 31, 2018, as previously reported		110,392,689	2,215,936	74,805		(12,216	)	(187,757	)	2,090,768
Adjustment related to the transition to Topic 842, Leases	3	—	—	—		—		8,375		8,375
As at December 31, 2018, adjusted		110,392,689	2,215,936	74,805		(12,216	)	(179,382	)	2,099,143
Exercise of stock options		747,686	18,964	(6,908	)	—		—		12,056
Stock-based compensation		—	—	31,596		—		—		31,596
Vesting of restricted share units		342,152	30,340	(30,340	)	—		—		—
Net loss and comprehensive loss for the period		—	—	—		9,274		(24,151	)	(14,877	)
As at March 31, 2019		111,482,527	2,265,240	69,153		(2,942	)	(203,533	)	2,127,918

The accompanying notes are an integral part of these condensed consolidated financial statements.

Shopify Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

Expressed in US $000’s



		Three months ended
		March 31, 2019	March 31, 2018
	Note	$	$
Cash flows from operating activities
Net loss for the period		(24,151)	(15,902)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Amortization and depreciation		6,832	7,582
Stock-based compensation		31,164	17,925
Provision for uncollectible receivables related to merchant cash advances and loans receivable	6	3,156	1,582
Unrealized foreign exchange (gain) loss		60	(128)
Changes in operating assets and liabilities:
Trade and other receivables		(10,551)	(8,161)
Merchant cash advances and loans receivable		(18,117)	(18,009)
Other current assets		(2,917)	(2,193)
Accounts payable and accrued liabilities		33,912	11,571
Deferred revenue		3,696	2,427
Lease assets and liabilities		1,260	1,431
Net cash provided (used) by operating activities		24,344	(1,875)
Cash flows from investing activities
Purchase of marketable securities		(700,052)	(933,307)
Maturity of marketable securities		679,467	347,902
Acquisitions of property and equipment		(9,552)	(5,405)
Acquisitions of intangible assets		(1,440)	(5,447)
Acquisition of businesses, net of cash acquired		(5,715)	—
Net cash used by investing activities		(37,292)	(596,257)
Cash flows from financing activities
Proceeds from the exercise of stock options		12,056	6,294
Proceeds from public offering, net of issuance costs	11	—	646,984
Net cash provided by financing activities		12,056	653,278
Effect of foreign exchange on cash and cash equivalents		655	(245)
Net increase (decrease) in cash and cash equivalents		(237)	54,901
Cash and cash equivalents – Beginning of Period		410,683	141,677
Cash and cash equivalents – End of Period		410,446	196,578

Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities included in cash flows from operating activities		3,521	—
Opening lease liabilities arising from obtaining right-of-use assets		103,310	—
Acquired property and equipment remaining unpaid		4,890	3,044
Acquired intangible assets remaining unpaid		—	300
Capitalized stock-based compensation		432	322

The accompanying notes are an integral part of these condensed consolidated financial statements.

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts


1.	Nature of Business

Shopify Inc. (“Shopify” or the “Company”) was incorporated as a Canadian corporation on September 28, 2004. The Company’s mission is to make commerce better for everyone. Shopify is the leading cloud-based, multi-channel commerce platform. The Company builds web- and mobile-based software and lets merchants easily set up beautiful online storefronts that are rich with retail functionality. Merchants use the Company's software to run their business across all of their sales channels, including web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces. The Shopify platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, ship orders, build customer relationships, source products, leverage analytics and reporting, and access financing, all from one integrated back office.

The Company’s headquarters and principal place of business are in Ottawa, Canada.


2.	Basis of Presentation and Consolidation

These unaudited condensed consolidated financial statements include the accounts of the Company and its directly and indirectly held wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.

These unaudited condensed consolidated financial statements of the Company have been presented in United States dollars ("USD") and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), including the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position, results of operations and comprehensive loss, cash flows and changes in shareholders’ equity for the interim periods. The financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018 . The unaudited condensed consolidated balance sheet at December 31, 2018 was derived from the audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements.

The interim results for the three months ended March 31, 2019 are not necessarily indicative of the results expected for the full fiscal year.


3.	Significant Accounting Policies

Except for the adoption of Topic 842, Leases, which is discussed below, there are no other material changes to the Company’s significant accounting policies during the three months ended March 31, 2019 , as compared to the significant accounting policies described in the Company’s annual consolidated financial statements for the year ended December 31, 2018 .

Use of Estimates

The preparation of consolidated financial statements, in accordance with U.S. GAAP, requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates, judgments and assumptions in these condensed consolidated financial statements include: key judgments related to revenue recognition in determining whether the Company is the principal or an agent to the arrangements with merchants, and the estimated period over which contract costs should be amortized; provision for uncollectible receivables related to merchant cash advances and loans;

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts

recoverability of deferred tax assets; fair value of acquired intangible assets; and the discount rate used to determine the present value of lease payments. Actual results may differ from the estimates made by management.

Leases

In February 2016, the Financial Accounting Standards Board issued ASU No. 2016-02, Leases (Topic 842), which requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. The standard requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. This standard also requires classification of all cash payments within operating activities in the statement of cash flows. In July 2018, the Financial Accounting Standards Board issued ASU No. 2018-11, Leases - Targeted Improvements, which provides an additional transition method.

The Company adopted the new leasing standard effective January 1, 2019, using the modified retrospective approach and applying the transition method which does not require adjustments to comparative periods nor require modified disclosures in the comparative periods. The Company elected to use the package of practical expedients so as to not reassess whether a contract is or contains a lease, lease classification, and initial direct costs, for contracts that expired or existed prior to the effective date. As the lessee to material operating leases, the most significant impact of adoption of the new leasing standard relates to the recognition of right-of-use assets of $91,140 and lease liabilities of $103,310 as of January 1, 2019 for the Company's operating leases.

The Company accounts for leases by first determining if an arrangement is a lease at inception. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company's leases do not provide an implicit rate, therefore, the incremental borrowing rate based on the information available at commencement date was used to determine the present value of lease payments. The right-of-use assets exclude lease incentives, which are accounted as a reduction of lease liabilities if they have not yet been received. The Company's lease terms may include options to extend or terminate the lease. These options are included in the lease terms when it is reasonably certain they will be exercised. Lease expense related to lease components is recognized on a straight-line basis over the lease term.

The Company's lease agreements include lease and non-lease components, which are accounted for separately under Topic 842. Variable lease components and non-lease components are excluded from the lease payments used to calculate the right-of-use assets and lease liabilities. As the Company previously included non-lease components in the calculation of lease incentives under Topic 840, the transition to Topic 842 resulted in an $8,375 cumulative adjustment to reduce opening accumulated deficit.

Concentration of Credit Risk

The Company’s cash and cash equivalents, marketable securities, trade and other receivables, merchant cash advances and loans receivable, and foreign exchange derivative products subject the Company to concentrations of credit risk. Management mitigates this risk associated with cash and cash equivalents by making deposits and entering into foreign exchange derivative products only with large banks and financial institutions that are considered to be highly credit worthy. Management mitigates the risks associated with marketable securities by adhering to its investment policy, which stipulates minimum rating requirements, maximum investment exposures and maximum maturities. Due to the Company’s diversified merchant base, there is no particular concentration of credit risk related to the Company’s trade and other receivables and merchant cash advances and loans receivable. Trade and other receivables and merchant cash advances and loans receivable are monitored on an ongoing basis to ensure timely collection of amounts. The Company has mitigated some of the risks associated with Shopify Capital by entering into an agreement with a third

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts

party to insure some of the merchant cash advances offered by Shopify Capital. There are no receivables from individual merchants accounting for 10% or more of revenues or receivables.

Interest Rate Risk

Certain of the Company’s cash, cash equivalents and marketable securities earn interest. The Company’s trade and other receivables, accounts payable and accrued liabilities and lease liabilities do not bear interest. The Company is not exposed to material interest rate risk.

Foreign Exchange Risk

The Company’s exposure to foreign exchange risk is primarily related to fluctuations between the Canadian Dollar (CAD) and the USD. The Company is exposed to foreign exchange fluctuations on the revaluation of foreign currency assets and liabilities. The Company uses foreign exchange derivative products to manage the impact of foreign exchange fluctuations. By their nature, derivative financial instruments involve risk, including the credit risk of non-performance by counter parties.

While the majority of the Company's revenues and cost of revenues are denominated in USD, a significant portion of operating expenses are incurred in CAD. As a result, earnings are adversely affected by an increase in the value of the CAD relative to the USD.

The following table summarizes the effects on revenues, cost of revenues, operating expenses, and loss from operations of a 10% strengthening ⁽¹⁾ of the CAD versus the USD without considering the impact of the Company's hedging activities and without factoring in any potential changes in demand for the Company's solutions as a result of changes in the CAD to USD exchange rates.



	Three months ended
	March 31, 2019						March 31, 2018
	GAAP Amounts As Reported $		Exchange Rate Effect ⁽²⁾ $		At 10% Stronger CAD Rate ⁽³⁾ $		GAAP Amounts As Reported $		Exchange Rate Effect ⁽²⁾ $		At 10% Stronger CAD Rate ⁽³⁾ $
	(in thousands)
Revenues	320,482		551		321,033		214,340		333		214,673
Cost of revenues	(140,191	)	(914	)	(141,105	)	(90,498	)	(821	)	(91,319	)
Operating expenses	(216,081	)	(10,933	)	(227,014	)	(144,175	)	(6,906	)	(151,081	)
Loss from operations	(35,790	)	(11,296	)	(47,086	)	(20,333	)	(7,394	)	(27,727	)

(1) A 10% weakening of the CAD versus the USD would have an equal and opposite impact on our revenues, cost of revenues, operating expenses and loss from operations as presented in the table.

(2) Represents the increase or decrease in GAAP amounts reported resulting from a 10% strengthening in the CAD-USD foreign exchange rates.

(3) Represents the outcome that would have resulted had the CAD-USD rates in those periods been 10% stronger than they actually were, excluding the impact of our hedging program and without factoring in any potential changes in demand for the Company's solutions as a result of changes in the CAD-USD rates.

Accounting Pronouncements Adopted in the Period

In August 2017, the Financial Accounting Standards Board issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which makes more financial and non-financial hedging strategies eligible for hedge accounting while also amending the presentation and disclosure requirements. The update is effective for annual periods beginning after December 15, 2018. The only impact of adoption on the Company's condensed consolidated financial statements was disclosure of the amounts of hedging gains or losses that were reclassified from Accumulated Other Comprehensive Income (Loss) to cost of revenues and each operating expense line.

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts

In August 2018, the Financial Accounting Standards Board issued ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update is effective for annual periods beginning after December 15, 2019 but the Company opted for early adoption. The adoption of this update did not have an impact on the Company's condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which will replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates on loans, trade and other receivables, held-to- maturity debt securities, and other instruments. The update is effective for annual periods beginning after December 15, 2019 including interim periods within those periods. Early adoption is permitted. The Company is currently assessing the impact of this new standard.


4.	Financial Instruments

As at March 31, 2019 , the carrying amount and fair value of the Company’s financial instruments were as follows:



	Level 1 $		Level 2 $		Level 3 $
	Carrying Amount	Fair Value	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Assets:
Cash equivalents:
Repurchase agreements	—	—	75,000	75,016	—	—
Marketable securities:
U.S. term deposits	127,500	128,506	—	—	—	—
U.S. federal bonds	365,963	366,381	—	—	—	—
Canadian federal bonds	39,749	39,821	—	—	—	—
Corporate bonds and commercial paper	—	—	1,053,356	1,056,838	—	—
Derivative assets:
Foreign exchange forward contracts	—	—	592	592	—	—

Liabilities:
Derivative liabilities:
Foreign exchange forward contracts	—	—	3,534	3,534	—	—

The fair values above include accrued interest of $4,688 , which is excluded from the carrying amounts. The accrued interest is included in Trade and other receivables in the Condensed Consolidated Balance Sheets.

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts

As at December 31, 2018 , the carrying amount and fair value of the Company’s financial instruments were as follows:



	Level 1 $		Level 2 $		Level 3 $
	Carrying Amount	Fair Value	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Assets:
Cash equivalents:
Commercial paper	—	—	4,994	4,994	—	—
Repurchase agreements	—	—	60,000	60,005	—	—
Marketable securities:
U.S. term deposits	127,500	128,241	—	—	—	—
U.S. federal bonds	230,898	231,299	—	—	—	—
Canadian federal bonds	19,967	19,962	—	—	—	—
Corporate bonds and commercial paper	—	—	1,180,622	1,182,437	—	—

Liabilities:
Derivative liabilities:
Foreign exchange forward contracts	—	—	12,216	12,216	—	—

The fair values above include accrued interest of $5,109 , which is excluded from the carrying amounts. The accrued interest is included in Trade and other receivables in the Condensed Consolidated Balance Sheets.

All cash equivalents and marketable securities mature within one year of the condensed consolidated balance sheet date.

As at March 31, 2019 the Company held foreign exchange forward contracts to convert USD into CAD, with a total notional value of $270,759 ( December 31, 2018 - $276,696 ), to fund a portion of its operations. The foreign exchange forward contracts have maturities of twelve months or less. The fair value of foreign exchange forward contracts and corporate bonds was based upon Level 2 inputs, which included period-end mid-market quotations for each underlying contract as calculated by the financial institution with which the Company has transacted. The quotations are based on bid/ask quotations and represent the discounted future settlement amounts based on current market rates. There were no transfers between Levels 1, 2 and 3 during the three months ended March 31, 2019 and the year ended December 31, 2018 .

Derivative Instruments and Hedging

The Company has a hedging program to mitigate the impact of foreign currency fluctuations on future cash flows and earnings. Under this program the Company has entered into foreign exchange forward contracts with certain financial institutions and designated those hedges as cash flow hedges. As of March 31, 2019 , $592 of unrealized gains and $3,534 of unrealized losses related to changes in the fair value of foreign exchange forward contracts designated as cash flow hedges were included in accumulated other comprehensive loss and current assets and current liabilities, on the condensed consolidated balance sheet. This amount is expected to be reclassified into earnings over the next twelve months. In the three months ended March 31, 2019 , $3,278 of realized losses ( March 31, 2018 - realized gains of $2,055 ) related to the maturity of foreign exchange forward contracts designated as cash flow hedges were included in operating expenses. Under the current hedging program, the Company is hedging cash flows associated with payroll and facility costs.

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts

5. Contract Balances

When revenue is recognized, the Company records a receivable that is included in trade and other receivables on the condensed consolidated balance sheet. Trade receivables and unbilled revenues, net of allowance for doubtful accounts, were as follows:



	March 31, 2019 $	December 31, 2018 $	December 31, 2017 $
Unbilled revenues	13,034	12,653	7,616
Trade receivables	11,030	11,191	7,073
Other receivables	16,349	17,503	7,250
	40,413	41,347	21,939

The allowance for doubtful accounts reflects our best estimate of probable losses inherent in our unbilled revenues and trade receivables accounts. The Company determined the allowance based on known troubled accounts, historical experience, and other currently available evidence.

Activity in the allowance for doubtful accounts was as follows:



	Three months ended
	March 31, 2019 $		March 31, 2018 $
Balance, beginning of the period	1,023		1,642
Provision for uncollectible receivables	716		494
Write-offs	(525	)	—
Balance, end of the period	1,214		2,136

Changes in deferred revenue were as follows:



	Three months ended
	March 31, 2019 $		March 31, 2018 $
Balance, beginning of the period	41,061		32,046
Deferral of revenue	26,646		20,603
Recognition of deferred revenue	(22,950	)	(18,176	)
Balance, end of the period	44,757		34,473

Current portion	42,746		32,993
Long term portion	2,011		1,480
	44,757		34,473

The opening balances of current and long-term deferred revenue were $30,694 and $1,352, respectively, as of January 1, 2018.

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts

6. Merchant Cash Advances and Loans Receivable



	March 31, 2019		December 31, 2018		December 31, 2017
	$		$		$
Merchant cash advances and loans receivable, gross	111,097		94,612		49,143
Allowance for uncollectible merchant cash advances and loans receivable	(4,263	)	(2,739	)	(2,042	)
Merchant cash advances and loans receivable, net	106,834		91,873		47,101

The following table summarizes the activities of the Company’s allowance for uncollectible merchant cash advances and loans receivable:



	Three months ended
	March 31, 2019		March 31, 2018
	$		$
Balance, beginning of the year	2,739		2,042
Provision for uncollectible merchant cash advances and loans receivable	3,156		1,582
Merchant cash advances and loans receivable charged off, net of recoveries	(1,632	)	(943	)
Balance, end of the year	4,263		2,681

7. Leases

The Company has office leases in Canada, the United States, Germany, Lithuania, Sweden and China. These leases have remaining lease terms of 1 year to 13 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year. Additional office space leases are set to commence between later this year and 2027, at which point the Company's right-of-use assets and lease liabilities will increase. In August 2018, the Company entered into a lease agreement for office space in Toronto, Canada that is set to commence in 2021, which will create a significant right-of-use asset and lease liability at that time. All of the Company's leases are operating leases.

The components of lease expense for the three months ended March 31, 2019 were as follows:



Operating lease expense	3,638
Variable lease expense, including non-lease components	3,224
Total lease expense	6,862

Total lease expense for the three months ended March 31, 2018 was $3,897 .

As at March 31, 2019, the weighted average remaining lease term is 10 years and the weighted average discount rate is 5.2%.

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts

Maturities of lease liabilities as at March 31, 2019 were as follows:



Fiscal Year	Operating Leases
Remainder of 2019	14,585
2020	23,091
2021	30,415
2022	35,197
2023	39,003
Thereafter	354,854
Total future minimum payments	497,145
Minimum payments related to leases that have not yet commenced	(132,470	)
Minimum payments related to non-lease components	(239,376	)
Imputed interest	(21,193	)
Total lease liabilities	104,106

8. Goodwill

On January 28, 2019, the Company completed the acquisition of Helpful.com Inc., a company based in Toronto, Canada. The Company acquired 100 percent of the outstanding shares of Helpful.com Inc. The transaction was accounted for as a business combination resulting in $5,653 of goodwill being added. The operations of Helpful.com Inc. have been consolidated into the Company's results as of the acquisition date. The remainder of the Company's goodwill relates to previous acquisitions of various companies including, but not limited to, Tictail, Inc. and Solutions Alveo Inc., which were acquired on November 19, 2018 and June 22, 2018, respectively. Goodwill is attributable to the Company’s single reporting unit.

No goodwill impairment was recognized in the three months ended March 31, 2019 or in the year ended December 31, 2018 .

The gross changes in the carrying amount of goodwill as of March 31, 2019 and December 31, 2018 are as follows:



	March 31, 2019	December 31, 2018
	$	$
Balance, beginning of the year	38,019	20,317
Acquisition of Helpful.com Inc.	5,653	—
Acquisition of Tictail, Inc.	—	15,125
Acquisition of Solutions Alveo Inc.	—	2,577
Balance, end of the period	43,672	38,019


9.	Credit Facility

The Company has a revolving credit facility with Royal Bank of Canada for $8,000 CAD. The credit facility bears interest at the Royal Bank Prime Rate plus 0.30% . As at March 31, 2019 the effective rate was 4.25% , and no cash amounts have been drawn under this credit facility.

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts


10.	Commitments and Contingencies

Unconditional Purchase Obligations

The Company has entered into agreements where it commits to certain usage levels related to third party services. The amount of the minimum fixed and determinable portion of the unconditional purchase obligations over the next five years, as at March 31, 2019 , was $57,401.

Litigation and Loss Contingencies

The Company records accruals for loss contingencies when losses are probable and reasonably estimable. From time to time, the Company may become a party to litigation and subject to claims incidental to the ordinary course of business, including intellectual property claims, labour and employment claims and threatened claims, breach of contract claims, tax and other matters. The Company currently has no material pending litigation or claims. The Company is not aware of any litigation matters or loss contingencies that would be expected to have a material adverse effect on the business, consolidated financial position, results of operations, or cash flows.

11. Shareholders’ Equity

Public Offerings

In December 2018, the Company completed a public offering in which it issued and sold 2,600,000 Class A subordinate voting shares at a public offering price of $154.00 per share. The Company received total net proceeds of $394,704 after deducting offering fees and expenses of $5,696.

In February 2018, the Company completed a public offering, in which it issued and sold 4,800,000 Class A subordinate voting shares at a public offering price of $137.00 per share. The Company received total net proceeds of $646,984 after deducting offering fees and expenses of $10,616 .

Common Stock Authorized

The Company is authorized to issue an unlimited number of Class A subordinate voting shares and an unlimited number of Class B multiple voting shares. The Class A subordinate voting shares have one vote per share and the Class B multiple voting shares have 10 votes per share. The Class B multiple voting shares are convertible into Class A subordinate voting shares on a one-for-one basis at the option of the holder. Class B multiple voting shares will also automatically convert into Class A subordinate voting shares in certain other circumstances.

Preferred Shares

The Company is authorized to issue an unlimited number of preferred shares issuable in series. Each series of preferred shares shall consist of such number of shares and having such rights, privileges, restrictions and conditions as may be determined by the Company’s Board of Directors prior to the issuance thereof. Holders of preferred shares, except as otherwise provided in the terms specific to a series of preferred shares or as required by law, will not be entitled to vote at meetings of holders of shares.

Stock-Based Compensation

As at March 31, 2019 there were 14,273,242 shares reserved for issuance under the Company's Stock Option Plan and Long Term Incentive Plan.

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts

The following table summarizes the stock option and Restricted Share Unit ("RSU") award activities under the Company's share-based compensation plans for the three months ended March 31, 2019:



	Shares Subject to Options Outstanding						Outstanding RSUs
	Number of Options ⁽¹⁾		Weighted Average Exercise Price $	Remaining Contractual Term (in years)	Aggregate Intrinsic Value ⁽²⁾ $	Weighted Average Grant Date Fair Value $	Outstanding RSUs		Weighted Average Grant Date Fair Value $
December 31, 2018	5,476,790		32.96	6.23	577,731	—	2,473,665		92.40
Stock options granted	350,796		180.38	—	—	84.38	—		—
Stock options exercised	(747,686	)	16.12	—	—	—	—		—
Stock options forfeited	(25,780	)	53.05	—	—	—	—		—
RSUs granted	—		—	—	—	—	504,539		180.38
RSUs settled	—		—	—	—	—	(342,152	)	88.67
RSUs forfeited	—		—	—	—	—	(55,898	)	92.23
March 31, 2019	5,054,120		45.58	6.51	813,898	—	2,580,154		110.10

Stock options exercisable as of March 31, 2019	3,123,353		17.55	5.45	590,546

(1) As at March 31, 2019 2,243,275 of the outstanding stock options were granted under the Company's Legacy Option Plan and are exercisable for Class B multiple voting shares, and 2,810,845 of the outstanding stock options were granted under the Company's Stock Option Plan and are exercisable for Class A subordinate voting shares.

(2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing market price of the Company's stock as of March 31, 2019 and December 31, 2018 .

As at March 31, 2019 the Company had issued 478 Deferred Share Units under its Long Term Incentive Plan.

The following table illustrates the classification of stock-based compensation expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss, which includes both stock-based compensation and restricted share-based compensation expense.



	Three months ended
	March 31, 2019	March 31, 2018
	$	$
Cost of revenues	714	426
Sales and marketing	6,835	4,038
Research and development	18,115	10,865
General and administrative	5,500	2,596
	31,164	17,925

Shopify Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Expressed in US $000's except share and per share amounts


12.	Changes in Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss), which is reported as a component of shareholders’ equity, for the three months ended March 31, 2019 and 2018 :



	Accumulated Other Comprehensive Income (Loss) (all amounts net of tax)
	Three months ended
	March 31, 2019		March 31, 2018
	$		$
Balance, beginning of the period	(12,216	)	3,435

Other comprehensive income (loss) before reclassifications	5,996		(4,779	)
Loss (gain) on cash flow hedges reclassified from accumulated other comprehensive income (loss) to earnings were as follows:
Cost of revenues	182		(135	)
Sales and marketing	963		(688	)
Research and development	1,658		(949	)
General and administrative	475		(283	)
Other comprehensive income (loss), net of tax	9,274		(6,834	)
Balance, end of the period	(2,942	)	(3,399	)


13.	Net Loss per Share

The Company applies the two-class method to calculate its basic and diluted net loss per share as both classes of its voting shares are participating securities with equal participation rights and are entitled to receive dividends on a share for share basis.

The following table summarizes the reconciliation of the basic weighted average number of shares outstanding and the diluted weighted average number of shares outstanding:



	March 31, 2019	March 31, 2018
Basic and diluted weighted average number of shares outstanding	110,921,276	102,256,644
The following items have been excluded from the diluted weighted average number of shares outstanding because they are anti-dilutive:
Stock options	5,054,120	6,956,299
Restricted share units	2,580,154	2,765,083
Deferred share units	478	—
	7,634,752	9,721,382

In the three months ended March 31, 2019 and 2018 , the Company was in a loss position and therefore diluted loss per share is equal to basic loss per share.

EXHIBIT 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS

April 30, 2019

In this Management's Discussion and Analysis ("MD&A"), "we", "us", "our", "Shopify" and "the Company" refer to Shopify Inc. and its consolidated subsidiaries, unless the context requires otherwise. In this MD&A, we explain Shopify's results of operations and cash flows for the three months ended March 31, 2019 and 2018 , and our financial position as of March 31, 2019 . You should read this MD&A together with our unaudited condensed consolidated financial statements and the accompanying notes for the fiscal quarter ended March 31, 2019 , as well as with our audited consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2018 . Additional information regarding Shopify, including our 2018 annual information form and our annual report on Form 40-F for the year ended December 31, 2018 , is available on our website at www.shopify.com, or at www.sedar.com and www.sec.gov.

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All amounts are in U.S. dollars ("USD") except where otherwise indicated.

Our MD&A is intended to enable readers to gain an understanding of Shopify’s results of operations, cash flows and financial position. To do so, we provide information and analysis comparing our results of operations, cash flows and financial position for the most recently completed quarter with the same quarter from the preceding fiscal year. We also provide analysis and commentary that we believe will help investors assess our future prospects. In addition, we provide “forward-looking statements” that are not historical facts, but that are based on our current estimates, beliefs and assumptions and which are subject to known and unknown important risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from current expectations. Forward-looking statements are intended to assist readers in understanding management's expectations as of the date of this MD&A and may not be suitable for other purposes. See “Forward-looking statements” below.

In this MD&A, references to our “solutions” means the combination of products and services that we offer to merchants, and references to “our merchants” as of a particular date means the total number of unique shops that are paying for a subscription to our platform.

Forward-looking statements

This MD&A contains forward-looking statements under the provisions of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, and forward-looking information within the meaning of applicable Canadian securities legislation.

In some cases, you can identify forward-looking statements by words such as “may”, "might", “will”, “should”, “could”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, “continue”, or the negative of these terms or other similar words. In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking. In particular, forward-looking statements in this MD&A include, but are not limited to, statements about:


•	the continued expansion of the number of channels for merchants to transact through;


•	the achievement of innovations and enhancements to, and expansion of, our platform and our solutions;


•	our exploration of new ways to accelerate checkout;


•	our ability to make it easier for merchants to manage their storefronts via their mobile devices;


•	whether a merchant using Shopify will ever need to re-platform;


•	the continued growth of our app developer, theme designer and partner ecosystem;


•	our revenue growth objectives and expectations about future profitability;


•	plans to continue making investments to drive future growth;


•	our expectation that the continued growth of merchant solutions may cause a decline in our overall gross margin percentage;


•	our expectation that as a result of the continued growth of our merchant solutions offerings, our seasonality will continue to affect our quarterly results and our business may become more seasonal in the future, and that historical patterns may not be a reliable indicator of our future performance;


•	our plan to continue to expand sales and marketing efforts to attract new merchants, retain revenue from existing merchants and increase revenues from both new and existing merchants, including adding sales personnel and expanding our marketing activities to continue to generate additional leads and build brand awareness;


•	our expectation that the overall trend of merchant solutions revenue making up an increasing component of total revenues over time, most notably in the fourth quarter due to higher holiday volume, will continue over time;


•	our expectation that our results of operations will be adversely impacted by an increase in the value of the Canadian dollar ("CAD") relative to the USD;


•	our belief that we have sufficient liquidity to meet our current and planned financial obligations over the next 12 months;


•	our expectations regarding contractual and contingent obligations;


•	our accounting estimates and assumptions made in the preparation of our financial statements; and


•	our expectations regarding the impact of accounting standards not yet adopted.

The forward-looking statements contained in this MD&A are based on our management’s perception of historic trends, current conditions and expected future developments, as well as other assumptions that management believes are appropriate in the circumstances, which include, but are not limited to:


•	our ability to increase the functionality of our platform;


•	our ability to offer more sales channels that can connect to the platform;


•	our belief in the increasing importance of a multi-channel platform that is both fully integrated and easy to use ;


•	our belief that commerce transacted over mobile will continue to grow more rapidly than desktop transactions;


•	our ability to expand our merchant base, retain revenue from existing merchants as they grow their businesses, and increase sales to both new and existing merchants;


•	our ability to manage our growth effectively;


•	our ability to protect our intellectual property rights;


•	our belief that our merchant solutions make it easier for merchants to start a business and grow on our platform;


•	our ability to develop new solutions to extend the functionality of our platform, provide a high level of merchant service and support;


•	our ability to hire, retain and motivate qualified personnel;


•	our ability to enhance our ecosystem and partner programs, and the assumption that this will drive growth in our merchant base, further accelerating growth of the ecosystem;


•	our belief that our investments and acquisitions will increase our revenue base, improve the retention of this base and strengthen our ability to increase sales to our merchants and help drive our growth;


•	our ability to achieve our revenue growth objectives while controlling costs and expenses, and our ability to achieve or maintain profitability;


•	our belief that monthly recurring revenue ("MRR") is most closely correlated with the long-term value of our merchant relationships;


•	our assumptions regarding the principal competitive factors in our markets;


•	our ability to predict future commerce trends and technology;


•	our assumptions that higher-margin solutions such as Shopify Capital and Shopify Shipping will continue to contribute to revenues and to grow through increased adoption and international expansion;


•	our expectation that Shopify Payments will continue to expand internationally;


•	our belief that our investments in sales and marketing initiatives will continue to be effective in growing the number of merchants using our platform, in retaining revenue from existing merchants and increasing revenues from both;


•	our ability to develop processes, systems and controls to enable our internal support functions to scale with the growth of our business;


•	our ability to obtain sufficient space for our growing employee base;


•	our ability to retain key personnel;


•	our ability to protect against currency, interest rate, concentration of credit and inflation risks;


•	our assumptions as to our future expenses and financing requirements;


•	our assumptions as to our critical accounting policies and estimates; and


•	our assumptions as to the effects of accounting pronouncements to be adopted.

Factors that may cause actual results to differ materially from current expectations may include, but are not limited to, risks and uncertainties that are discussed in greater detail in the "Risk Factors" section of our Annual Information Form for the year ended December 31, 2018 and elsewhere in this MD&A, including but not limited to risks relating to:


•	sustaining our rapid growth;


•	managing our growth;


•	our history of losses and our potential inability to achieve profitability;


•	our limited operating history in new and developing markets and new geographic regions;


•	our ability to innovate;


•	a denial of service attack or security breach;


•	payments processed through Shopify Payments;


•	our reliance on a single supplier to provide the technology we offer through Shopify Payments;


•	the security of personal information we store relating to merchants and their buyers, as well as buyers with whom we have a direct relationship;


•	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;


•	our potential inability to hire, retain and motivate qualified personnel;


•	international sales and the use of our platform in various countries;


•	our potential inability to compete successfully against current and future competitors;


•	serious software errors or defects;


•	exchange rate fluctuations that may negatively affect our results of operations;


•	our potential inability to achieve or maintain data transmission capacity;


•	the reliance of our growth in part on the success of our strategic relationships with third parties;


•	our potential failure to maintain a consistently high level of customer service;


•	our use of a limited number of data centers and a cloud-based platform to deliver our services;


•	ineffective operations of our solutions when accessed through mobile devices;


•	changes to technologies used in our platform or new versions or upgrades of operating systems and internet browsers;


•	the impact of worldwide economic conditions, including the resulting effect on spending by small and medium-sized businesses ("SMBs") or their buyers;


•	potential claims by third parties of intellectual property infringement;


•	our potential inability to obtain, maintain and protect our intellectual property rights and proprietary information or prevent third parties from making unauthorized use of our technology;


•	our use of open source software;


•	our potential inability to generate traffic to our website through search engines and social networking sites;


•	our potential failure to effectively maintain, promote and enhance our brand;


•	our dependence on the continued services and performance of our senior management and other key employees;


•	activities of merchants or partners or the content of merchants' shops;


•	acquisitions and investments;


•	seasonal fluctuations;


•	our reliance on computer hardware, purchased or leased, software licensed from and services rendered by third parties, in order to provide our solutions and run our business, sometimes by a single-source supplier;


•	Shopify Capital and offering financing;


•	our pricing decisions for our solutions;


•	provisions of our financial instruments;


•	our potential inability to raise additional funds as may be needed to pursue our growth strategy or continue our operations, on favorable terms or at all;


•	unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns;


•	new tax laws could be enacted or existing laws could be applied to us or our merchants;


•	our tax loss carryforwards;


•	our dependence upon buyers’ and merchants’ access to, and willingness to use, the internet for commerce;


•	ownership of our shares;


•	our sensitivity to interest rate fluctuations;


•	our concentration of credit risk, and the ability to mitigate that risk using third parties; and


•	the risk of inflation.

Although we believe that the plans, intentions, expectations, assumptions and strategies reflected in our forward-looking statements are reasonable, these statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future results. You should read this MD&A and the documents that we reference in this MD&A completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

The forward-looking statements in this MD&A represent our views as of the date of this MD&A. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. Therefore, these forward-looking statements do not represent our views as of any date other than the date of this MD&A.

Overview

Shopify is the leading cloud-based, multi-channel commerce platform. Shopify builds web- and mobile-based software and lets merchants easily set up beautiful online storefronts that are rich with retail functionality. Merchants use our software to run their business across all of their sales channels, including web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces. The Shopify platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, ship orders, build customer relationships, source products, leverage analytics and reporting, and access financing, all from one integrated back office.

In an era where social media, cloud computing, mobile devices, and data analytics are creating new possibilities for commerce, Shopify provides differentiated value by offering merchants:

A multi-channel front end . Our software enables merchants to easily display, manage, and sell their products across over a dozen different sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces. The Shopify API has been developed to support custom storefronts that let merchants sell anywhere, in any language.

A single integrated back end . Our software provides one single integrated, easy-to-use back end that merchants use to manage their business and buyers across these multiple sales channels. Merchants use their Shopify dashboard to manage products and inventory, process orders and payments, ship orders, build customer relationships, source products, leverage analytics and reporting, and access financing.

A data advantage . Our software is delivered to merchants as a service, and operates on a shared infrastructure. With each new transaction processed, we grow our data proficiency. This cloud-based infrastructure not only relieves merchants from running and securing their own hardware, it also consolidates data generated by the interactions between buyers and merchants’ shops, as well as those of our merchants on the Shopify platform, providing rich data to inform both our own decisions as well as those of our merchants.

Shopify also enables merchants to build their own brand, leverage mobile technology, and handle massive traffic spikes with flexible infrastructure.

Brand ownership . Shopify is designed to help our merchants own their brand, develop a direct relationship with their buyers, and make their buyer experience memorable and distinctive. We recognize that in a world where buyers have more choices than ever before, a merchant’s brand is increasingly important. The Shopify platform is designed to allow a merchant to keep their brand present in every interaction to help build buyer loyalty and competitive advantage against traditional retailers. While our platform is designed to empower merchants first, merchants benefit when buyers are confident that their payments are secure. We believe that an increasing awareness among buyers that Shopify provides a superior and secure checkout experience is an additional advantage for our merchants in an increasingly competitive market. For merchants using Shopify Payments, buyers are already getting a superior experience, and with our investments in additional customer touchpoints such as retail and shipping, brands that sell on Shopify can offer buyers an end-to-end, managed shopping experience that previously was only available to much larger businesses.

Mobile . As ecommerce expands as a percentage of overall retail transactions, today’s buyers expect to be able to transact anywhere, anytime, on any device through an experience that is simple, seamless, and secure. As transactions over mobile devices represent the majority of transactions across online stores powered by Shopify, the mobile experience is a merchant’s primary and most important interaction with online buyers. For several years Shopify has focused on enabling mobile commerce, and the Shopify platform now includes a mobile-optimized checkout system, designed to enable merchants’ buyers to more easily buy products over mobile websites. Our merchants are able to offer their buyers the ability to quickly and securely check out by using Shopify Pay, Apple Pay, and Google Pay on the web, and we continue to explore other new ways to accelerate checkout. Shopify’s mobile capabilities are not limited to the front end: merchants who are often on-the-go find themselves managing their storefronts via their mobile devices, as Shopify continues to strive to make it ever easier to do so.

Infrastructure . We build our platform to address the growing challenges facing merchants with the aim of making complex tasks simple. The Shopify platform is engineered to enterprise-level standards and functionality while being designed for simplicity and ease of use. We also design our platform with a robust technical infrastructure able to manage large spikes in traffic that accompany events such as new product releases, holiday shopping seasons, and flash sales. We are constantly innovating and enhancing our platform, with our continuously deployed, multi-tenant architecture ensuring all of our merchants are always using the latest technology.

This combination of ease of use with enterprise-level functionality allows merchants to start with a Shopify store and grow with our platform to almost any size. Using Shopify, merchants may never need to re-platform. Our Shopify Plus subscription plan was created to accommodate larger merchants, with additional functionality, scalability and support requirements. Shopify Plus is also designed for larger merchants not already on Shopify who want to migrate from their expensive and complex legacy solutions and get more functionality.

A rich ecosystem of app developers, theme designers and other partners, such as digital and service professionals, marketers, photographers, and affiliates has evolved around the Shopify platform. Approximately 19,000 of these partners have referred merchants to Shopify over the last year, and this strong, symbiotic relationship continues to grow. We believe this ecosystem has grown in part due to the platform’s functionality, which is highly extensible and can be

expanded through our application program interface ("API") and the approximately 2,700 apps available in the Shopify App Store. The partner ecosystem helps drive the growth of our merchant base, which in turn further accelerates growth of the ecosystem.

Our mission is to make commerce better for everyone, and we believe we can help merchants of nearly all sizes, from aspirational entrepreneurs to large enterprises, and all retail verticals realize their potential at all stages of their business life cycle. While our platform can scale to meet the needs of large merchants, we focus on selling to small and medium-sized businesses and entrepreneurs. Most of our merchants are on subscription plans that cost less than $50 per month, which is in line with our focus of providing cost effective solutions for early stage businesses. In the three months ended March 31, 2019 , our platform facilitated Gross Merchandise Volume ("GMV") of $11.9 billion , representing an increase of 49.6% from the three months ended March 31, 2018 . A detailed description of this metric is presented below in the section entitled, “Key Performance Indicators.”

Our business has experienced rapid growth. During the three months ended March 31, 2019 our total revenue was $320.5 million , an increase of 49.5% versus the three months ended March 31, 2018 . Our business model has two revenue streams: a recurring subscription component we call subscription solutions and a merchant success-based component we call merchant solutions.

In the three months ended March 31, 2019 , subscription solutions revenues accounted for 43.8% of our total revenues ( 46.7% in the three months ended March 31, 2018 ). We offer a range of plans that increase in price depending on additional features and economic considerations. Our highest-end plan, Shopify Plus, is offered at a starting rate that is several times that of our standard Shopify plans. Shopify Plus caters to merchants with higher-volume sales and offers additional functionality, scalability and support requirements, including a dedicated Merchant Success Manager. Unilever, Kylie Cosmetics, Allbirds, and MVMT are a few of the Shopify Plus merchants seeking a reliable, cost-effective and scalable commerce solution. The flexibility of our pricing plans is designed to help our merchants grow in a cost-effective manner and to provide more advanced features and support as their business needs evolve.

Revenue from subscription solutions is generated through the sale of subscriptions to our platform, including variable platform fees, and from the sale of themes, apps, and the registration of domain names. Our merchants typically enter into monthly subscription agreements. The revenue from these agreements is recognized over time on a ratable basis over the contractual term and therefore we have deferred revenue on our balance sheet. We do not consider this deferred revenue balance to be a good indicator of future revenue. Instead, we believe Monthly Recurring Revenue ("MRR") is most closely correlated with the long-term value of our merchant relationships. Subscription solutions revenues increased from $100.2 million in the three months ended March 31, 2018 to $140.5 million in the three months ended March 31, 2019 , representing an increase of 40.2% . As of March 31, 2019 , MRR totaled $44.2 million , representing an increase of 36.2% relative to MRR at March 31, 2018 . Subscription solutions revenue has been growing at a faster rate than MRR due to apps and platform fees increasing as a percentage of total subscription solutions. A detailed description of this metric is presented below in the section entitled, "Key Performance Indicators".

We offer a variety of merchant solutions that are designed to add value to our merchants and augment our subscription solutions. During the three months ended March 31, 2019 , merchant solutions revenues accounted for 56.2% of total revenues ( 53.3% in the three months ended March 31, 2018 ). We principally generate merchant solutions revenues from payment processing fees from Shopify Payments. Shopify Payments is a fully integrated payment processing service that allows our merchants to accept and process payment cards online and offline. In addition to payment processing fees from Shopify Payments, we also generate merchant solutions revenue from transaction fees, referral fees from partners, Shopify Capital, Shopify Shipping, and sales of point-of-sale ("POS") hardware. Our merchant solutions revenues are directionally correlated with the level of GMV that our merchants process through our platform. Merchant solutions revenues increased from $114.1 million in the three months ended March 31, 2018 to $180.0 million in the three months ended March 31, 2019 , representing an increase of 57.7% .

Our business model is driven by our ability to attract new merchants, retain revenue from existing merchants, and increase sales to both new and existing merchants. Our merchants represent a wide array of retail verticals and business sizes and no single merchant has ever represented more than five percent of our total revenues in a single reporting period. We believe that our future success is dependent on many factors, including our ability to expand our merchant

base, retain merchants as they grow their businesses on our platform, offer more sales channels that connect merchants with their specific target audience, develop new solutions to extend our platform’s functionality and catalyze merchants’ sales growth, enhance our ecosystem and partner programs, provide a high level of merchant support, hire, retain and motivate qualified personnel, and build with a focus on maximizing long-term value.

We have focused on rapidly growing our business and plan to continue making investments to drive future growth. We believe that our investments will increase our revenue base, improve the retention of this base and strengthen our ability to increase sales to our merchants.

Key Performance Indicators

Key performance indicators, which we do not consider to be non-GAAP measures, that we use to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions include Monthly Recurring Revenue ("MRR") and Gross Merchandise Volume ("GMV"). Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies.

The following table shows MRR and GMV for the three months ended March 31, 2019 and 2018 .



	Three months ended March 31,
	2019		2018
	(in thousands)
Monthly Recurring Revenue	$	44,213	$	32,461
Gross Merchandise Volume	$	11,895,884	$	7,952,432

Monthly Recurring Revenue

We calculate MRR at the end of each period by multiplying the number of merchants who have subscription plans with us at the period end date by the average monthly subscription plan fee, which excludes variable platform fees, in effect on the last day of that period, assuming they maintain their subscription plans the following month. MRR allows us to average our various pricing plans and billing periods into a single, consistent number that we can track over time. We also analyze the factors that make up MRR, specifically the number of paying merchants using our platform and changes in our average revenue earned from subscription plan fees per paying merchant. In addition, we use MRR to forecast monthly, quarterly and annual subscription plan revenue, which makes up the majority of our subscriptions solutions revenue. We had $44.2 million of MRR as at March 31, 2019 compared to $32.5 million as at March 31, 2018 .

Gross Merchandise Volume

GMV is the total dollar value of orders facilitated through our platform in the period, net of refunds, and inclusive of shipping and handling, duty and value-added taxes. GMV does not represent revenue earned by us. However, the volume of GMV facilitated through our platform is an indicator of the success of our merchants and the strength of our platform. Our merchant solutions revenues are also directionally correlated with the level of GMV facilitated through our platform. For the three months ended March 31, 2019 and 2018 , we facilitated GMV of $11.9 billion and $8.0 billion , respectively.

Factors Affecting the Comparability of Our Results

Change in Revenue Mix

As a result of the continued growth of Shopify Payments, transaction fees, revenue sharing agreements, Shopify Capital, and Shopify Shipping, our revenues from merchant solutions have generally increased significantly. Merchant solutions are intended to complement subscription solutions by providing additional value to our merchants and increasing their use of our platform. Gross profit margins on Shopify Payments, the biggest driver of merchant solutions revenue, are typically lower than on subscription solutions due to the associated third-party costs of providing this solution. We

view this revenue stream as beneficial to our operating margins, as Shopify Payments requires significantly less sales and marketing and research and development expense than Shopify’s core subscription business. The lower margins on merchant solutions compared to subscription solutions means that the continued growth of merchant solutions may cause a decline in our overall gross margin percentage.

Seasonality

Our merchant solutions revenues are directionally correlated with the level of GMV that our merchants facilitated through our platform. Our merchants typically process additional GMV during the fourth quarter holiday season. As a result, we have historically generated higher merchant solutions revenues in our fourth quarter than in other quarters. While we believe that this seasonality has affected and will continue to affect our quarterly results, our rapid growth has largely masked seasonal trends to date. As a result of the continued growth of our merchant solutions offerings, we believe that our business may become more seasonal in the future and that historical patterns in our business may not be a reliable indicator of our future performance.

Foreign Currency Fluctuations

While most of our revenues are denominated in USD, a significant portion of our operating expenses are incurred in CAD. As a result, our results of operations will be adversely impacted by an increase in the value of the CAD relative to the USD. In addition, a portion of Shopify Payments revenue is based on the local currency of the country in which the applicable merchant is located and these transactions expose us to currency fluctuations to the extent non-USD based payment processing and other merchant solutions revenues increase. Refer to the "Quantitative and Qualitative Disclosures about Market Risk— Foreign Currency Exchange Risk" section below for additional information on the effect on reported results of changes in foreign exchange rates.

Key Components of Results of Operations

There have been no significant changes to the key components of results of operations during the three months ended March 31, 2019 . See Management's Discussion and Analysis dated February 12, 2019 as well as our Annual Report on Form 40-F for the year ended December 31, 2018 for details on the key components of results of operations.

Quarterly Results of Operations

The following table sets forth our results of operations for the three months ended March 31, 2019 and 2018 .



	Three months ended March 31,
	2019			2018
	(in thousands, except share and per share data)
Revenues:
Subscription solutions	$	140,451		$	100,198
Merchant solutions	180,031			114,142
	320,482			214,340
Cost of revenues ⁽¹⁾ :
Subscription solutions	27,985			23,160
Merchant solutions	112,206			67,338
	140,191			90,498
Gross profit	180,291			123,842
Operating expenses:
Sales and marketing ⁽¹⁾	105,022			75,784
Research and development ⁽¹⁾	76,355			47,716
General and administrative ⁽¹⁾	34,704			20,675
Total operating expenses	216,081			144,175
Loss from operations	(35,790		)	(20,333		)
Other income:
Interest income, net	12,078			4,649
Foreign exchange loss	(439		)	(218		)
	11,639			4,431
Net loss	$	(24,151	)	$	(15,902	)
Basic and diluted net loss per share attributable to shareholders	$	(0.22	)	$	(0.16	)
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders	110,921,276			102,256,644

(1) Includes stock-based compensation expense and related payroll taxes as follows:



	Three months ended March 31,
	2019		2018
	(in thousands)
Cost of revenues	$	814	$	489
Sales and marketing	7,645		4,769
Research and development	19,923		11,916
General and administrative	6,031		2,941
	$	34,413	$	20,115

Revenues



	Three months ended March 31,						2019 vs. 2018
	2019			2018			% Change
	(in thousands, except percentages)
Revenues:
Subscription solutions	$	140,451		$	100,198		40.2	%
Merchant solutions	180,031			114,142			57.7	%
	$	320,482		$	214,340		49.5	%
Percentage of revenues:
Subscription solutions	43.8		%	46.7		%
Merchant solutions	56.2		%	53.3		%
Total revenues	100.0		%	100.0		%

Subscription Solutions

Subscription solutions revenues increased $40.3 million , or 40.2% , for the three months ended March 31, 2019 compared to the same period in 2018 . The period over period increase was primarily a result of growth in MRR, which was driven largely by the higher number of merchants using our platform.

Merchant Solutions

Merchant solutions revenues increased $65.9 million , or 57.7% , for the three months ended March 31, 2019 compared to the same period in 2018 . The increase in merchant solutions revenues was primarily a result of Shopify Payments revenue growing in the three months ended March 31, 2019 compared to the same period in 2018 . This increase was a result of an increase in the number of merchants using our platform, continued expansion into new geographical regions, and an increase in our Shopify Payments penetration rate, which was 40.9% , resulting in GMV of $4.9 billion that was facilitated using Shopify Payments for the three months ended March 31, 2019 . This compares to a penetration rate of 38.2% resulting in GMV of $3.0 billion that was facilitated using Shopify Payments in the same period in 2018 .

In addition to the increase in revenue from Shopify Payments, revenue from transaction fees, referral fees from partners, Shopify Capital, and Shopify Shipping increased during the three months ended March 31, 2019 compared to the same period in 2018 , as a result of the increase in GMV facilitated through our platform compared to the same period in 2018 .

Cost of Revenues



	Three months ended March 31,						2019 vs. 2018
	2019			2018			% Change
	(in thousands, except percentages)
Cost of revenues:
Cost of subscription solutions	$	27,985		$	23,160		20.8	%
Cost of merchant solutions	112,206			67,338			66.6	%
Total cost of revenues	$	140,191		$	90,498		54.9	%
Percentage of revenues:
Cost of subscription solutions	8.7		%	10.8		%
Cost of merchant solutions	35.0		%	31.4		%
	43.7		%	42.2		%

Cost of Subscription Solutions

Cost of subscription solutions increased $4.8 million , or 20.8% , for the three months ended March 31, 2019 compared to the same period in 2018 . The increase was due to an increase in the costs necessary to support a greater number of merchants using our platform, resulting in an increase in: credit card fees for processing merchant billings, amortization related to newly launched platform enhancements, employee-related costs, payments to third-party theme developers, and payments to third-party partners for the registration of domain names. As a percentage of revenues, cost of subscription solutions decreased from 10.8% in the three months ended March 31, 2018 to 8.7% in the three months ended March 31, 2019 due to subscription solutions representing a smaller percentage of our total revenues and a decrease in third-party infrastructure and hosting costs as well as employee-related costs relative to subscription solutions revenue.

Cost of Merchant Solutions

Cost of merchant solutions increased $ 44.9 million , or 66.6% , for the three months ended March 31, 2019 compared to the same period in 2018 . The increase was primarily due to higher payment processing and interchange fees resulting from an increase in GMV facilitated through Shopify Payments and a one-time item that reduced these fees in the three months ended March 31, 2018. The increase was also due to an increase in credit card fees for processing merchant billings. Cost of merchant solutions as a percentage of revenues increased from 31.4% in the three months ended March 31, 2018 to 35.0% in the three months ended March 31, 2019 , mainly as a result of Shopify Payments representing a larger percentage of total revenue.

Gross Profit



	Three months ended March 31,						2019 vs. 2018
	2019			2018			% Change
	(in thousands, except percentages)
Gross profit	$	180,291		$	123,842		45.6	%
Percentage of total revenues	56.3		%	57.8		%

Gross profit increased $56.4 million , or 45.6% , for the three months ended March 31, 2019 compared to the same period in 2018 . As a percentage of total revenues, gross profit decreased from 57.8% in the three months ended March 31, 2018 to 56.3% in the three months ended March 31, 2019 , principally due to Shopify Payments representing a larger percentage of total revenue, which was partly offset by the relative growth of higher-margin merchant solutions products, namely referral fees from partners, Shopify Capital, and Shopify Shipping as well as lower third-party infrastructure and hosting costs relative to our revenues resulting from optimization efforts and lower employee-related costs.

Operating Expenses

Sales and Marketing



	Three months ended March 31,						2019 vs. 2018
	2019			2018			% Change
	(in thousands, except percentages)
Sales and marketing	$	105,022		$	75,784		38.6	%
Percentage of total revenues	32.8		%	35.4		%

Sales and marketing expenses increased $29.2 million , or 38.6% , for the three months ended March 31, 2019 compared to the same period in 2018 , due to an increase of $14.8 million in marketing programs, such as advertisements on search engines and social media, spend on brand and media, as well as payments to partners, all of which support the growth of our business, an increase of $13.7 million in employee-related costs ($2.9 million of which related to stock-based compensation and related payroll taxes), and an increase of $0.7 million related to computer hardware and software.

Research and Development



	Three months ended March 31,						2019 vs. 2018
	2019			2018			% Change
	(in thousands, except percentages)
Research and development	$	76,355		$	47,716		60.0	%
Percentage of total revenues	23.8		%	22.3		%

Research and development expenses increased $28.6 million , or 60.0% , for the three months ended March 31, 2019 compared to the same period in 2018 , due to an increase of $26.1 million in employee-related costs ($8.0 million of which related to stock-based compensation and related payroll taxes), a $1.3 million increase in computer hardware and software costs, and a $1.2 million increase in professional services fees, all as a result of the growth in our employee base and expanded development programs.

General and Administrative



	Three months ended March 31,						2019 vs. 2018
	2019			2018			% Change
	(in thousands, except percentages)
General and administrative	$	34,704		$	20,675		67.9	%
Percentage of total revenues	10.8		%	9.6		%

General and administrative expenses increased $14.0 million , or 67.9% , for the three months ended March 31, 2019 compared to the same period in 2018 , due to an increase of $8.4 million in employee-related costs ($3.1 million of which related to stock-based compensation and related payroll taxes), a $3.5 million increase in losses and insurance costs related to Shopify Payments and Shopify Capital, a $1.2 million increase in finance costs, which includes insurance, sales and use and other value added taxes, and bank fees, a $0.6 million increase in professional services fees for tax services, and a $0.3 million increase in computer and software costs.

Other Income (Expenses)



	Three months ended March 31,				2019 vs. 2018
	2019		2018		% Change
	(in thousands, except percentages)
Other income (expenses), net	$	11,639	$	4,431	*


*	Not a meaningful comparison

In the three months ended March 31, 2019 we had other income of $11.6 million, compared to other income of $4.4 million in the same period in 2018 . The increase was driven mainly by an increase in interest income of $7.4 million, primarily as a result of our increased cash, cash equivalents and marketable securities balances. This was slightly offset by the fact that the foreign exchange loss of $0.2 million in 2018 increased to $0.4 million in 2019, resulting in a decrease in other income of $0.2 million.

Summary of Quarterly Results

The following table sets forth selected unaudited quarterly results of operations data for each of the eight quarters ended March 31, 2019 . The information for each of these quarters has been derived from unaudited condensed consolidated financial statements that were prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflects all adjustments, which includes only normal recurring adjustments, necessary for the fair

presentation of the results of operations for these periods in accordance with U.S. GAAP. This data should be read in conjunction with our unaudited condensed consolidated financial statements and audited consolidated financial statements and related notes for the relevant period. These quarterly operating results are not necessarily indicative of our operating results for a full year or any future period.



	Three months ended
	Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			June 30, 2018			Mar 31, 2018			Dec 31, 2017			Sep 30, 2017			June 30, 2017
	(in thousands, except per share data)
Revenues:
Subscription solutions	$	140,451		$	133,560		$	120,517		$	110,721		$	100,198		$	93,918		$	82,435		$	71,598
Merchant solutions	180,031			210,302			149,547			134,242			114,142			128,896			89,021			80,057
	320,482			343,862			270,064			244,963			214,340			222,814			171,456			151,655
Cost of revenues: ⁽¹⁾
Subscription solutions	27,985			$	26,706		$	26,600		$	24,524		23,160			19,867			15,458			13,688
Merchant solutions	112,206			131,413			93,737			83,484			67,338			81,802			55,971			51,127
	140,191			158,119			120,337			108,008			90,498			101,669			71,429			64,815
Gross profit	180,291			185,743			149,727			136,955			123,842			121,145			100,027			86,840
Operating expenses:
Sales and marketing ⁽¹⁾	105,022			95,163			91,635			87,487			75,784			67,174			58,314			54,872
Research and development ⁽¹⁾	76,355			67,024			61,629			54,305			47,716			40,339			36,350			32,714
General and administrative ⁽¹⁾	34,704			33,014			27,831			25,924			20,675			19,745			18,039			15,161
Total operating expenses	216,081			195,201			181,095			167,716			144,175			127,258			112,703			102,747
Loss from operations	(35,790		)	(9,458		)	(31,368		)	(30,761		)	(20,333		)	(6,113		)	(12,676		)	(15,907		)
Other income	11,639			7,944			8,184			6,808			4,431			3,126			3,296			1,877
Net loss	$	(24,151	)	$	(1,514	)	$	(23,184	)	$	(23,953	)	$	(15,902	)	$	(2,987	)	$	(9,380	)	$	(14,030	)
Basic and diluted net loss per share attributable to shareholders	$	(0.22	)	$	(0.01	)	$	(0.22	)	$	(0.23	)	$	(0.16	)	$	(0.03	)	$	(0.09	)	$	(0.15	)

(1) Includes stock-based compensation expense and related payroll taxes as follows:



	Three months ended
	Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		June 30, 2018		Mar 31, 2018		Dec 31, 2017		Sep 30, 2017		June 30, 2017
	(in thousands)
Cost of revenues	$	814	$	660	$	655	$	637	$	489	$	370	$	355	$	307
Sales and marketing	7,645		6,641		6,397		6,249		4,769		3,182		2,729		2,305
Research and development	19,923		16,769		15,669		15,221		11,916		10,843		9,324		8,075
General and administrative	6,031		5,356		5,007		4,386		2,941		3,302		1,981		2,282
	$	34,413	$	29,426	$	27,728	$	26,493	$	20,115	$	17,697	$	14,389	$	12,969

The following table sets forth selected unaudited quarterly statements of operations data as a percentage of total revenues for each of the eight quarters ended March 31, 2019 .



	Three months ended
	Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		June 30, 2018		Mar 31, 2018		Dec 31, 2017		Sep 30, 2017		June 30, 2017
Revenues
Subscription solutions	43.8	%	38.8	%	44.6	%	45.2	%	46.7	%	42.2	%	48.1	%	47.2	%
Merchant solutions	56.2	%	61.2	%	55.4	%	54.8	%	53.3	%	57.8	%	51.9	%	52.8	%
	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenues
Subscription solutions	8.7	%	7.8	%	9.8	%	10.0	%	10.8	%	8.9	%	9.0	%	9.0	%
Merchant solutions	35.0	%	38.2	%	34.7	%	34.1	%	31.4	%	36.7	%	32.6	%	33.7	%
	43.7	%	46.0	%	44.5	%	44.1	%	42.2	%	45.6	%	41.6	%	42.7	%
Gross profit	56.3	%	54.0	%	55.4	%	55.9	%	57.8	%	54.4	%	58.3	%	57.3	%
Operating expenses:
Sales and marketing	32.8	%	27.7	%	33.9	%	35.7	%	35.4	%	30.1	%	34.0	%	36.2	%
Research and development	23.8	%	19.5	%	22.8	%	22.2	%	22.3	%	18.1	%	21.2	%	21.6	%
General and administrative	10.8	%	9.6	%	10.3	%	10.6	%	9.6	%	8.9	%	10.5	%	10.0	%
	67.4	%	56.8	%	67.0	%	68.5	%	67.3	%	57.1	%	65.7	%	67.8	%
Loss from operations	(11.2	)%	(2.8	)%	(11.6	)%	(12.6	)%	(9.5	)%	(2.7	)%	(7.4	)%	(10.5	)%
Other income	3.6	%	2.3	%	3.0	%	2.8	%	2.1	%	1.4	%	1.9	%	1.2	%
Net loss	(7.5	)%	(0.4	)%	(8.6	)%	(9.8	)%	(7.4	)%	(1.3	)%	(5.5	)%	(9.3	)%

We believe that year-over-year comparisons are more meaningful than our sequential results due to seasonality in our business. While we believe that this seasonality has affected and will continue to affect our quarterly results, our rapid growth has largely masked seasonal trends to date. Our merchant solutions revenues are directionally correlated with our merchants' GMV. Our merchants' GMV typically increases during the holiday season. As a result, we have historically generated higher merchant solutions revenues in our fourth quarter than in other quarters. As a result of the continued growth of our merchant solutions offerings, we believe that our business may become more seasonal in the future, and that historical patterns in our business may not be a reliable indicator of our future performance.

Quarterly Revenue and Gross Margin Trends

Revenues experienced a seasonal decrease in our first quarters as buyers typically reduce their spending following the holiday season resulting in a seasonal decrease in GMV per merchant, which was not completely offset by merchant and MRR growth. Subsequently, revenues have increased in each of the next three quarters as a result of merchant, MRR, and overall GMV growth. Our merchants have processed additional GMV during the fourth quarter holiday seasons, and as a result we have generated higher merchant solutions revenues in our fourth quarters compared to other quarters. As a result of the continued growth of our merchant solutions offerings, we believe that our business may become more seasonal in the future.

Our gross margin percentage has varied over the past eight quarters and is generally driven by the mix between our higher margin subscription solutions revenue and lower margin merchant solutions revenue. While our total revenues have increased in recent periods, the mix has shifted towards merchant solutions revenue, most notably in the fourth quarter due to higher holiday volume of orders facilitated and the resulting Shopify Payments revenue during this period. We expect this overall trend to continue over time.

Quarterly Operating Expenses Trends

Total operating expenses have increased sequentially for each period presented primarily due to the addition of personnel in connection with the expansion of our business as well as additional marketing initiatives to attract potential merchants.

Key Balance Sheet Information



	March 31, 2019		December 31, 2018
	(in thousands)
Cash, cash equivalents and marketable securities	$	1,997,014	$	1,969,670
Total assets	2,402,751		2,254,785
Total liabilities	274,833		164,017
Total non-current liabilities	101,819		25,329

Total assets increased $148.0 million as at March 31, 2019 compared to December 31, 2018 , principally due to the adoption of the new lease accounting standard, further discussed in the "Critical Accounting Policies and Estimates " section below , which resulted in the addition of right-of-use assets totaling $90.1 million as at March 31, 2019 . The increase in total assets was also driven by a $27.6 million increase in marketable securities, a $15.0 million increase in merchant cash advances and loans receivable, a $9.2 million increase in property and equipment, largely related to leaseholds for our offices, and a $5.7 million increase in goodwill related to a business acquisition. Total liabilities increased by $110.8 million , principally as a result of the adoption of the new leasing standard, which resulted in $79.2 million of additional lease liabilities related to obtaining right-of-use assets. The increase was also due to an increase in accounts payable and accrued liabilities of $28.1 million, which was due to an increase in payroll liabilities and costs related to marketing, partly offset by a decrease in foreign exchange forward contract liabilities. The growth in sales of our subscription solutions offering resulted in an increase of deferred revenue of $3.7 million.

Liquidity and Capital Resources

To date, we have financed our operations primarily through the sale of equity securities, raising approximately $2.0 billion, net of issuance costs, from investors.

In February 2018, the Company completed a public offering, in which it issued and sold 4,800,000 Class A subordinate voting shares at a public offering price of $137.00 per share. The Company received total net proceeds of $647.0 million after deducting offering fees and expenses of $10.6 million .

In July 2018, due to the expiry of our previous short-form base shelf prospectus, we filed a new short-form base shelf prospectus with the Securities Commissions in each of the provinces and territories of Canada, except Quebec, and a corresponding shelf registration statement on Form F-10 with the U.S. Securities and Exchange Commission. The shelf prospectus and registration statement allow Shopify to offer up to $5.0 billion of Class A subordinate voting shares, preferred shares, debt securities, warrants, subscription receipts, units, or any combination thereof, from time to time during the 25-month period that the shelf prospectus is effective.

In December 2018, the Company completed a public offering, in which it issued and sold 2,600,000 Class A subordinate voting shares at a public offering price of $154.00 per share. The Company received total net proceeds of $394.7 million after deducting offering fees and expenses of $5.7 million .

Our principal cash requirements are for working capital and capital expenditures. Excluding current deferred revenue, working capital at March 31, 2019 was $2,043.7 million . Given the ongoing cash generated from operations and our existing cash and cash equivalents, we believe there is sufficient liquidity to meet our current and planned financial obligations over the next 12 months. Our future financing requirements will depend on many factors including our growth rate, subscription renewal activity, the timing and extent of spending to support development of our platform, the expansion of sales and marketing activities, and potential mergers and acquisitions activity. Although we currently are not a party to any material undisclosed agreement and do not have any understanding with any third-parties with respect to potential material investments in, or acquisitions of, businesses or technologies, we may enter into these types of arrangements in the future, which could also require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

Cash, Cash Equivalents and Marketable Securities

Cash, cash equivalents, and marketable securities increased by $27.3 million to $1,997.0 million as at March 31, 2019 from $ 1,969.7 million as at December 31, 2018 , primarily as a result of cash provided by our operating activities and proceeds from the exercise of stock options.

Cash equivalents and marketable securities include money market funds, repurchase agreements, term deposits, U.S. and Canadian federal bonds, corporate bonds, and commercial paper, all maturing within the 12 months from March 31, 2019 .

The following table summarizes our total cash, cash equivalents and marketable securities as at March 31, 2019 and 2018 as well as our operating, investing and financing activities for the three months ended March 31, 2019 and 2018 :



	Three months ended March 31,
	2019			2018
	(in thousands)
Cash, cash equivalents and marketable securities (end of period)	$	1,997,014		$	1,580,033
Net cash provided by (used in):
Operating activities	$	24,344		$	(1,875	)
Investing activities	(37,292		)	(596,257		)
Financing activities	12,056			653,278
Effect of foreign exchange on cash and cash equivalents	655			(245		)
Net increase (decrease) in cash and cash equivalents	(237		)	54,901
Change in marketable securities	27,581			587,093
Net increase in cash, cash equivalents and marketable securities	$	27,344		$	641,994

Cash Flows From Operating Activities

Our largest source of operating cash is from subscription solutions. These payments are typically paid to us at the beginning of the applicable subscription period, except for our Shopify Plus merchants who typically pay us at the end of their monthly billing cycle. We also generate significant cash flows from our Shopify Payments processing fee arrangements, which are received on a daily basis as transactions are processed. Our primary uses of cash from operating activities are for third-party payment processing fees, employee-related expenditures, advancing funds to merchants through Shopify Capital, marketing programs, third-party shipping partners, outsourced hosting costs, and leased facilities.

For the three months ended March 31, 2019 , cash provided by operating activities was $24.3 million . This was primarily as a result of our net loss of $24.2 million , which once adjusted for $31.2 million of stock-based compensation expense, $6.8 million of amortization and depreciation, a $3.2 million increase of our provision for uncollectible merchant cash advances and loans, and an unrealized foreign exchange loss of $0.1 million , contributed $17.1 million of positive cash flows. Additional cash of $38.8 million resulted from the following increases in operating liabilities: $33.9 million in accounts payable and accrued liabilities due to payroll liabilities and costs related to marketing; $3.7 million in deferred revenue due to the growth in sales of our subscription solutions; and $1.2 million in lease assets and liabilities as a result of receiving payment for certain inducements. These were offset by $31.6 million of cash used resulting from the following increases in operating assets: $18.1 million in merchant cash advances and loans as we continue to grow Shopify Capital; $10.6 million in trade and other receivables, and $2.9 million in other current assets driven primarily by an increase in deposits and prepaid expenses.

For the three months ended March 31, 2018 , cash used by operating activities was $1.9 million . This was primarily as a result of our net loss of $15.9 million , which once adjusted for $17.9 million of stock-based compensation expense,

$7.6 million of amortization and depreciation, a $1.6 million increase of our provision for uncollectible merchant cash advances, and an unrealized foreign exchange gain of $0.1 million , contributed $11.1 million of positive cash flows. Additional cash of $15.4 million resulted from the following increases in operating liabilities: $11.6 million in accounts payable and accrued liabilities; $2.4 million in deferred revenue; and $1.4 million in lease liabilities. These were offset by $28.4 million of cash used resulting from the following increases in operating assets: $18.0 million in merchant cash advances; $8.2 million in trade and other receivables; and $2.2 million in other current assets.

Cash Flows From Investing Activities

Cash flows used in investing activities are primarily related to the purchase and sale of marketable securities, purchases of computer equipment, leasehold improvements and furniture and fixtures to support our expanding infrastructure and workforce, software development costs eligible for capitalization, and business acquisitions.

Net cash used in investing activities in the three months ended March 31, 2019 was $ 37.3 million , which was driven by net purchases of $20.6 million in marketable securities, $ 9.6 million used to purchase property and equipment, which primarily consisted of expenditures on leasehold improvements, $1.4 million used for purchasing and developing software to add functionality to our platform and support our expanding merchant base, and $5.7 million used to make a business acquisition.

Net cash used in investing activities in the three months ended March 31, 2018 was $ 596.3 million , reflecting net purchases of $585.4 million in marketable securities. Cash used in investing activities also included $5.4 million used to purchase property and equipment, which primarily consisted of expenditures on leasehold improvements, and $5.4 million used towards the development of software.

Cash Flows From Financing Activities

To date, cash flows from financing activities have related to proceeds from private placements, public offerings, and exercises of stock options.

Net cash provided by financing activities in the three months ended March 31, 2019 was $ 12.1 million driven by the proceeds from the issuance of Class A subordinate voting shares and Class B multiple voting shares as a result of stock option exercises. This compares to $653.3 million for the same period in 2018 of which $647.0 million was raised by our February 2018 public offering while the remaining $6.3 million related to stock option exercises.

Contractual Obligations and Contingencies

Our principal commitments consist of obligations under our operating leases for office space. The following table summarizes our contractual obligations as of March 31, 2019 :



	Payments Due by Period
	Less Than 1 Year		1 to 3 Years		3 to 5 Years		More Than 5 Years		Total
	(in thousands)
Bank indebtedness	$	—	$	—	$	—	$	—	$	—
Operating lease and unconditional purchase obligations ⁽¹⁾	32,761		137,686		78,046		306,053		554,546
Total contractual obligations	$	32,761	$	137,686	$	78,046	$	306,053	$	554,546

(1) Consists of payment obligations under our office leases as well as other unconditional purchase obligations.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements, other than operating leases and other unconditional purchase obligations (which have been disclosed above under "Contractual Obligations and Contingencies").

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to a variety of risks, including foreign currency exchange fluctuations, changes in interest rates, concentration of credit and inflation. We regularly assess currency, interest rate and inflation risks to minimize any adverse effects on our business as a result of those factors.

Foreign Currency Exchange Risk

While the majority of our revenues are denominated in USD, a significant portion of operating expenses are incurred in CAD. As a result, our earnings are adversely affected by an increase in the value of the CAD relative to the USD. Foreign currency forward contracts are used to hedge against the earning effects of such fluctuations.

Effect of Foreign Exchange Rates

The following non-GAAP financial measure converts our revenues, cost of revenues, operating expenses, and loss from operations using the comparative period's monthly average exchange rates:



	Three months ended March 31,
	2019								2018
	GAAP Amounts As Reported			Exchange Rate Effect ⁽¹⁾		At Prior Year Effective Rates ⁽²⁾			GAAP Amounts As Reported
	(in thousands)
Revenues	$	320,482		$	302	$	320,784		$	214,340
Cost of revenues	(140,191		)	—		(140,191		)	(90,498		)
Operating expenses	(216,081		)	2,915		(213,166		)	(144,175		)
Loss from operations	$	(35,790	)	$	3,217	$	(32,573	)	$	(20,333	)

(1) Represents the increase or decrease in GAAP amounts reported resulting from using the comparative period's effective CAD-USD foreign exchange rates.

(2) Represents the outcome that would have resulted if the comparative period's effective CAD-USD foreign exchange rates are applied to the current reporting period.

This effect of foreign exchange rates on our consolidated statements of operations disclosure is a supplement to our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP. We have provided the above non-GAAP disclosure as we believe it presents a clearer comparison of our period to period operating results by removing the impact of fluctuations in the CAD to USD exchange rate and to assist investors in understanding our financial and operating performance. Non-GAAP financial measures are not recognized measures for financial statement presentation under U.S. GAAP, 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 U.S. GAAP.

Interest Rate Sensitivity

We had cash, cash equivalents and marketable securities totaling $ 1,997.0 million as of March 31, 2019 . The cash and cash equivalents are held for operations and working capital purposes. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.

Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Our future investment income may fall short of our expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we

classify our debt securities as "held to maturity," no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other than temporary.

Concentration of Credit Risk

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Disclosure Controls and Procedures and Internal Control Over Financial Reporting

Management of the Company, under the supervision of the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), is responsible for establishing and maintaining disclosure controls and procedures to provide reasonable assurance that all material information relating to the Company, including its consolidated subsidiaries, is made known to the CEO and CFO to ensure appropriate and timely decisions are made regarding public disclosure.

Management of the Company, under the supervision of the Company's CEO and CFO, is responsible for establishing and maintaining adequate internal control over the Company's financial reporting, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP.

The Company's CEO and CFO certified the Company's annual report on Form 40-F for the year ended December 31, 2018, as required by Section 302 and Section 906 of the United States Sarbanes-Oxley Act of 2002 ("SOX"). The Company relied on the statutory exemption contained in section 8.1 of National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109"), which allows it to file with the Canadian securities regulatory authorities the certificates required under SOX as soon as practicable after such certificates are filed with or furnished to the SEC.

As of March 31, 2019, the Company's CEO and CFO were satisfied with the effectiveness of the Company's disclosure controls and procedures. In accordance with the Canadian Securities Administrators NI 52-109, the Company has filed interim certificates signed by the CEO and the CFO that, among other things, report on the appropriateness of the financial disclosure, the design of disclosure controls and procedures, and the design of internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

During the period covered by this quarterly report, there were no significant changes in the Company's internal control over financial reporting, or any other factors that could significantly affect such internal control, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP. In the preparation of these consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we re-evaluate these estimates on an ongoing basis.

Other than the adoption of ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract and the new leasing standard described below, there have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2019 as compared to the critical accounting policies and estimates described in our most recent annual consolidated financial statements.

The Company adopted the new leasing standard effective January 1, 2019, using the modified retrospective approach and applying the transition method which does not require adjustments to comparative periods nor require modified disclosures in the comparative periods. The Company elected the package of practical expedients to not reassess whether a contract is or contains a lease, lease classification, and initial direct costs for contracts that expired or existed prior to the effective date. As the lessee to material operating leases, the most significant impact of adoption of the new leasing standard relates to the recognition of right-of-use assets of $91.1 million and lease liabilities of $103.3 million as of January 1, 2019 for the Company's operating leases.

The Company's lease agreements include lease and non-lease components, which are accounted for separately under Topic 842. Variable lease components and non-lease components are excluded from the lease payments used to calculate the right-of-use assets and lease liabilities. As the Company previously included non-lease components in the calculation of lease incentives under Topic 840, the transition to Topic 842 resulted in an $8.4 million cumulative adjustment to reduce opening accumulated deficit.

Recently Issued Accounting Pronouncements Not Yet Adopted

See "Recent Accounting Pronouncements Not Yet Adopted" described in Note 3 of the Notes to the Condensed Consolidated Financial Statements.

Shares Outstanding

Shopify is a publicly traded company listed on the New York Stock Exchange (NYSE: SHOP) and on the Toronto Stock Exchange (TSX: SHOP). As of April 25, 2019 there were 99,333,005 Class A subordinate voting shares issued and outstanding, and 12,251,272 Class B multiple voting shares issued and outstanding.

As of April 25, 2019 there were 2,158,452 options outstanding under the Company’s Fourth Amended and Restated Incentive Stock Option Plan, of which 2,118,480 were vested as of such date. Each such option is or will become exercisable for one Class B multiple voting share. As of April 25, 2019 there were 2,780,034 options outstanding under the Company’s Amended and Restated Stock Option Plan, of which 978,788 were vested as of such date. Each such option is or will become exercisable for one Class A subordinate voting share.

As of April 25, 2019 there were 2,562,809 RSUs and 562 DSUs outstanding under the Company’s Amended and Restated Long Term Incentive Plan. Each such RSU or DSU will vest as one Class A subordinate voting share.

EXHIBIT 99.3

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Tobias Lütke, Chief Executive Officer of Shopify Inc. , certify the following:


1.	Review : I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Shopify Inc. (the “issuer”) for the interim period ended March 31, 2019 .


2.	No misrepresentations : Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.


3.	Fair presentation : Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.


4.	Responsibility : The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuer's Annual and Interim Filings , for the issuer.


5.	Design : Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1 Control framework : The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is the Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 N/A

5.3 N/A


6.	Reporting changes in ICFR : The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on January 1, 2019 and ended on March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: April 30, 2019

/s/ Tobias Lütke

Tobias Lütke

Chief Executive Officer

EXHIBIT 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Amy Shapero, Chief Financial Officer of Shopify Inc. , certify the following:


1.	Review : I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Shopify Inc. (the “issuer”) for the interim period ended March 31, 2019 .


2.	No misrepresentations : Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.


3.	Fair presentation : Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.


4.	Responsibility : The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuer's Annual and Interim Filings , for the issuer.


5.	Design : Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

5.2 N/A

5.3 N/A


6.	Reporting changes in ICFR : The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on January 1, 2019 and ended on March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: April 30, 2019

/s/ Amy Shapero

Amy Shapero

Chief Financial Officer