UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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☐
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REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Class A Subordinate Voting Shares
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SHOP
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New York Stock Exchange
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Fiscal 2019
US$
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Fiscal 2018
US$
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(in thousands)
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Audit Fees
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1,133
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764
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Audit-related Fees
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—
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—
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Tax Fees
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—
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—
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All Other Fees
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3
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2
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Total
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1,136
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766
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Exhibit No.
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Document
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1.1
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Annual Information Form for the year ended December 31, 2019
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1.2
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Audited Consolidated Financial Statements for the year ended December 31, 2019
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1.3
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Management’s Discussion and Analysis for the year ended December 31, 2019
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23.1
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Consent of PricewaterhouseCoopers LLP
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31.1
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Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Shopify Inc.
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(Registrant)
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Date:
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February 12, 2020
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By:
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/s/ Joseph A. Frasca
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Name: Joseph A. Frasca
Title: Chief Legal Officer
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Exhibit No.
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Document
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1.1
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Annual Information Form for the year ended December 31, 2019
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1.2
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Audited Consolidated Financial Statements for the year ended December 31, 2019
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1.3
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Management’s Discussion and Analysis for the year ended December 31, 2019
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23.1
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Consent of PricewaterhouseCoopers LLP
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31.1
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Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Section
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Page Number
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General Matters
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Forward-Looking Information
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Corporate Structure
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Description of the Business
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General Development of the Business
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Risk Factors
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Dividends and Distributions
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Capital Structure
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Market for Securities
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Directors and Officers
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Legal Proceedings and Regulatory Actions
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Interest of Management and Others in Material Transactions
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Transfer Agents and Registrars
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Material Contracts
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Interests of Experts
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Additional Information
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Exhibit A - Audit Committee Charter
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our ability to predict future commerce trends and technology;
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the size of our addressable markets and our ability to serve those markets;
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our exploration of new ways to accelerate checkout;
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our ability to make it easier for merchants to manage their storefronts via their mobile devices;
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whether a merchant using Shopify will ever need to re-platform;
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our ability to expand our merchant base;
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our ability to offer more sales channels that can connect to our platform;
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our ability to invest in and develop new solutions to extend the functionality of our platform to boost adoption and catalyze merchants' sales growth;
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our ability to provide a high level of merchant service and support;
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our ability to hire, retain and motivate qualified personnel;
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the intended growth of our business and making investments to drive future growth, and the impact of those investments;
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the ability of Shopify Fulfillment Network partners to increase the speed and reliability of their warehouse operations by leveraging 6 River Systems, Inc.'s ("6 River Systems") solutions;
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our expectation that seasonality will continue to affect our quarterly results;
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our expectation that our business may become more seasonal in the future;
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the rapid evolution of multi-channel commerce and ecommerce and our ability to bring to market new and better selling and buying experiences;
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our focus on product management, product development and product design;
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our investment in developing online and point of sale assets with a single commerce operating system;
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our ability to grow our base of merchants by offering new and better ways to market and sell their products and expanding the range of our solutions;
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our ability to grow our addressable market and meet our merchants' needs;
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the growth of our merchants’ revenues and our ability to retain merchants as they grow;
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our expectation that we will continue to invest in data analytics;
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our intention to continue strategically investing in marketing programs that enhance the awareness of our brand;
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our belief in the importance of establishing relationships with merchants early in the business lifecycle;
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our intention to grow our merchant base by inspiring entrepreneurship through marketing programs;
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our investment in additional sales capacity focused on larger merchants;
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the growth and strengthening of our third-party ecosystem and partner program, including formation of strategic partnerships;
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our ability to continue to build for the long-term including through our sustainability fund;
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our plans to localize the Shopify platform for markets outside our core geographies, promote the Shopify brand, and expand services, introduce new solutions, and enter strategic partnerships and acquisitions;
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our intention to optimize our cloud-based infrastructure;
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our expectation that leveraging third-party providers of infrastructure will increase engineering velocity and better position us for potential changes in data sovereignty regulations;
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our investment in end-to-end automation and comprehensive test suites for our platform;
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our expectation of increased competition;
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the impact of strategic decisions on short-term revenue or profitability;
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the trend in our future growth;
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the need to devote additional resources to manage future growth and our ability to satisfy obligations and effectively manage such growth;
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the expansion of our platform internationally and our ability to maintain our corporate culture as we grow;
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potential selective acquisitions and investments;
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expansion of our lease commitments;
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our plan to increase our investments in research and development and maintain our high level of merchant service and support;
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our plan to continue investing in our network infrastructure;
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our intention to issue stock options or other equity awards as key components of our overall compensation and employee attraction and retention efforts;
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our intention to pursue additional relationships with other third parties, such as technology and content providers and implementation consultants;
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our expectation that we will incur additional general and administrative expenses as a result of our growth;
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our expectation regarding the continued expansion of Shopify Plus;
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our intention to continue our use and development of open source software;
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our investment in efforts to market our brand;
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our exploration of other products, models and structures for Shopify Capital;
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our operation and future expansion of Shopify Fulfillment Network;
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our transfer pricing procedures;
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changes in our pricing models;
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our expectation that we will not pay any cash dividends in the foreseeable future; and
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our intention to invest our future earnings, if any, to fund our growth.
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our ability to increase the functionality of our platform;
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our ability to offer more sales channels that can connect to the platform;
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our belief in the increasing importance of a multi-channel platform that is both fully integrated and easy to use;
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our belief that commerce transacted over mobile will continue to grow more rapidly than desktop transactions;
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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;
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our ability to manage our growth effectively;
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our ability to protect our intellectual property rights;
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our belief that our merchant solutions make it easier for merchants to start a business and grow on our platform;
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our ability to develop new solutions to extend the functionality of our platform, provide a high level of merchant service and support;
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our ability to hire, retain and motivate qualified personnel;
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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;
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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;
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our ability to achieve our revenue growth objectives while controlling costs and expenses, and our ability to achieve or maintain profitability;
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our belief that monthly recurring revenue ("MRR") is most closely correlated with the long-term value of our merchant relationships;
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our assumptions regarding the principal competitive factors in our markets;
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our ability to predict future commerce trends and technology;
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our assumptions that higher-margin solutions such as Shopify Capital and Shopify Shipping will continue to grow through increased adoption and international expansion;
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our expectation that Shopify Payments will continue to expand internationally;
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our expectation that Shopify Fulfillment Network will continue to scale and grow;
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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;
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our ability to develop processes, systems and controls to enable our internal support functions to scale with the growth of our business;
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our ability to obtain sufficient space for our growing employee base;
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our ability to retain key personnel;
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our ability to protect against currency, interest rate, concentration of credit and inflation risks;
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our assumptions as to our future expenses and financing requirements;
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our assumptions as to our critical accounting policies and estimates; and
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our assumptions as to the effects of accounting pronouncements to be adopted.
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sustaining our rapid growth;
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managing our growth;
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our history of losses and our potential inability to achieve profitability;
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our limited operating history in new and developing markets and new geographic regions;
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our ability to innovate;
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the security of personal information we store relating to merchants and their buyers, as well as buyers with whom we have a direct relationship including users of our apps;
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a denial of service attack or security breach;
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our potential inability to compete successfully against current and future competitors;
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international sales and the use of our platform in various countries;
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the reliance of our growth in part on the success of our strategic relationships with third parties;
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our potential failure to effectively maintain, promote and enhance our brand;
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our use of a single cloud-based platform to deliver our services;
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our potential inability to achieve or maintain data transmission capacity;
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our current reliance on a single supplier to provide the technology we offer through Shopify Payments;
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payments processed through Shopify Payments;
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our potential inability to hire, retain and motivate qualified personnel;
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serious errors or defects in our software or hardware or issues with our hardware supply chain;
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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;
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our potential failure to maintain a consistently high level of customer service;
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exchange rate fluctuations that may negatively affect our results of operations;
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our dependence on the continued services and performance of our senior management and other key employees;
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ineffective operations of our solutions when accessed through mobile devices;
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changes to technologies used in our platform or new versions or upgrades of operating systems and internet browsers;
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the impact of worldwide economic conditions, including the resulting effect on spending by small and medium-sized businesses ("SMBs") or their buyers;
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potential claims by third parties of intellectual property infringement;
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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;
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our use of open source software;
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our potential inability to generate traffic to our website through search engines and social networking sites;
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activities of merchants or partners or the content of merchants' shops;
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acquisitions and investments;
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seasonal fluctuations;
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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;
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Shopify Capital and offering financing;
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our ability to successfully operate and scale Shopify Fulfillment Network;
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our pricing decisions for our solutions;
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provisions of our financial instruments;
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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;
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unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns;
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new tax laws could be enacted or existing laws could be applied to us or our merchants;
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being required to collect federal, state, provincial or local business taxes and sales and use taxes or other indirect taxes in additional jurisdictions or for past sales;
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our tax loss carryforwards;
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our dependence upon buyers’ and merchants’ access to, and willingness to use, the internet for commerce;
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ownership of our shares;
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our sensitivity to interest rate fluctuations; and
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our concentration of credit risk, and the ability to mitigate that risk using third parties, and the risk of inflation.
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Grow our Base of Merchants. We believe that we have a significant opportunity to increase the size of our current merchant base. As such we have a dedicated focus on product and brand marketing paired with global earned media efforts and ongoing content creation and distribution to continue growing this global base. Our continued investments in functionality to boost adoption of the Shopify platform by merchants around the world include the translation of the Shopify platform, which is now available in 20 languages, as well as the incorporation of local payment methods into Shopify Payments. We intend to continue to strategically invest in marketing programs that enhance the awareness of our brand and solutions among businesses at different stages of their lifecycle. While we believe it is important to establish relationships early in the business lifecycle and grow along with our merchants, we also see the opportunity from larger businesses looking for faster time-to-market and better value as they innovate to meet rapidly evolving buyer demands. We intend to grow our base of merchants primarily by inspiring entrepreneurship through marketing programs. These include awareness-driving brand campaigns, Shopify blogs, in-person educational and support interactions, such as those in our Los Angeles-based retail space, as well as merchant affinity programs and documentaries featuring entrepreneur success stories through Shopify Studios. Additionally, we are investing in additional sales capacity focused on acquiring larger merchants, as we continue to hire and train outbound sales representatives to reach certain merchant segments and promote certain of our offerings.
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Grow our Merchants’ Revenue. Our goals are closely aligned with the goals of our merchants. The more a merchant sells on our platform, the more revenue we generate as they process more transactions, upgrade plans, add new sales channels, ship more products, and use additional solutions. We intend to continue to improve our platform to help our merchants sell more and expect to continue to use initiatives such as our Shopify blogs, Shopify Academy, Shopify community forums, Shop Class programs, and Shopify space in Los Angeles to educate our merchant base on how they can be even more successful using our platform. Shopify blogs are now available in seven different languages and engagement with Shopify Academy, a free training program launched in 2018 to help entrepreneurs build and grow a business, expanded significantly in 2019.
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Continuous Innovation and Expansion of our Platform. Our platform is built to support innovation and the rapid technology changes in commerce and we have consistently expanded the functionality of our platform over the last decade. We foresaw the rise of mobile and launched our Shopify Mobile application in 2010 and continued to improve mobile functionality of our merchants' stores. Other platform additions include Shopify Payments, in 2013, which eliminates the need for merchants to
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Continue to Grow and Develop our Ecosystem. We have a thriving third-party ecosystem that includes app developers, theme designers, and other partners that bolster the functionality of our platform. Our annual Unite conference demonstrates to partners the opportunities that exist to collaborate in building the future of commerce technology. This ecosystem has grown in part due to the platform’s functionality, which is highly extensible and can be expanded through our API. There are currently approximately 3,700 apps available in the Shopify App Store. We believe that growing our ecosystem makes the Shopify platform more attractive and stickier, which further expands our merchant base, and in turn drives additional growth of our ecosystem.
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Continue to Expand our Referral Partner Programs. We have strong relationships with thousands of design and marketing agencies throughout the world. These agencies build merchant web and mobile shops on our platform. Approximately 24,500 active partners referred merchants to us in the past 12 months, and we refer work to them using our services marketplace. We intend to strengthen our existing relationships with referral partners and create new ones with the goal of expanding our overall merchant base.
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Continue to Build for the Long-term. We have a culture of iteration and experimentation with a focus on maximizing long-term value, and many of our investments are made with an eye toward what we believe merchants will require several years from now. Such longer-term initiatives include localizing the platform for international expansion, promoting our brand, expanding our existing services, introducing new solutions, and entering into strategic partnerships and acquisitions. Because we view commerce as a powerful vehicle for positive change, as part of our focus on the long term, in 2019 Shopify launched a five million dollar sustainability fund focused on funding the most promising and impactful technologies and projects for combating climate change.
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Security. Credit card processing on the Shopify platform is performed by a dedicated, highly scalable, geographically redundant, high-security environment with specialized policies and procedures in place. The environment is designed to be highly isolated and secure and exceeds the requirements of PCI DSS. We have been certified as a PCI DSS Level 1-compliant service provider, which is the highest level of compliance available. We use firewalls, advanced encryption, intrusion detection systems, two-factor authentication, and other technology to keep our merchants’ data secure.
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Scalability. The cloud-based architecture of our platform has been designed to support sudden traffic and order spikes from our merchants. We use a technology called “containerization” to efficiently scale our computing resources across our platform. We have benchmarked the Shopify platform to handle at least 150,000 requests per second and 12,000 orders per minute based on platform load testing.
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Reliability. Our platform includes cloud-based servers that are fault-tolerant and ensure that our platform is highly reliable. Because Shopify is at the heart of our merchants’ businesses, we employ a highly redundant, horizontally scalable, shared architecture to ensure resiliency and high availability.
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Performance. We believe that the faster and more accessible our merchants’ shops appear to their buyers, the more our merchants will sell. We have a dedicated team that is constantly profiling and optimizing the performance of the Shopify platform. We leverage content delivery networks with global points of presence to ensure that content and data is delivered quickly to users across the globe. In 2019, online shops hosted on our platform had sub-100 millisecond median response times; our merchants’ shops averaged 319 million unique monthly visitors and almost 3.2 billion monthly browsing sessions, most of which were from mobile devices; and we processed an average of 65.5 million orders per month.
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Deployment. The Shopify platform is “single branch” software, which means that all of our merchants use the latest version of Shopify at all times. The result is that we have no overhead in maintaining older versions of our platform. Our software deployment process enables us to quickly distribute new software as soon as it is ready. This is made possible by our ongoing investment in end-to-end automation and comprehensive test suites.
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vision for commerce and product strategy;
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simplicity and ease of use;
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integration of multiple sales channels;
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cost-effective solution;
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vast and growing app ecosystem;
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breadth and depth of functionality;
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pace of innovation;
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powerful data analytics;
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ability to scale;
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security and reliability;
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support for a merchant’s brand development; and
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brand recognition and reputation.
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ecommerce software vendors;
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content management systems;
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payment processors;
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POS software providers;
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domain registrars;
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shipping label providers;
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alternative lenders; and
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marketplaces.
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are impactful;
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are merchant-obsessed;
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make great decisions quickly;
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thrive on change;
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are constant learners; and
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build for the long term.
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greater difficulty in enforcing contracts, including our universal terms of service and other agreements;
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lack of familiarity and burdens and complexity involved with complying with multiple, conflicting and changing foreign laws, standards, regulatory requirements, tariffs, export controls and other barriers;
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difficulties in ensuring compliance with countries’ multiple, conflicting and changing international trade, customs and sanctions laws;
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data privacy laws which may require that merchant and customer data be stored and processed in a designated territory;
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difficulties in managing systems integrators and technology partners;
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differing technology standards and different strategic priorities for merchants in various jurisdictions;
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potentially adverse tax consequences, including the complexities of foreign value-added tax (or other tax) systems and restrictions on the repatriation of earnings;
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uncertain political and economic climates and increased exposure to global political, economic, and social risks that may impact our operations or our merchants' operations and/or decrease consumer spending, including the impact of global health emergencies;
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difficulties in ensuring compliance with government regulations of ecommerce and other services, which could lead to lower adoption rates and restrictions on foreign ownership;
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potentially restrictive actions by foreign governments or regulators, including actions that prevent or limit our access to our platform, services, apps, or websites;
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uncertainties and instability in European and global markets and increased regulatory costs and challenges, and other adverse effects caused by the United Kingdom's withdrawal from the European Union;
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lower levels of credit card usage and increased payment risks;
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currency exchange rates;
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reduced or uncertain protection for intellectual property rights in some countries;
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new and different sources of competition;
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lower levels of consumer spending; and
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restricted access to and/or lower levels of use of the internet.
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we pay interchange and other fees on these transactions, which may increase our operating expenses;
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if we are unable to maintain our chargeback rate at acceptable levels, or comply with other applicable network rules, our credit card fees may increase, we may receive fines from credit card networks, or credit card issuers may terminate their relationship with us or with particular merchants on our platform;
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increased costs and diversion of management time and effort and other resources to deal with fraudulent transactions or chargeback disputes;
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potential fraudulent or otherwise illegal activity by merchants, their buyers, developers, employees or third parties which could lead to increased fines or liabilities;
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restrictions on funds or required reserves related to payments; and
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additional disclosure and other requirements, including new onboarding authentication, reporting regulations and new credit card association rules.
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diversion of management time and focus from operating our business;
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use of resources that are needed in other areas of our business;
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in the case of an acquisition, implementation or remediation of controls, procedures and policies of the acquired company;
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in the case of an acquisition, difficulty integrating the accounting systems and operations of the acquired company, including potential risks to our corporate culture;
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in the case of an acquisition, coordination of product, engineering and selling and marketing functions, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company, as applicable, difficulties associated with supporting new products or services, difficulty converting the customers of the acquired company onto our platform and difficulties associated with contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company;
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in the case of an acquisition, retention and integration of employees from the acquired company;
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unforeseen costs or liabilities;
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adverse effects to our existing business relationships with partners and merchants as a result of the acquisition or investment;
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the possibility of adverse tax consequences;
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litigation or other claims arising in connection with the acquired company or investment; and
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in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries.
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dispose of assets;
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complete mergers or acquisitions;
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incur indebtedness;
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encumber assets;
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pay dividends or make other distributions to holders of our shares;
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make specified investments;
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change certain key management personnel;
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engage in any business other than the businesses we currently engage in; and
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engage in transactions with our affiliates.
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changes in the valuation of our deferred tax assets and liabilities;
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expected timing and amount of the release of any tax valuation allowances;
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tax effects of stock-based compensation;
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costs related to intercompany restructurings;
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changes in tax laws, regulations or interpretations thereof; or
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future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated earnings in countries where we have higher statutory tax rates.
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significant volatility in the market price and trading volume of comparable companies;
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actual or anticipated changes or fluctuations in our operating results or in the expectations of market analysts;
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adverse market reaction to any indebtedness we may incur or securities we may issue in the future;
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short sales, hedging and other derivative transactions in our shares;
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announcements of technological innovations, new products, strategic alliances or significant agreements by us or by our competitors;
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changes in the prices of our solutions or the prices of our competitors’ solutions;
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litigation or regulatory action against us;
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breaches of security or privacy, and the costs associated with any such breaches and remediation;
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investors’ general perception of us and the public’s reaction to our press releases, our other public announcements and our filings with the SEC and Canadian securities regulators;
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|
fluctuations in quarterly results;
|
•
|
publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts;
|
•
|
changes in general political, economic, industry and market conditions and trends;
|
•
|
sales of our Class A subordinate voting shares and Class B multiple voting shares by our directors, executive officers and existing shareholders;
|
•
|
recruitment or departure of key personnel; and
|
•
|
the other risk factors described in this section of our AIF.
|
•
|
require that any action to be taken by our shareholders be effected at a duly called annual or special meeting and not by written consent;
|
•
|
establish an advance notice procedure for shareholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; and
|
•
|
require the approval of a two-thirds majority of the votes cast by shareholders present in person or by proxy in order to amend certain provisions of our restated articles of incorporation, including, in some circumstances, by separate class votes of holders of our Class A subordinate voting shares and Class B multiple voting shares.
|
•
|
change the rights, privileges, restrictions or conditions attached to the shares of that class;
|
•
|
increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of that class; and
|
•
|
make any class of shares having rights or privileges inferior to the shares of such class equal or superior to the shares of that class.
|
(a)
|
offers a price per Class A subordinate voting share at least as high as the highest price per share paid or required to be paid pursuant to the take-over bid for the Class B multiple voting shares;
|
(b)
|
provides that the percentage of outstanding Class A subordinate voting shares to be taken up (exclusive of shares owned immediately prior to the offer by the offeror or persons acting jointly or in concert with the offeror) is at least as high as the percentage of outstanding Class B multiple voting shares to be sold (exclusive of Class B multiple voting shares owned immediately prior to the offer by the offeror and persons acting jointly or in concert with the offeror);
|
(c)
|
has no condition attached other than the right not to take up and pay for Class A subordinate voting shares tendered if no shares are purchased pursuant to the offer for Class B multiple voting shares; and
|
(d)
|
is in all other material respects identical to the offer for Class B multiple voting shares.
|
2019
|
NYSE (US$)
|
|
TSX (CAD$)
|
||||||
High
|
Low
|
Volume
|
High
|
Low
|
Volume
|
||||
January
|
169.60
|
129.48
|
24,683,791
|
|
222.83
|
174.59
|
5,005,535
|
|
|
February
|
191.13
|
160.63
|
30,078,504
|
|
252.00
|
212.82
|
4,554,066
|
|
|
March
|
209.59
|
181.00
|
28,075,064
|
|
279.57
|
243.00
|
13,022,002
|
|
|
April
|
247.50
|
190.38
|
39,665,216
|
|
332.76
|
254.23
|
6,272,240
|
|
|
May
|
285.96
|
237.39
|
44,565,854
|
|
385.35
|
318.88
|
7,425,514
|
|
|
June
|
338.94
|
262.17
|
39,306,664
|
|
446.40
|
352.63
|
7,068,349
|
|
|
July
|
340.84
|
300.33
|
37,744,517
|
|
446.77
|
395.10
|
5,176,820
|
|
|
August
|
409.61
|
313.39
|
49,540,737
|
|
543.76
|
427.38
|
7,631,446
|
|
|
September
|
395.75
|
286.07
|
62,240,439
|
|
524.64
|
380.21
|
5,948,958
|
|
|
October
|
349.44
|
291.06
|
55,254,397
|
|
462.97
|
380.80
|
4,301,850
|
|
|
November
|
344.00
|
282.08
|
37,008,853
|
|
457.50
|
372.01
|
3,700,674
|
|
|
December
|
416.60
|
311.53
|
52,173,508
|
|
544.00
|
414.38
|
4,979,571
|
|
Designation of Class
|
Number of securities subject to a contractual restriction on transfer
|
Percentage of class
|
Class A Subordinate Voting Shares
|
122,080
|
0.12%
|
Director
|
Audit Committee
|
Compensation Committee
|
Nominating and Corporate Governance Committee
|
Robert Ashe
|
Member
|
Chair
|
|
Gail Goodman
|
Member
|
Member
|
|
Colleen Johnston
|
Chair
|
|
Member
|
Jeremy Levine
|
|
|
Member
|
John Phillips
|
|
Member
|
Chair
|
•
|
the quality and integrity of our financial statements and related information;
|
•
|
the independence, qualifications, appointment and performance of our external auditor;
|
•
|
our disclosure controls and procedures, internal control over financial reporting and management’s responsibility for assessing and reporting on the effectiveness of such controls;
|
•
|
our compliance with applicable legal and regulatory requirements; and
|
•
|
our enterprise risk management processes.
|
|
Fiscal 2019
|
Fiscal 2018
|
||
|
$
|
$
|
||
|
(in thousands)
|
|||
Audit Fees
|
1,133
|
|
764
|
|
Audit-Related Fees
|
—
|
|
—
|
|
Tax Fees
|
—
|
|
—
|
|
All Other Fees
|
3
|
|
2
|
|
Total
|
1,136
|
|
766
|
|
•
|
Jeremy Levine, who, until June 4, 2018, was a board member of Onestop Internet Inc., a corporation that made an assignment for the benefit of creditors on June 4, 2018. The sale of assets has been completed, and the liquidation is in process. Jeremy Levine was also a board member, until May 29, 2019, of Rabbit, Inc., a corporation that made an assignment for the benefit of creditors on May 24, 2019. The liquidation has been completed.
|
•
|
Coattail Agreement dated as of May 27, 2015, in connection with our Class B Multiple Voting Shares
|
•
|
Third Amended and Restated Investors’ Rights Agreement dated May 27, 2015
|
•
|
the quality and integrity of the Company’s financial statements and related information;
|
•
|
the independence, qualifications, appointment and performance of the Company’s external auditor ("external auditor");
|
•
|
the appointment and dismissal of the Company’s head of Risk and Internal Audit;
|
•
|
the independence and performance of the Risk and Internal Audit function;
|
•
|
the Company’s disclosure controls and procedures, internal controls over financial reporting, and management’s responsibility for assessing and reporting on the effectiveness of such controls;
|
•
|
the Company’s compliance with applicable legal and regulatory requirements; and
|
•
|
the Company’s enterprise risk management processes.
|
•
|
communicate directly with the external auditors and the head of Risk and Internal Audit;
|
•
|
investigate any matter relating to the Company’s accounting, auditing, internal control or financial reporting practices or anything else within its scope of responsibility;
|
•
|
obtain full access to all Company books, records, facilities and personnel; and
|
•
|
at its sole discretion and at the Company’s expense, retain and set the compensation of outside legal, accounting, or other advisors, as necessary to assist in the performance of its duties and responsibilities.
|
1.
|
Prepare an audit committee report, if required, to be included in the Company’s annual proxy statement.
|
2.
|
Prior to their public disclosure, review and discuss with management and, if applicable, the external auditor:
|
•
|
the Company’s annual financial statements and the related Management’s Discussion and Analysis ("MD&A"), including the discussion of critical accounting estimates included therein and, if appropriate, recommend to the Board the approval, filing and disclosure of such information;
|
•
|
the Company’s annual earnings press releases, including any pro forma or non-GAAP information included therein and, if appropriate, recommend to the Board the approval, filing and disclosure of such information;
|
•
|
the Company’s quarterly unaudited financial statements and associated MD&A, including the discussion of critical accounting estimates included therein and, if appropriate, approve the filing and disclosure of such information;
|
•
|
the Company’s quarterly earnings press releases, including any pro forma or non-GAAP information included therein and, if appropriate, approve the filing and disclosure of such information;
|
•
|
the type and presentation of financial information and earnings guidance provided to analysts, ratings agencies and others;
|
•
|
to the extent they include financial information extracted or derived from the Company’s financial statements, other public reports or filings by the Company, including the Company’s annual information and proxy statements, approve such information, or where appropriate recommend to the board their approval; and
|
•
|
internal controls (or summaries thereof) and the integrity of the financial reporting and related attestations by the external auditors of the Company’s internal controls over financial reporting.
|
3.
|
Review, report and approve of, or where appropriate provide recommendations to the Board as to, the appointment, term, compensation and review of engagement, removal, independence, audit plan (including the timing and scope of the audit), estimated and actual fees and contractual arrangements of the external auditor.
|
4.
|
Review the external auditors’ management letters and management’s responses to such letters.
|
5.
|
At least annually, the Committee shall assess the external auditor’s independence. The Committee shall obtain and review a report by the external auditor describing all relationships between the external auditor and the Company, including the written disclosures and the letter from the external auditor required by applicable requirements. The Committee shall review any disclosed relationships or services that may affect the independence and objectivity of the auditor and take appropriate actions to oversee the external auditor.
|
6.
|
Review and preapprove (which may be pursuant to preapproval policies and procedures) all audit and non-audit services to be provided by the external auditor. Delegate, if deemed appropriate, authority to one or more members of the Committee to grant preapprovals of audit and non-audit services, provided that any such approvals be presented to the Committee at its next scheduled meeting. Consider whether the auditor’s provision of permissible non-audit services is compatible with the auditor’s independence.
|
7.
|
Discuss with the external auditor and management any matters required to be discussed in accordance with applicable Public Company Accounting Oversight Board ("PCAOB") standards.
|
8.
|
Meet periodically with the external auditor in the absence of management. Review with the external auditor any audit problems or difficulties the external auditor encountered in the course of the audit work and management’s response, including any restrictions on the scope of the external auditor’s activities or access to requested information and any significant disagreements with management.
|
9.
|
Review and discuss the reports required to be made by the external auditor regarding:
|
•
|
critical accounting policies and practices;
|
•
|
material selections of accounting policies when there is a choice of policies available under GAAP that have been discussed with management, including the ramifications of the use of such alternative treatment, and the treatment preferred by the external auditor;
|
•
|
other material written communications between the external auditor and management; and,
|
•
|
any other matters required to be communicated to the Committee by applicable rules and regulations.
|
10.
|
At least annually, obtain and review a report by the external auditor describing:
|
•
|
the external auditor’s internal quality-control procedures;
|
•
|
any material issues raised by the most recent internal quality-control review or peer review, or by any inquiry or investigation by governmental or professional authorities within the preceding five years with respect to independent audits carried out by the external auditor, and any steps taken to deal with such issues; and,
|
•
|
all relationships between the external auditor and the Company, addressing the matters set forth in PCAOB Rule 3526.
This report should be used to evaluate the external auditor’s qualifications, performance, and independence. Further, the Committee will review the experience and qualifications of the lead partner each year and determine that all partner rotation requirements, as promulgated by applicable rules and regulations, are executed. The Committee will also consider whether there should be rotation of the external auditor itself. The Committee will present its conclusions to the Board. |
11.
|
Set policies, consistent with governing laws and regulations, for the hiring of current or former personnel of the external auditor.
|
12.
|
Review and discuss with management and the external auditor, and monitor, report and where appropriate,
|
•
|
the adequacy and effectiveness of the Company’s system of internal controls over financial reporting, including any significant deficiencies and significant changes in internal controls;
|
•
|
the integrity of the Company’s external financial reporting processes;
|
•
|
the Company’s disclosure controls and procedures, including any significant deficiencies in or material non-compliance with, such controls and procedures; and
|
•
|
the relationship of the Committee with other committees of the Board and management.
|
13.
|
Understand the scope of the external auditors’ review of internal control over financial reporting and obtain reports on significant findings and recommendations, together with management responses.
|
14.
|
Review and discuss with the Company’s Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") the process for the certifications to be provided and receive and review any disclosure from the Company’s CEO and CFO made in connection with the required certifications of the Company’s quarterly and annual reports filed, including: a) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial data; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls.
|
15.
|
Review major issues and analyses prepared by management and/or the external auditor regarding accounting principles and financial reporting issues and judgments made in connection with the preparation of financial statements, including any significant changes in the Company’s selection or application of accounting principles, the effect of alternative GAAP methods on the financial statements, complex or unusual transactions and highly judgmental areas, such as the presentation and impact of significant risks and uncertainties and key estimates and judgments of management that may be material to financial reporting, the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company, and major issues as to the adequacy of the Company’s internal controls, and any special audit steps adopted in light of material control deficiencies.
|
16.
|
Review the Company’s policies and procedures for reviewing and approving or ratifying related-party transactions. Review and approve or ratify all related-party transactions.
|
17.
|
Establish and oversee procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, including procedures for confidential, anonymous submissions by employees regarding questionable accounting or auditing matters.
|
18.
|
Meet periodically with management in the absence of the external auditor.
|
19.
|
Consider the risk of management’s ability to override the Company’s internal controls.
|
20.
|
Review and approve the risk based internal audit plan, and any significant changes thereto.
|
21.
|
Review and approve the budget and resource plan for the Risk and Internal Audit function and review significant updates.
|
22.
|
Review and approve at least annually the head of Risk and Internal Audit’s Independence Attestation and the internal audit charter.
|
23.
|
Conduct an annual review of the performance of the head of Risk and Internal Audit and assess the effectiveness and operational adequacy of the department.
|
24.
|
Review the results of a quality assurance review report prepared by an independent party on the Risk and Internal Audit department conducted on a five-year cycle (once the function has been established). This can be delayed by the Audit Committee, if circumstances exist.
|
25.
|
Review and discuss regular reports prepared by the head of Risk and Internal Audit, including all information outlined in regulatory guidance, together with management’s response and follow-up on outstanding issues (to ensure progress is occurring within an appropriate timeframe), and proactively consider thematic issues across the Company;
|
26.
|
Provide a forum for the head of Risk and Internal Audit to have unfettered access to the Committee to raise any internal audit organizational or industry issues or issues with respect to the relationship and interaction between the Risk and Internal Audit department, management, the external auditor and/or regulators.
|
27.
|
Review, with the Company’s counsel, legal compliance and legal matters that could have a significant impact on the Company’s financial statements. Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up of any instances of non-compliance. Receive and review periodic reports from the Company with respect to the Company’s pending or threatened material litigation. Review the appropriateness of the disclosure thereof in the documents reviewed by the Committee. Review, with Company’s counsel, on a regular basis, any reports of whistleblowing, including any reports made to the Anonymous Helpline.
|
28.
|
Discuss the Company’s policies with respect to risk assessment and risk management, the Company’s insurance coverage, as well as the Company’s major financial risk exposures and the steps management has undertaken to control them.
|
29.
|
Review the Company’s compliance with internal policies and the Company’s progress in remedying any material deficiencies that could have a significant impact on the Company.
|
30.
|
Review the findings of any examinations by regulatory agencies, and any external auditors observations made regarding those findings.
|
31.
|
Report regularly to the Board regarding the execution of the Committee’s duties and responsibilities, activities, any issues encountered, and related recommendations.
|
32.
|
Institute and oversee special investigations as needed.
|
33.
|
Perform any other activities consistent with this Charter, the Company’s by-laws, and governing laws that the Board or Committee determines are necessary or appropriate.
|
•
|
chair meetings of the Committee;
|
•
|
in consultation with the Board Chair and the Corporate Secretary, determine the frequency, dates and locations of meetings of the Committee;
|
•
|
in consultation with the CEO, the CFO, the Corporate Secretary and others as required, review the annual work plan and the meeting agendas to ensure all required business is brought before the Committee;
|
•
|
in consultation with the Board Chair, ensure that all items requiring the Committee’s approval are appropriately tabled;
|
•
|
report to the Board on the matters reviewed by, and on any decisions or recommendations of, the Committee at the next meeting of the Board following any meeting of the Committee; and
|
•
|
carry out any other or special assignments or any functions as may be requested by the Board.
|
/s/ Tobias Lütke
|
Tobias Lütke
|
Chief Executive Officer
|
/s/ Amy Shapero
|
Amy Shapero
|
Chief Financial Officer
|
|
|
|
As at
|
||||
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||
|
Note
|
|
$
|
|
$
|
||
Assets
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
4
|
|
649,916
|
|
|
410,683
|
|
Marketable securities
|
5
|
|
1,805,278
|
|
|
1,558,987
|
|
Trade and other receivables, net
|
6
|
|
90,529
|
|
|
41,347
|
|
Merchant cash advances and loans receivable, net
|
7
|
|
150,172
|
|
|
91,873
|
|
Other current assets
|
8
|
|
48,833
|
|
|
26,192
|
|
|
|
|
2,744,728
|
|
|
2,129,082
|
|
Long-term assets
|
|
|
|
|
|
||
Property and equipment, net
|
9
|
|
111,398
|
|
|
61,612
|
|
Intangible assets, net
|
10
|
|
167,282
|
|
|
26,072
|
|
Right-of-use assets
|
11
|
|
134,774
|
|
|
—
|
|
Deferred tax assets
|
19
|
|
19,432
|
|
|
—
|
|
Goodwill
|
12
|
|
311,865
|
|
|
38,019
|
|
|
|
|
744,751
|
|
|
125,703
|
|
Total assets
|
|
|
3,489,479
|
|
|
2,254,785
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
13
|
|
181,193
|
|
|
96,956
|
|
Income taxes payable
|
19
|
|
69,432
|
|
|
—
|
|
Deferred revenue
|
14
|
|
56,691
|
|
|
39,180
|
|
Lease liabilities
|
11
|
|
9,066
|
|
|
2,552
|
|
|
|
|
316,382
|
|
|
138,688
|
|
Long-term liabilities
|
|
|
|
|
|
||
Deferred revenue
|
14
|
|
5,969
|
|
|
1,881
|
|
Lease liabilities
|
11
|
|
142,641
|
|
|
22,316
|
|
Deferred tax liabilities
|
19
|
|
8,753
|
|
|
1,132
|
|
|
|
|
157,363
|
|
|
25,329
|
|
Commitments and contingencies
|
11, 16
|
|
|
|
|
||
Shareholders’ equity
|
|
|
|
|
|
||
Common stock, unlimited Class A subordinate voting shares authorized, 104,518,173 and 98,081,889 issued and outstanding; unlimited Class B multiple voting shares authorized, 11,910,802 and 12,310,800 issued and outstanding
|
17
|
|
3,256,284
|
|
|
2,215,936
|
|
Additional paid-in capital
|
|
|
62,628
|
|
|
74,805
|
|
Accumulated other comprehensive income (loss)
|
18
|
|
1,046
|
|
|
(12,216
|
)
|
Accumulated deficit
|
3
|
|
(304,224
|
)
|
|
(187,757
|
)
|
Total shareholders’ equity
|
|
|
3,015,734
|
|
|
2,090,768
|
|
Total liabilities and shareholders’ equity
|
|
|
3,489,479
|
|
|
2,254,785
|
|
"/s/ Tobias Lütke"
|
"/s/ Colleen Johnston"
|
Tobias Lütke
|
Colleen Johnston
|
Chair, Board of Directors
|
Chair, Audit Committee
|
|
|
|
Years ended
|
||||||
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
Note
|
|
$
|
|
$
|
||||
Revenues
|
|
|
|
|
|
||||
Subscription solutions
|
21
|
|
642,241
|
|
|
464,996
|
|
||
Merchant solutions
|
21
|
|
935,932
|
|
|
608,233
|
|
||
|
|
|
1,578,173
|
|
|
1,073,229
|
|
||
Cost of revenues
|
|
|
|
|
|
|
|
||
Subscription solutions
|
|
|
128,155
|
|
|
100,990
|
|
||
Merchant solutions
|
|
|
584,375
|
|
|
375,972
|
|
||
|
|
|
712,530
|
|
|
476,962
|
|
||
Gross profit
|
|
|
865,643
|
|
|
596,267
|
|
||
Operating expenses
|
|
|
|
|
|
||||
Sales and marketing
|
|
|
472,841
|
|
|
350,069
|
|
||
Research and development
|
|
|
355,015
|
|
|
230,674
|
|
||
General and administrative
|
|
|
178,934
|
|
|
107,444
|
|
||
Total operating expenses
|
|
|
1,006,790
|
|
|
688,187
|
|
||
Loss from operations
|
|
|
(141,147
|
)
|
|
(91,920
|
)
|
||
Other income
|
|
|
|
|
|
||||
Interest income, net
|
|
|
48,182
|
|
|
29,436
|
|
||
Foreign exchange loss
|
|
|
(2,850
|
)
|
|
(2,069
|
)
|
||
|
|
|
45,332
|
|
|
27,367
|
|
||
Loss before income taxes
|
|
|
(95,815
|
)
|
|
(64,553
|
)
|
||
Provision for income taxes
|
19
|
|
29,027
|
|
|
—
|
|
||
Net loss
|
|
|
(124,842
|
)
|
|
(64,553
|
)
|
||
Other comprehensive income (loss)
|
|
|
|
|
|
||||
Unrealized gain (loss) on cash flow hedges
|
18
|
|
18,046
|
|
|
(15,651
|
)
|
||
Tax effect on unrealized gain (loss) on cash flow hedges
|
|
|
(4,784
|
)
|
|
—
|
|
||
Comprehensive loss
|
|
|
(111,580
|
)
|
|
(80,204
|
)
|
||
|
|
|
|
|
|
||||
Basic and diluted net loss per share attributable to shareholders
|
20
|
|
$
|
(1.10
|
)
|
|
$
|
(0.61
|
)
|
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders
|
20
|
|
113,026,424
|
|
|
105,671,839
|
|
|
|
|
|
Common Stock
|
|
Additional
Paid-In Capital
$
|
|
Accumulated Other Comprehensive Income (Loss)
$
|
|
Accumulated Deficit
$
|
|
Total
$
|
||||||||
|
|
Note
|
|
Shares
|
|
Amount $
|
|
|||||||||||||
As at December 31, 2017
|
|
|
|
99,877,688
|
|
|
1,077,477
|
|
|
43,392
|
|
|
3,435
|
|
|
(123,204
|
)
|
|
1,001,100
|
|
Exercise of stock options
|
|
|
|
2,179,999
|
|
|
48,408
|
|
|
(17,914
|
)
|
|
—
|
|
|
—
|
|
|
30,494
|
|
Stock-based compensation
|
|
|
|
—
|
|
|
—
|
|
|
97,690
|
|
|
—
|
|
|
—
|
|
|
97,690
|
|
Vesting of restricted share units
|
|
|
|
935,002
|
|
|
48,363
|
|
|
(48,363
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Issuance of Class A subordinate voting shares, net of offering costs of $16,312
|
|
17
|
|
7,400,000
|
|
|
1,041,688
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,041,688
|
|
Net loss and comprehensive loss for the year
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,651
|
)
|
|
(64,553
|
)
|
|
(80,204
|
)
|
As at December 31, 2018
|
|
|
|
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 January 1, 2019
|
|
|
|
110,392,689
|
|
|
2,215,936
|
|
|
74,805
|
|
|
(12,216
|
)
|
|
(179,382
|
)
|
|
2,099,143
|
|
Exercise of stock options
|
|
|
|
2,084,063
|
|
|
75,296
|
|
|
(26,959
|
)
|
|
—
|
|
|
—
|
|
|
48,337
|
|
Stock-based compensation
|
|
|
|
—
|
|
|
—
|
|
|
159,310
|
|
|
—
|
|
|
—
|
|
|
159,310
|
|
Vesting of restricted share units
|
|
|
|
1,252,250
|
|
|
106,408
|
|
|
(106,408
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Issuance of shares related to business acquisitions
|
|
22
|
|
514,973
|
|
|
170,630
|
|
|
(38,120
|
)
|
|
—
|
|
|
—
|
|
|
132,510
|
|
Issuance of Class A subordinate voting shares, net of offering costs of $5,724, net of tax of $1,541
|
|
17
|
|
2,185,000
|
|
|
688,014
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
688,014
|
|
Net loss and comprehensive loss for the year
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,262
|
|
|
(124,842
|
)
|
|
(111,580
|
)
|
As at December 31, 2019
|
|
|
|
116,428,975
|
|
|
3,256,284
|
|
|
62,628
|
|
|
1,046
|
|
|
(304,224
|
)
|
|
3,015,734
|
|
|
|
|
Years ended
|
||||
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||
|
Note
|
|
$
|
|
$
|
||
Cash flows from operating activities
|
|
|
|
|
|
||
Net loss for the year
|
|
|
(124,842)
|
|
|
(64,553)
|
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
||
Amortization and depreciation
|
|
|
35,651
|
|
|
27,052
|
|
Stock-based compensation
|
|
|
158,456
|
|
|
95,720
|
|
Provision for uncollectible receivables related to merchant cash advances and loans receivable
|
7
|
|
15,912
|
|
|
5,922
|
|
Deferred income taxes
|
|
|
(37,918)
|
|
|
—
|
|
Unrealized foreign exchange loss
|
|
|
3,181
|
|
|
1,272
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Trade and other receivables
|
|
|
(56,181)
|
|
|
(32,649)
|
|
Merchant cash advances and loans receivable
|
|
|
(74,211)
|
|
|
(50,694)
|
|
Other current assets
|
|
|
(12,401)
|
|
|
(10,816)
|
|
Accounts payable and accrued liabilities
|
|
|
84,563
|
|
|
20,641
|
|
Income tax assets and liabilities
|
|
|
64,648
|
|
|
—
|
|
Deferred revenue
|
|
|
12,305
|
|
|
9,015
|
|
Lease assets and liabilities
|
|
|
1,452
|
|
|
8,414
|
|
Net cash provided by operating activities
|
|
|
70,615
|
|
|
9,324
|
|
Cash flows from investing activities
|
|
|
|
|
|
||
Purchase of marketable securities
|
|
|
(2,718,604)
|
|
|
(2,447,955)
|
|
Maturity of marketable securities
|
|
|
2,477,038
|
|
|
1,698,264
|
|
Acquisitions of property and equipment
|
|
|
(56,759)
|
|
|
(27,950)
|
|
Acquisitions of intangible assets
|
|
|
(5,638)
|
|
|
(13,595)
|
|
Acquisition of businesses, net of cash acquired
|
22
|
|
(265,512)
|
|
|
(19,397)
|
|
Net cash used by investing activities
|
|
|
(569,475)
|
|
|
(810,633)
|
|
Cash flows from financing activities
|
|
|
|
|
|
||
Proceeds from the exercise of stock options
|
|
|
48,337
|
|
|
30,494
|
|
Proceeds from public offering, net of issuance costs
|
17
|
|
688,014
|
|
|
1,041,688
|
|
Net cash provided by financing activities
|
|
|
736,351
|
|
|
1,072,182
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
|
1,742
|
|
|
(1,867)
|
|
Net increase in cash and cash equivalents
|
|
|
239,233
|
|
|
269,006
|
|
Cash and cash equivalents – Beginning of Year
|
|
|
410,683
|
|
|
141,677
|
|
Cash and cash equivalents – End of Year
|
|
|
649,916
|
|
|
410,683
|
|
|
|
|
|
|
|
||
Supplemental cash flow information:
|
|
|
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities included in cash flows from operating activities
|
|
|
15,611
|
|
|
—
|
|
Lease liabilities arising from obtaining right-of-use assets
|
|
|
153,053
|
|
|
—
|
|
Acquired property and equipment remaining unpaid
|
|
|
7,878
|
|
|
1,931
|
|
Acquired intangible assets remaining unpaid
|
|
|
—
|
|
|
322
|
|
Capitalized stock-based compensation
|
|
|
854
|
|
|
1,970
|
|
1.
|
Nature of Business
|
2.
|
Basis of Presentation and Consolidation
|
3.
|
Significant Accounting Policies
|
|
Years ended
|
||||||||||||||||||
|
December 31, 2019
|
|
December 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)
$ |
||||||||||||
Revenues
|
$
|
1,578,173
|
|
$
|
3,148
|
|
$
|
1,581,321
|
|
|
$
|
1,073,229
|
|
$
|
1,857
|
|
$
|
1,075,086
|
|
Cost of revenues
|
(712,530
|
)
|
(4,283
|
)
|
(716,813
|
)
|
|
(476,962
|
)
|
(3,302
|
)
|
(480,264
|
)
|
||||||
Operating expenses
|
(1,006,790
|
)
|
(39,505
|
)
|
(1,046,295
|
)
|
|
(688,187
|
)
|
(30,275
|
)
|
(718,462
|
)
|
||||||
Loss from operations
|
$
|
(141,147
|
)
|
$
|
(40,640
|
)
|
$
|
(181,787
|
)
|
|
$
|
(91,920
|
)
|
$
|
(31,720
|
)
|
$
|
(123,640
|
)
|
4.
|
Cash and Cash Equivalents
|
|
Level 1
$ |
|
Level 2
$ |
|
Level 3
$ |
|||||||||
|
Carrying Amount
|
Fair Value
|
|
Carrying Amount
|
Fair Value
|
|
Carrying Amount
|
Fair Value
|
||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
||||||
Repurchase agreements
|
—
|
|
—
|
|
|
200,000
|
|
200,009
|
|
|
—
|
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
||||||
U.S. term deposits
|
300,000
|
|
301,354
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
U.S. federal bonds
|
222,713
|
|
223,403
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Canadian federal bonds
|
69,922
|
|
69,919
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Corporate bonds and commercial paper
|
—
|
|
—
|
|
|
1,212,643
|
|
1,216,822
|
|
|
—
|
|
—
|
|
Derivative assets:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange forward contracts
|
—
|
|
—
|
|
|
5,830
|
|
5,830
|
|
|
—
|
|
—
|
|
Other:
|
|
|
|
|
|
|
|
|
||||||
Equity investments in private companies
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
2,500
|
|
2,500
|
|
|
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
|
|
|
—
|
|
—
|
|
|
December 31, 2019
$ |
|
December 31, 2018
$ |
|
January 1, 2018
$ |
|||
Indirect taxes receivable
|
36,821
|
|
|
3,774
|
|
|
832
|
|
Unbilled revenues
|
31,629
|
|
|
12,653
|
|
|
7,616
|
|
Trade receivables
|
9,660
|
|
|
11,191
|
|
|
7,073
|
|
Accrued interest
|
5,754
|
|
|
5,109
|
|
|
2,015
|
|
Other receivables
|
6,665
|
|
|
8,620
|
|
|
4,403
|
|
|
90,529
|
|
|
41,347
|
|
|
21,939
|
|
|
Years ended
|
||||
|
December 31, 2019
$ |
|
December 31, 2018
$ |
||
Balance, beginning of the year
|
1,023
|
|
|
1,642
|
|
Provision for uncollectible receivables
|
2,836
|
|
|
1,355
|
|
Write-offs, net of recoveries
|
(965
|
)
|
|
(1,974
|
)
|
Balance, end of the year
|
2,894
|
|
|
1,023
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|
January 1, 2018
|
|||
|
$
|
|
$
|
|
$
|
|||
Merchant cash advances receivable, gross
|
131,227
|
|
|
77,653
|
|
|
49,143
|
|
Allowance for uncollectible merchant cash advances receivable
|
(7,241
|
)
|
|
(1,767
|
)
|
|
(2,042
|
)
|
Loans receivable, gross
|
28,547
|
|
|
16,959
|
|
|
—
|
|
Allowance for uncollectible loans receivable
|
(2,361
|
)
|
|
(972
|
)
|
|
—
|
|
Merchant cash advances and loans receivable, net
|
150,172
|
|
|
91,873
|
|
|
47,101
|
|
|
Years ended
|
||||
|
December 31, 2019
|
|
December 31, 2018
|
||
|
$
|
|
$
|
||
Balance, beginning of the year
|
2,739
|
|
|
2,042
|
|
Provision for uncollectible merchant cash advances receivable
|
13,257
|
|
|
4,950
|
|
Merchant cash advances receivable charged off, net of recoveries
|
(7,783
|
)
|
|
(5,225
|
)
|
Provision for uncollectible loans receivable
|
2,655
|
|
|
972
|
|
Loans receivable charged off, net of recoveries
|
(1,266
|
)
|
|
—
|
|
Balance, end of the year
|
9,602
|
|
|
2,739
|
|
|
December 31, 2019
$ |
|
December 31, 2018
$ |
||
Prepaid expenses
|
20,840
|
|
|
12,912
|
|
Deposits
|
12,853
|
|
|
9,599
|
|
Other current assets
|
9,310
|
|
|
3,681
|
|
Foreign exchange contracts
|
5,830
|
|
|
—
|
|
|
48,833
|
|
|
26,192
|
|
9.
|
Property and Equipment
|
|
December 31, 2019
|
|||||||
|
Cost
$ |
|
Accumulated depreciation
$ |
|
Net book
value $ |
|||
Leasehold improvements
|
110,477
|
|
|
24,675
|
|
|
85,802
|
|
Computer equipment
|
18,141
|
|
|
10,989
|
|
|
7,152
|
|
Fulfillment robots
|
3,220
|
|
|
197
|
|
|
3,023
|
|
Office furniture and equipment
|
25,821
|
|
|
10,400
|
|
|
15,421
|
|
|
157,659
|
|
|
46,261
|
|
|
111,398
|
|
|
December 31, 2018
|
|||||||
|
Cost
$ |
|
Accumulated depreciation
$ |
|
Net book
value $ |
|||
Leasehold improvements
|
63,402
|
|
|
16,498
|
|
|
46,904
|
|
Computer equipment
|
14,293
|
|
|
7,540
|
|
|
6,753
|
|
Office furniture and equipment
|
14,092
|
|
|
6,137
|
|
|
7,955
|
|
|
91,787
|
|
|
30,175
|
|
|
61,612
|
|
|
Years ended
|
||||
|
December 31, 2019
$ |
|
December 31, 2018
$ |
||
Cost of revenues
|
1,253
|
|
|
5,950
|
|
Sales and marketing
|
4,929
|
|
|
4,087
|
|
Research and development
|
7,940
|
|
|
4,900
|
|
General and administrative
|
2,657
|
|
|
1,968
|
|
|
16,779
|
|
|
16,905
|
|
|
December 31, 2019
|
|||||||
|
Cost
$ |
|
Accumulated amortization
$ |
|
Net book
value $ |
|||
Acquired technology
|
161,643
|
|
|
17,332
|
|
|
144,311
|
|
Software development costs
|
27,489
|
|
|
16,690
|
|
|
10,799
|
|
Acquired customer relationships
|
8,435
|
|
|
1,016
|
|
|
7,419
|
|
Purchased software
|
6,973
|
|
|
5,639
|
|
|
1,334
|
|
Other intangible assets
|
4,120
|
|
|
701
|
|
|
3,419
|
|
|
208,660
|
|
|
41,378
|
|
|
167,282
|
|
|
December 31, 2018
|
|||||||
|
Cost
$ |
|
Accumulated amortization
$ |
|
Net book
value $ |
|||
Acquired technology
|
15,556
|
|
|
7,875
|
|
|
7,681
|
|
Software development costs
|
24,963
|
|
|
9,226
|
|
|
15,737
|
|
Acquired customer relationships
|
495
|
|
|
346
|
|
|
149
|
|
Purchased software
|
6,973
|
|
|
4,503
|
|
|
2,470
|
|
Other intangible assets
|
591
|
|
|
556
|
|
|
35
|
|
|
48,578
|
|
|
22,506
|
|
|
26,072
|
|
|
Years ended
|
||||
|
December 31, 2019
$ |
|
December 31, 2018
$ |
||
Cost of revenues
|
17,535
|
|
|
9,720
|
|
Sales and marketing
|
998
|
|
|
252
|
|
Research and development
|
266
|
|
|
60
|
|
General and administrative
|
73
|
|
|
109
|
|
|
18,872
|
|
|
10,141
|
|
Fiscal Year
|
Amount
$ |
|
2020
|
30,358
|
|
2021
|
22,152
|
|
2022
|
18,008
|
|
2023
|
17,706
|
|
2024
|
17,384
|
|
Thereafter
|
61,674
|
|
Total
|
167,282
|
|
|
Year ended
|
|
|
$
|
|
Operating lease expense
|
16,372
|
|
Variable lease expense, including non-lease components
|
12,971
|
|
Total lease expense
|
29,343
|
|
Fiscal Year
|
Operating Leases
$
|
|
2020
|
25,665
|
|
2021
|
40,424
|
|
2022
|
48,839
|
|
2023
|
41,111
|
|
2024
|
48,175
|
|
Thereafter
|
366,675
|
|
Total future minimum payments
|
570,889
|
|
Minimum payments related to leases that have not yet commenced
|
(142,200
|
)
|
Minimum payments related to variable lease payments, including non-lease components
|
(233,770
|
)
|
Imputed interest
|
(43,212
|
)
|
Total lease liabilities
|
151,707
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||
|
$
|
|
$
|
||
Balance, beginning of the year
|
38,019
|
|
|
20,317
|
|
Acquisition of 6 River Systems, Inc.
|
264,527
|
|
|
—
|
|
Acquisition of Tictail, Inc.
|
—
|
|
|
15,125
|
|
Other acquisitions
|
9,319
|
|
|
2,577
|
|
Balance, end of the year
|
311,865
|
|
|
38,019
|
|
13.
|
Accounts Payable and Accrued Liabilities
|
|
December 31, 2019
$ |
|
December 31, 2018
$ |
||
Trade accounts payable and trade accruals
|
90,517
|
|
|
61,271
|
|
Indirect taxes payable
|
52,018
|
|
|
4,974
|
|
Employee related accruals
|
32,372
|
|
|
14,321
|
|
Other payables and accruals
|
6,286
|
|
|
4,174
|
|
Foreign exchange forward contracts
|
—
|
|
|
12,216
|
|
|
181,193
|
|
|
96,956
|
|
|
Years ended
|
||||
|
December 31, 2019
$ |
|
December 31, 2018
$ |
||
Balance, beginning of the year
|
41,061
|
|
|
32,046
|
|
Deferral of revenue
|
46,291
|
|
|
37,563
|
|
Deferred revenue from 6RS acquisition
|
8,901
|
|
|
—
|
|
Recognition of deferred revenue
|
(33,593
|
)
|
|
(28,548
|
)
|
Balance, end of the year
|
62,660
|
|
|
41,061
|
|
|
December 31, 2019
$ |
|
December 31, 2018
$ |
||
Current portion
|
56,691
|
|
|
39,180
|
|
Long term portion
|
5,969
|
|
|
1,881
|
|
|
62,660
|
|
|
41,061
|
|
16.
|
Commitments and Contingencies
|
|
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, 2017
|
7,353,546
|
|
|
20.67
|
|
|
6.81
|
|
|
590,700
|
|
|
—
|
|
|
2,498,678
|
|
|
53.84
|
|
Stock options granted
|
486,434
|
|
|
138.12
|
|
—
|
|
|
—
|
|
|
69.81
|
|
|
—
|
|
|
|
||
Stock options exercised
|
(2,179,999
|
)
|
|
13.99
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||
Stock options forfeited
|
(183,191
|
)
|
|
44.58
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||
RSUs granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,127,094
|
|
|
139.58
|
|
RSUs settled
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(935,002
|
)
|
|
51.72
|
|
RSUs forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(217,105
|
)
|
|
68.70
|
|
December 31, 2018
|
5,476,790
|
|
|
32.96
|
|
|
6.23
|
|
|
577,731
|
|
|
—
|
|
|
2,473,665
|
|
|
92.40
|
|
Stock options granted
|
488,485
|
|
|
165.03
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Stock options exercised
|
(2,084,063
|
)
|
|
23.19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Stock options forfeited
|
(68,970
|
)
|
|
68.24
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
RSUs granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
888,991
|
|
|
232.09
|
|
RSUs settled
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,252,250
|
)
|
|
84.98
|
|
RSUs forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(170,488
|
)
|
|
116.06
|
|
December 31, 2019
|
3,812,242
|
|
|
54.59
|
|
6.14
|
|
|
1,307,565
|
|
|
—
|
|
|
1,939,918
|
|
|
159.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock options exercisable as of December 31, 2019
|
2,510,366
|
|
|
25.19
|
|
5.19
|
|
|
934,823
|
|
|
|
|
|
|
|
•
|
Fair Value of Common Stock. The Company uses the five-day volume weighted average price for its common stock as reported on the New York Stock Exchange.
|
•
|
Expected Term. The Company determines the expected term based on the average period the stock options are expected to remain outstanding. The Company bases the expected term assumptions on its historical behavior combined with estimates of the post-vesting holding period.
|
•
|
Expected Volatility. The Company determines the price volatility factor based on the Company's historical volatility over the expected life of the stock options.
|
•
|
Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes valuation model on the yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term of the stock options for each stock option group.
|
•
|
Expected Dividend. The Company has not paid and does not anticipate paying any cash dividends in the foreseeable future and, therefore, uses an expected dividend yield of zero in the option pricing model.
|
|
Years ended
|
||||
|
December 31, 2019
|
|
December 31, 2018
|
||
Expected volatility
|
50.7
|
%
|
|
54.2
|
%
|
Risk-free interest rate
|
2.25
|
%
|
|
2.72
|
%
|
Dividend yield
|
Nil
|
|
|
Nil
|
|
Average expected life
|
4.77
|
|
|
5.31
|
|
|
Years ended
|
||||
|
December 31, 2019
|
|
December 31, 2018
|
||
|
$
|
|
$
|
||
Cost of revenues
|
3,572
|
|
|
2,232
|
|
Sales and marketing
|
33,917
|
|
|
21,928
|
|
Research and development
|
93,549
|
|
|
55,164
|
|
General and administrative
|
27,418
|
|
|
16,396
|
|
|
158,456
|
|
|
95,720
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||
|
Years ended
|
||||
|
December 31, 2019
|
|
December 31, 2018
|
||
|
$
|
|
$
|
||
Balance, beginning of the year
|
(12,216
|
)
|
|
3,435
|
|
|
|
|
|
||
Other comprehensive income (loss) before reclassifications
|
12,865
|
|
|
(19,821
|
)
|
Loss on cash flow hedges reclassified from accumulated other comprehensive income (loss) to earnings were as follows:
|
|
|
|
||
Cost of revenues
|
279
|
|
|
255
|
|
Sales and marketing
|
1,538
|
|
|
1,224
|
|
Research and development
|
2,620
|
|
|
2,063
|
|
General and administrative
|
744
|
|
|
628
|
|
Tax effect on unrealized gain (loss) on cash flow hedges
|
(4,784
|
)
|
|
—
|
|
Other comprehensive income (loss), net of tax
|
13,262
|
|
|
(15,651
|
)
|
Balance, end of the year
|
1,046
|
|
|
(12,216
|
)
|
|
Years ended
|
||||
|
December 31, 2019
$ |
|
December 31, 2018
$ |
||
Loss before income taxes
|
|
|
|
||
Domestic
|
(55,507
|
)
|
|
(55,537
|
)
|
Foreign
|
(40,308
|
)
|
|
(9,016
|
)
|
|
(95,815
|
)
|
|
(64,553
|
)
|
|
|
|
|
||
Current income tax expense
|
|
|
|
||
Domestic
|
63,120
|
|
|
—
|
|
Foreign
|
1,850
|
|
|
—
|
|
|
64,970
|
|
|
—
|
|
Deferred income tax recovery
|
|
|
|
||
Domestic
|
(14,351
|
)
|
|
—
|
|
Foreign
|
(21,592
|
)
|
|
—
|
|
|
(35,943
|
)
|
|
—
|
|
|
|
|
|
||
Provision for income taxes
|
29,027
|
|
|
—
|
|
|
Years ended
|
||||
|
December 31, 2019
$ |
|
December 31, 2018
$ |
||
Loss before income taxes
|
(95,815
|
)
|
|
(64,553
|
)
|
Expected income tax recovery at Canadian statutory income tax rate of 26.51% (2018 - 26.51%)
|
(25,400
|
)
|
|
(17,113
|
)
|
Permanent differences
|
74,024
|
|
|
16,057
|
|
Foreign tax rate differential
|
1,770
|
|
|
1,726
|
|
Tax credits earned during the year
|
(1,571
|
)
|
|
—
|
|
Other items
|
(1,468
|
)
|
|
(88
|
)
|
Change in valuation allowance
|
(18,328
|
)
|
|
(582
|
)
|
Provision for income taxes
|
29,027
|
|
|
—
|
|
|
December 31, 2019
$ |
|
December 31, 2018
$ |
||
Deferred tax assets
|
|
|
|
||
Tax loss carryforwards
|
59,407
|
|
|
19,540
|
|
Temporary differences on capital and intangible assets
|
44,445
|
|
|
2,366
|
|
Stock-based compensation expense
|
11,324
|
|
|
6,427
|
|
Accruals and reserves
|
10,397
|
|
|
8,384
|
|
Share issuance costs
|
6,590
|
|
|
8,011
|
|
Temporary differences related to lease assets and liabilities
|
4,526
|
|
|
—
|
|
Investment tax credits
|
694
|
|
|
5,833
|
|
Valuation allowance
|
(89,363
|
)
|
|
(46,343
|
)
|
Total deferred tax assets
|
48,020
|
|
|
4,218
|
|
|
|
|
|
||
Deferred tax liabilities
|
|
|
|
|
|
Temporary differences on intangible assets
|
(35,967
|
)
|
|
(5,350
|
)
|
Other deferred tax liabilities
|
(1,374
|
)
|
|
—
|
|
Total deferred tax liabilities
|
(37,341
|
)
|
|
(5,350
|
)
|
|
|
|
|
||
Net deferred tax assets (liabilities)
|
10,679
|
|
|
(1,132
|
)
|
|
Years ended
|
||||
|
December 31, 2019
|
|
December 31, 2018
|
||
Basic and diluted weighted average number of shares outstanding
|
113,026,424
|
|
|
105,671,839
|
|
The following items have been excluded from the diluted weighted average number of shares outstanding because they are anti-dilutive:
|
|
|
|
|
|
Stock options
|
3,812,242
|
|
|
5,476,790
|
|
Restricted share units
|
1,939,918
|
|
|
2,473,665
|
|
Deferred share units
|
673
|
|
|
347
|
|
|
5,752,833
|
|
|
7,950,802
|
|
|
Years ended
|
||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
|
$
|
|
%
|
|
$
|
|
%
|
||||
Canada
|
96,168
|
|
|
6.1
|
%
|
|
70,774
|
|
|
6.6
|
%
|
United States
|
1,079,520
|
|
|
68.4
|
%
|
|
755,454
|
|
|
70.4
|
%
|
United Kingdom
|
103,498
|
|
|
6.6
|
%
|
|
69,596
|
|
|
6.5
|
%
|
Australia
|
68,571
|
|
|
4.3
|
%
|
|
47,937
|
|
|
4.5
|
%
|
Rest of World
|
230,416
|
|
|
14.6
|
%
|
|
129,468
|
|
|
12.0
|
%
|
|
1,578,173
|
|
|
100.0
|
%
|
|
1,073,229
|
|
|
100.0
|
%
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
|
$
|
|
%
|
|
$
|
|
%
|
||||
Canada
|
102,832
|
|
|
93.6
|
%
|
|
58,460
|
|
|
94.9
|
%
|
United States
|
4,747
|
|
|
4.3
|
%
|
|
1,593
|
|
|
2.6
|
%
|
Rest of World
|
2,302
|
|
|
2.1
|
%
|
|
1,559
|
|
|
2.5
|
%
|
|
109,881
|
|
|
100.0
|
%
|
|
61,612
|
|
|
100.0
|
%
|
22.
|
Business Acquisitions
|
|
Amount
$ |
|
Net tangible assets and liabilities:
|
|
|
Cash
|
8,158
|
|
Trade and other receivables, net
|
2,038
|
|
Other current assets
|
4,394
|
|
Property and equipment, net
|
3,551
|
|
Accounts payable and accrued liabilities
|
(4,056
|
)
|
Current and long-term deferred revenue
|
(8,901
|
)
|
Estimated fair value of identifiable intangible assets:
|
|
|
Acquired technology
|
142,500
|
|
Customer relationships
|
7,600
|
|
Net deferred tax liability on acquired intangibles
|
(26,107
|
)
|
|
|
|
Goodwill
|
264,527
|
|
Total purchase price
|
393,704
|
|
|
Amount
$ |
|
Net closing working capital:
|
|
|
Cash
|
1,465
|
|
Trade and other receivables, net
|
156
|
|
Other current assets
|
1,054
|
|
Accounts payable and accrued liabilities
|
(1,847
|
)
|
Estimated fair value of identifiable assets acquired:
|
|
|
Acquired technology
|
1,400
|
|
Customer relationships
|
100
|
|
Goodwill
|
15,125
|
|
Net deferred tax liability on acquired intangibles
|
(309
|
)
|
Total purchase price
|
17,144
|
|
•
|
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 plan to continue making investments to drive future growth;
|
•
|
our expectation that we will continue to invest in, develop and scale Shopify Fulfillment Network to provide our merchants with fast and affordable fulfillment and our expectation that Shopify Fulfillment Network is well positioned to improve supply chain economics and delivery for merchants;
|
•
|
our expectation that the 6 River Systems Inc. ("6RS") acquisition will expand our addressable market to include warehouse automation and accelerate the development of Shopify Fulfillment Network;
|
•
|
our expectation that the gross margin percentage of merchant solutions will decline in the short term as we develop Shopify Fulfillment Network and 6RS;
|
•
|
our revenue growth objectives and expectations about future profitability;
|
•
|
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 expectation that the cost of subscription solutions will increase and that our subscription solutions gross margin percentage will fluctuate modestly over time;
|
•
|
our expectation that the cost of merchant solutions will increase in absolute dollars in future periods;
|
•
|
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 our research and development expenses will increase in absolute dollars as we continue to increase the functionality of our platform, but will eventually decline as a percentage of total revenues;
|
•
|
our expectation that general and administrative expenses will increase on an absolute dollar basis, but may decrease as a percentage of our total revenues as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business;
|
•
|
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;
|
•
|
the impact of inflation on our costs and operations;
|
•
|
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.
|
•
|
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 grow through increased adoption and international expansion;
|
•
|
our expectation that Shopify Payments will continue to expand internationally;
|
•
|
our expectation that Shopify Fulfillment Network will continue to scale and grow;
|
•
|
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.
|
•
|
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;
|
•
|
the security of personal information we store relating to merchants and their buyers, as well as buyers with whom we have a direct relationship including users of our apps;
|
•
|
a denial of service attack or security breach;
|
•
|
our potential inability to compete successfully against current and future competitors;
|
•
|
international sales and the use of our platform in various countries;
|
•
|
the reliance of our growth in part on the success of our strategic relationships with third parties;
|
•
|
our potential failure to effectively maintain, promote and enhance our brand;
|
•
|
our use of a single cloud-based platform to deliver our services;
|
•
|
our potential inability to achieve or maintain data transmission capacity;
|
•
|
our current reliance on a single supplier to provide the technology we offer through Shopify Payments;
|
•
|
payments processed through Shopify Payments;
|
•
|
our potential inability to hire, retain and motivate qualified personnel;
|
•
|
serious errors or defects in our software or hardware or issues with our hardware supply chain;
|
•
|
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 failure to maintain a consistently high level of customer service;
|
•
|
exchange rate fluctuations that may negatively affect our results of operations;
|
•
|
our dependence on the continued services and performance of our senior management and other key employees;
|
•
|
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;
|
•
|
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 ability to successfully operate and scale Shopify Fulfillment Network;
|
•
|
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;
|
•
|
being required to collect federal, state, provincial or local business taxes and sales and use taxes or other indirect taxes in additional jurisdictions or for past sales;
|
•
|
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; and
|
•
|
our concentration of credit risk, and the ability to mitigate that risk using third parties, and the risk of inflation.
|
|
Years ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Monthly Recurring Revenue
|
$
|
53,898
|
|
|
$
|
40,932
|
|
Gross Merchandise Volume
|
$
|
61,138,457
|
|
|
$
|
41,103,238
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands, except share and per share data)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Subscription solutions
|
$
|
642,241
|
|
|
$
|
464,996
|
|
|
$
|
310,031
|
|
Merchant solutions
|
935,932
|
|
|
608,233
|
|
|
363,273
|
|
|||
|
1,578,173
|
|
|
1,073,229
|
|
|
673,304
|
|
|||
Cost of revenues(1)(2):
|
|
|
|
|
|
||||||
Subscription solutions
|
128,155
|
|
|
100,990
|
|
|
61,267
|
|
|||
Merchant solutions
|
584,375
|
|
|
375,972
|
|
|
231,784
|
|
|||
|
712,530
|
|
|
476,962
|
|
|
293,051
|
|
|||
Gross profit
|
865,643
|
|
|
596,267
|
|
|
380,253
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Sales and marketing(1)(2)
|
472,841
|
|
|
350,069
|
|
|
225,694
|
|
|||
Research and development(1)(2)
|
355,015
|
|
|
230,674
|
|
|
135,997
|
|
|||
General and administrative(1)
|
178,934
|
|
|
107,444
|
|
|
67,719
|
|
|||
Total operating expenses
|
1,006,790
|
|
|
688,187
|
|
|
429,410
|
|
|||
Loss from operations
|
(141,147
|
)
|
|
(91,920
|
)
|
|
(49,157
|
)
|
|||
Other income
|
45,332
|
|
|
27,367
|
|
|
9,162
|
|
|||
Loss before income taxes
|
(95,815
|
)
|
|
(64,553
|
)
|
|
(39,995
|
)
|
|||
Provision for income taxes
|
29,027
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
$
|
(124,842
|
)
|
|
$
|
(64,553
|
)
|
|
$
|
(39,995
|
)
|
Basic and diluted net loss per share attributable to shareholders
|
$
|
(1.10
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.42
|
)
|
Weighted average shares used to compute net loss per share attributable to shareholders
|
113,026,424
|
|
|
105,671,839
|
|
|
95,774,897
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenues
|
$
|
4,090
|
|
|
$
|
2,441
|
|
|
$
|
1,281
|
|
Sales and marketing
|
38,167
|
|
|
24,056
|
|
|
9,876
|
|
|||
Research and development
|
104,645
|
|
|
59,575
|
|
|
34,560
|
|
|||
General and administrative
|
29,861
|
|
|
17,690
|
|
|
9,485
|
|
|||
|
$
|
176,763
|
|
|
$
|
103,762
|
|
|
$
|
55,202
|
|
|
Years ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenues
|
$
|
9,624
|
|
|
$
|
4,914
|
|
|
$
|
3,101
|
|
Sales and marketing
|
283
|
|
|
—
|
|
|
—
|
|
|||
Research and development
|
232
|
|
|
—
|
|
|
—
|
|
|||
|
$
|
10,139
|
|
|
$
|
4,914
|
|
|
$
|
3,101
|
|
|
Years ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Revenues
|
|
|
|
|
|
|||
Subscription solutions
|
40.7
|
%
|
|
43.3
|
%
|
|
46.0
|
%
|
Merchant solutions
|
59.3
|
%
|
|
56.7
|
%
|
|
54.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenues
|
|
|
|
|
|
|||
Subscription solutions
|
8.1
|
%
|
|
9.4
|
%
|
|
9.1
|
%
|
Merchant solutions
|
37.0
|
%
|
|
35.0
|
%
|
|
34.4
|
%
|
|
45.1
|
%
|
|
44.4
|
%
|
|
43.5
|
%
|
Gross profit
|
54.9
|
%
|
|
55.6
|
%
|
|
56.5
|
%
|
Operating expenses
|
|
|
|
|
|
|||
Sales and marketing
|
30.0
|
%
|
|
32.6
|
%
|
|
33.5
|
%
|
Research and development
|
22.5
|
%
|
|
21.5
|
%
|
|
20.2
|
%
|
General and administrative
|
11.3
|
%
|
|
10.0
|
%
|
|
10.1
|
%
|
Total operating expenses
|
63.8
|
%
|
|
64.1
|
%
|
|
63.8
|
%
|
Loss from operations
|
(8.9
|
)%
|
|
(8.5
|
)%
|
|
(7.3
|
)%
|
Other income
|
2.9
|
%
|
|
2.5
|
%
|
|
1.4
|
%
|
Loss before income taxes
|
(6.0
|
)%
|
|
(6.0
|
)%
|
|
(5.9
|
)%
|
Provision for income taxes
|
1.9
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Net loss
|
(7.9
|
)%
|
|
(6.0
|
)%
|
|
(5.9
|
)%
|
|
Years ended December 31,
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands, except percentages)
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Subscription solutions
|
$
|
642,241
|
|
|
$
|
464,996
|
|
|
$
|
310,031
|
|
|
38.1
|
%
|
|
50.0
|
%
|
Merchant solutions
|
935,932
|
|
|
608,233
|
|
|
363,273
|
|
|
53.9
|
%
|
|
67.4
|
%
|
|||
|
$
|
1,578,173
|
|
|
$
|
1,073,229
|
|
|
$
|
673,304
|
|
|
47.0
|
%
|
|
59.4
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Subscription solutions
|
40.7
|
%
|
|
43.3
|
%
|
|
46.0
|
%
|
|
|
|
|
|||||
Merchant solutions
|
59.3
|
%
|
|
56.7
|
%
|
|
54.0
|
%
|
|
|
|
|
|||||
Total revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
Years ended December 31,
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands, except percentages)
|
||||||||||||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of subscription solutions
|
$
|
128,155
|
|
|
$
|
100,990
|
|
|
$
|
61,267
|
|
|
26.9
|
%
|
|
64.8
|
%
|
Cost of merchant solutions
|
584,375
|
|
|
375,972
|
|
|
231,784
|
|
|
55.4
|
%
|
|
62.2
|
%
|
|||
Total cost of revenues
|
$
|
712,530
|
|
|
$
|
476,962
|
|
|
$
|
293,051
|
|
|
49.4
|
%
|
|
62.8
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of subscription solutions
|
8.1
|
%
|
|
9.4
|
%
|
|
9.1
|
%
|
|
|
|
|
|||||
Cost of merchant solutions
|
37.0
|
%
|
|
35.0
|
%
|
|
34.4
|
%
|
|
|
|
|
|||||
|
45.1
|
%
|
|
44.4
|
%
|
|
43.5
|
%
|
|
|
|
|
|
Years ended December 31,
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands, except percentages)
|
||||||||||||||||
Gross profit
|
$
|
865,643
|
|
|
$
|
596,267
|
|
|
$
|
380,253
|
|
|
45.2
|
%
|
|
56.8
|
%
|
Percentage of total revenues
|
54.9
|
%
|
|
55.6
|
%
|
|
56.5
|
%
|
|
|
|
|
|
Years ended December 31,
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands, except percentages)
|
||||||||||||||||
Sales and marketing
|
$
|
472,841
|
|
|
$
|
350,069
|
|
|
$
|
225,694
|
|
|
35.1
|
%
|
|
55.1
|
%
|
Percentage of total revenues
|
30.0
|
%
|
|
32.6
|
%
|
|
33.5
|
%
|
|
|
|
|
|
Years ended December 31,
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands, except percentages)
|
||||||||||||||||
Research and development
|
$
|
355,015
|
|
|
$
|
230,674
|
|
|
$
|
135,997
|
|
|
53.9
|
%
|
|
69.6
|
%
|
Percentage of total revenues
|
22.5
|
%
|
|
21.5
|
%
|
|
20.2
|
%
|
|
|
|
|
|
Years ended December 31,
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands, except percentages)
|
||||||||||||||||
General and administrative
|
$
|
178,934
|
|
|
$
|
107,444
|
|
|
$
|
67,719
|
|
|
66.5
|
%
|
|
58.7
|
%
|
Percentage of total revenues
|
11.3
|
%
|
|
10.0
|
%
|
|
10.1
|
%
|
|
|
|
|
|
Years ended December 31,
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change
|
||||||
|
(in thousands, except percentages)
|
||||||||||||||
Other income (expenses), net
|
$
|
45,332
|
|
|
$
|
27,367
|
|
|
$
|
9,162
|
|
|
*
|
|
*
|
*
|
Not a meaningful comparison
|
|
Years ended December 31,
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change
|
||||||
|
(in thousands, except percentages)
|
||||||||||||||
Provision for income taxes
|
$
|
29,027
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
*
|
|
*
|
*
|
Not a meaningful comparison
|
|
Years ended December 31,
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|
% Change
|
|
% Change
|
||||||
|
(in thousands, except share and per share data)
|
||||||||||||||
Net loss
|
$
|
(124,842
|
)
|
|
$
|
(64,553
|
)
|
|
$
|
(39,995
|
)
|
|
*
|
|
*
|
Basic and diluted net loss per share attributable to shareholders
|
$
|
(1.10
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.42
|
)
|
|
|
|
|
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders
|
113,026,424
|
|
|
105,671,839
|
|
|
95,774,897
|
|
|
|
|
|
*
|
Not a meaningful comparison
|
|
Three months ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands, except share and per share data)
|
||||||
Revenues:
|
|
|
|
||||
Subscription solutions
|
$
|
183,166
|
|
|
$
|
133,560
|
|
Merchant solutions
|
321,994
|
|
|
210,302
|
|
||
|
505,160
|
|
|
343,862
|
|
||
Cost of revenues(1)(2):
|
|
|
|
||||
Subscription solutions
|
37,369
|
|
|
26,706
|
|
||
Merchant solutions
|
203,900
|
|
|
131,413
|
|
||
|
241,269
|
|
|
158,119
|
|
||
Gross profit
|
263,891
|
|
|
185,743
|
|
||
Operating expenses:
|
|
|
|
||||
Sales and marketing(1)(2)
|
132,063
|
|
|
95,163
|
|
||
Research and development(1)(2)
|
102,753
|
|
|
67,024
|
|
||
General and administrative(1)
|
59,154
|
|
|
33,014
|
|
||
Total operating expenses
|
293,970
|
|
|
195,201
|
|
||
Loss from operations
|
(30,079
|
)
|
|
(9,458
|
)
|
||
Other income
|
11,539
|
|
|
7,944
|
|
||
Loss before income taxes
|
(18,540
|
)
|
|
(1,514
|
)
|
||
Recovery of income taxes
|
(19,311
|
)
|
|
—
|
|
||
Net income (loss)
|
$
|
771
|
|
|
$
|
(1,514
|
)
|
Basic and diluted net income (loss) per share attributable to shareholders
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders
|
116,027,240
|
|
|
107,734,499
|
|
|
Three months ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Cost of revenues
|
$
|
1,209
|
|
|
$
|
660
|
|
Sales and marketing
|
11,319
|
|
|
6,641
|
|
||
Research and development
|
32,361
|
|
|
16,769
|
|
||
General and administrative
|
8,533
|
|
|
5,356
|
|
||
|
$
|
53,422
|
|
|
$
|
29,426
|
|
|
Three months ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
||||||
Cost of revenues
|
$
|
4,820
|
|
|
$
|
1,447
|
|
Sales and marketing
|
283
|
|
|
—
|
|
||
Research and development
|
58
|
|
|
—
|
|
||
|
$
|
5,161
|
|
|
$
|
1,447
|
|
|
Three months ended December 31,
|
|
2019 vs. 2018
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Revenues:
|
|
|
|
|
|
|||||
Subscription solutions
|
$
|
183,166
|
|
|
$
|
133,560
|
|
|
37.1
|
%
|
Merchant solutions
|
321,994
|
|
|
210,302
|
|
|
53.1
|
%
|
||
|
$
|
505,160
|
|
|
$
|
343,862
|
|
|
46.9
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|||||
Subscription solutions
|
36.3
|
%
|
|
38.8
|
%
|
|
|
|||
Merchant solutions
|
63.7
|
%
|
|
61.2
|
%
|
|
|
|||
Total revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
Three months ended December 31,
|
|
2019 vs. 2018
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Cost of subscription solutions
|
$
|
37,369
|
|
|
$
|
26,706
|
|
|
39.9
|
%
|
Cost of merchant solutions
|
203,900
|
|
|
131,413
|
|
|
55.2
|
%
|
||
Total cost of revenues
|
$
|
241,269
|
|
|
$
|
158,119
|
|
|
52.6
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|||||
Cost of subscription solutions
|
7.4
|
%
|
|
7.8
|
%
|
|
|
|||
Cost of merchant solutions
|
40.4
|
%
|
|
38.2
|
%
|
|
|
|||
|
47.8
|
%
|
|
46.0
|
%
|
|
|
|
Three months ended December 31,
|
|
2019 vs. 2018
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Gross profit
|
$
|
263,891
|
|
|
$
|
185,743
|
|
|
42.1
|
%
|
Percentage of total revenues
|
52.2
|
%
|
|
54.0
|
%
|
|
|
|
Three months ended December 31,
|
|
2019 vs. 2018
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Sales and marketing
|
$
|
132,063
|
|
|
$
|
95,163
|
|
|
38.8
|
%
|
Percentage of total revenues
|
26.1
|
%
|
|
27.7
|
%
|
|
|
|
Three months ended December 31,
|
|
2019 vs. 2018
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Research and development
|
$
|
102,753
|
|
|
$
|
67,024
|
|
|
53.3
|
%
|
Percentage of total revenues
|
20.3
|
%
|
|
19.5
|
%
|
|
|
|
Three months ended December 31,
|
|
2019 vs. 2018
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
General and administrative
|
$
|
59,154
|
|
|
$
|
33,014
|
|
|
79.2
|
%
|
Percentage of total revenues
|
11.7
|
%
|
|
9.6
|
%
|
|
|
|
Three months ended December 31,
|
|
2019 vs. 2018
|
||||||
|
2019
|
|
2018
|
|
% Change
|
||||
|
(in thousands, except percentages)
|
||||||||
Other income (expenses), net
|
$
|
11,539
|
|
|
$
|
7,944
|
|
|
*
|
*
|
Not a meaningful comparison
|
|
Three months ended December 31,
|
|
2019 vs. 2018
|
||||||
|
2019
|
|
2018
|
|
% Change
|
||||
|
(in thousands, except percentages)
|
||||||||
Recovery of income taxes
|
$
|
(19,311
|
)
|
|
$
|
—
|
|
|
*
|
*
|
Not a meaningful comparison
|
|
Three months ended
|
||||||||||||||||||||||||||||||
|
Dec 31, 2019
|
|
Sep 30, 2019
|
|
Jun 30, 2019
|
|
Mar 31, 2019
|
|
Dec 31, 2018
|
|
Sep 30, 2018
|
|
Jun 30, 2018
|
|
Mar 31, 2018
|
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription solutions
|
$
|
183,166
|
|
|
$
|
165,577
|
|
|
$
|
153,047
|
|
|
$
|
140,451
|
|
|
$
|
133,560
|
|
|
$
|
120,517
|
|
|
$
|
110,721
|
|
|
$
|
100,198
|
|
Merchant solutions
|
321,994
|
|
|
224,975
|
|
|
208,932
|
|
|
180,031
|
|
|
210,302
|
|
|
149,547
|
|
|
134,242
|
|
|
114,142
|
|
||||||||
|
505,160
|
|
|
390,552
|
|
|
361,979
|
|
|
320,482
|
|
|
343,862
|
|
|
270,064
|
|
|
244,963
|
|
|
214,340
|
|
||||||||
Cost of revenues:(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription solutions
|
37,369
|
|
|
33,263
|
|
|
$
|
29,538
|
|
|
$
|
27,985
|
|
|
$
|
26,706
|
|
|
$
|
26,600
|
|
|
$
|
24,524
|
|
|
23,160
|
|
|||
Merchant solutions
|
203,900
|
|
|
140,593
|
|
|
127,676
|
|
|
112,206
|
|
|
131,413
|
|
|
93,737
|
|
|
83,484
|
|
|
67,338
|
|
||||||||
|
241,269
|
|
|
173,856
|
|
|
157,214
|
|
|
140,191
|
|
|
158,119
|
|
|
120,337
|
|
|
108,008
|
|
|
90,498
|
|
||||||||
Gross profit
|
263,891
|
|
|
216,696
|
|
|
204,765
|
|
|
180,291
|
|
|
185,743
|
|
|
149,727
|
|
|
136,955
|
|
|
123,842
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sales and marketing(1)(2)
|
132,063
|
|
|
116,546
|
|
|
119,210
|
|
|
105,022
|
|
|
95,163
|
|
|
91,635
|
|
|
87,487
|
|
|
75,784
|
|
||||||||
Research and development(1)(2)
|
102,753
|
|
|
90,387
|
|
|
85,520
|
|
|
76,355
|
|
|
67,024
|
|
|
61,629
|
|
|
54,305
|
|
|
47,716
|
|
||||||||
General and administrative(1)
|
59,154
|
|
|
45,421
|
|
|
39,655
|
|
|
34,704
|
|
|
33,014
|
|
|
27,831
|
|
|
25,924
|
|
|
20,675
|
|
||||||||
Total operating expenses
|
293,970
|
|
|
252,354
|
|
|
244,385
|
|
|
216,081
|
|
|
195,201
|
|
|
181,095
|
|
|
167,716
|
|
|
144,175
|
|
||||||||
Loss from operations
|
(30,079
|
)
|
|
(35,658
|
)
|
|
(39,620
|
)
|
|
(35,790
|
)
|
|
(9,458
|
)
|
|
(31,368
|
)
|
|
(30,761
|
)
|
|
(20,333
|
)
|
||||||||
Other income
|
11,539
|
|
|
11,212
|
|
|
10,942
|
|
|
11,639
|
|
|
7,944
|
|
|
8,184
|
|
|
6,808
|
|
|
4,431
|
|
||||||||
Loss before income taxes
|
$
|
(18,540
|
)
|
|
$
|
(24,446
|
)
|
|
$
|
(28,678
|
)
|
|
$
|
(24,151
|
)
|
|
$
|
(1,514
|
)
|
|
$
|
(23,184
|
)
|
|
$
|
(23,953
|
)
|
|
$
|
(15,902
|
)
|
Provision for (recovery of) income taxes
|
$
|
(19,311
|
)
|
|
$
|
48,338
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income (loss)
|
$
|
771
|
|
|
$
|
(72,784
|
)
|
|
$
|
(28,678
|
)
|
|
$
|
(24,151
|
)
|
|
$
|
(1,514
|
)
|
|
$
|
(23,184
|
)
|
|
$
|
(23,953
|
)
|
|
$
|
(15,902
|
)
|
Basic and diluted net income (loss) per share attributable to shareholders
|
$
|
0.01
|
|
|
$
|
(0.64
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.16
|
)
|
|
Three months ended
|
||||||||||||||||||||||||||||||
|
Dec 31, 2019
|
|
Sep 30, 2019
|
|
Jun 30, 2019
|
|
Mar 31, 2019
|
|
Dec 31, 2018
|
|
Sep 30, 2018
|
|
Jun 30, 2018
|
|
Mar 31, 2018
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Cost of revenues
|
$
|
1,209
|
|
|
$
|
1,041
|
|
|
$
|
1,026
|
|
|
$
|
814
|
|
|
$
|
660
|
|
|
$
|
655
|
|
|
$
|
637
|
|
|
$
|
489
|
|
Sales and marketing
|
11,319
|
|
|
9,692
|
|
|
9,511
|
|
|
7,645
|
|
|
6,641
|
|
|
6,397
|
|
|
6,249
|
|
|
4,769
|
|
||||||||
Research and development
|
32,361
|
|
|
25,913
|
|
|
26,448
|
|
|
19,923
|
|
|
16,769
|
|
|
15,669
|
|
|
15,221
|
|
|
11,916
|
|
||||||||
General and administrative
|
8,533
|
|
|
7,853
|
|
|
7,444
|
|
|
6,031
|
|
|
5,356
|
|
|
5,007
|
|
|
4,386
|
|
|
2,941
|
|
||||||||
|
$
|
53,422
|
|
|
$
|
44,499
|
|
|
$
|
44,429
|
|
|
$
|
34,413
|
|
|
$
|
29,426
|
|
|
$
|
27,728
|
|
|
$
|
26,493
|
|
|
$
|
20,115
|
|
|
Three months ended
|
||||||||||||||||||||||||||||||
|
Dec 31, 2019
|
|
Sep 30, 2019
|
|
Jun 30, 2019
|
|
Mar 31, 2019
|
|
Dec 31, 2018
|
|
Sep 30, 2018
|
|
Jun 30, 2018
|
|
Mar 31, 2018
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Cost of revenues
|
$
|
4,820
|
|
|
$
|
1,649
|
|
|
$
|
1,530
|
|
|
$
|
1,625
|
|
|
$
|
1,447
|
|
|
$
|
1,241
|
|
|
$
|
1,120
|
|
|
$
|
1,106
|
|
Sales and marketing
|
283
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Research and development
|
58
|
|
|
58
|
|
|
58
|
|
|
58
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
$
|
5,161
|
|
|
$
|
1,707
|
|
|
$
|
1,588
|
|
|
$
|
1,683
|
|
|
$
|
1,447
|
|
|
$
|
1,241
|
|
|
$
|
1,120
|
|
|
$
|
1,106
|
|
|
Three months ended
|
||||||||||||||||||||||
|
Dec 31, 2019
|
|
Sep 30, 2019
|
|
Jun 30, 2019
|
|
Mar 31, 2019
|
|
Dec 31, 2018
|
|
Sep 30, 2018
|
|
Jun 30, 2018
|
|
Mar 31, 2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Subscription solutions
|
36.3
|
%
|
|
42.4
|
%
|
|
42.3
|
%
|
|
43.8
|
%
|
|
38.8
|
%
|
|
44.6
|
%
|
|
45.2
|
%
|
|
46.7
|
%
|
Merchant solutions
|
63.7
|
%
|
|
57.6
|
%
|
|
57.7
|
%
|
|
56.2
|
%
|
|
61.2
|
%
|
|
55.4
|
%
|
|
54.8
|
%
|
|
53.3
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Subscription solutions
|
7.4
|
%
|
|
8.5
|
%
|
|
8.2
|
%
|
|
8.7
|
%
|
|
7.8
|
%
|
|
9.8
|
%
|
|
10.0
|
%
|
|
10.8
|
%
|
Merchant solutions
|
40.4
|
%
|
|
36.0
|
%
|
|
35.3
|
%
|
|
35.0
|
%
|
|
38.2
|
%
|
|
34.7
|
%
|
|
34.1
|
%
|
|
31.4
|
%
|
|
47.8
|
%
|
|
44.5
|
%
|
|
43.5
|
%
|
|
43.7
|
%
|
|
46.0
|
%
|
|
44.5
|
%
|
|
44.1
|
%
|
|
42.2
|
%
|
Gross profit
|
52.2
|
%
|
|
55.5
|
%
|
|
56.6
|
%
|
|
56.3
|
%
|
|
54.0
|
%
|
|
55.4
|
%
|
|
55.9
|
%
|
|
57.8
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
26.1
|
%
|
|
29.8
|
%
|
|
32.9
|
%
|
|
32.8
|
%
|
|
27.7
|
%
|
|
33.9
|
%
|
|
35.7
|
%
|
|
35.4
|
%
|
Research and development
|
20.3
|
%
|
|
23.1
|
%
|
|
23.6
|
%
|
|
23.8
|
%
|
|
19.5
|
%
|
|
22.8
|
%
|
|
22.2
|
%
|
|
22.3
|
%
|
General and administrative
|
11.7
|
%
|
|
11.6
|
%
|
|
11.0
|
%
|
|
10.8
|
%
|
|
9.6
|
%
|
|
10.3
|
%
|
|
10.6
|
%
|
|
9.6
|
%
|
|
58.1
|
%
|
|
64.5
|
%
|
|
67.5
|
%
|
|
67.4
|
%
|
|
56.8
|
%
|
|
67.0
|
%
|
|
68.5
|
%
|
|
67.3
|
%
|
Loss from operations
|
(5.9
|
)%
|
|
(9.1
|
)%
|
|
(10.9
|
)%
|
|
(11.2
|
)%
|
|
(2.8
|
)%
|
|
(11.6
|
)%
|
|
(12.6
|
)%
|
|
(9.5
|
)%
|
Other income
|
2.3
|
%
|
|
2.9
|
%
|
|
3.0
|
%
|
|
3.6
|
%
|
|
2.3
|
%
|
|
3.0
|
%
|
|
2.8
|
%
|
|
2.1
|
%
|
Loss before income taxes
|
(3.6
|
)%
|
|
(6.3
|
)%
|
|
(7.9
|
)%
|
|
(7.5
|
)%
|
|
(0.4
|
)%
|
|
(8.6
|
)%
|
|
(9.8
|
)%
|
|
(7.4
|
)%
|
Provision for (recovery of) income taxes
|
(3.8
|
)%
|
|
12.4
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Net income (loss)
|
0.2
|
%
|
|
(18.6
|
)%
|
|
(7.9
|
)%
|
|
(7.5
|
)%
|
|
(0.4
|
)%
|
|
(8.6
|
)%
|
|
(9.8
|
)%
|
|
(7.4
|
)%
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
(in thousands)
|
||||||
Cash, cash equivalents and marketable securities
|
$
|
2,455,194
|
|
|
$
|
1,969,670
|
|
Total assets
|
3,489,479
|
|
|
2,254,785
|
|
||
Total liabilities
|
473,745
|
|
|
164,017
|
|
||
Total non-current liabilities
|
157,363
|
|
|
25,329
|
|
|
Years ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Cash, cash equivalents and marketable securities (end of period)
|
$
|
2,455,194
|
|
|
$
|
1,969,670
|
|
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
70,615
|
|
|
$
|
9,324
|
|
Investing activities
|
(569,475
|
)
|
|
(810,633
|
)
|
||
Financing activities
|
736,351
|
|
|
1,072,182
|
|
||
Effect of foreign exchange on cash and cash equivalents
|
1,742
|
|
|
(1,867
|
)
|
||
Net increase in cash and cash equivalents
|
239,233
|
|
|
269,006
|
|
||
Change in marketable securities
|
246,291
|
|
|
762,625
|
|
||
Net increase in cash, cash equivalents and marketable securities
|
$
|
485,524
|
|
|
$
|
1,031,631
|
|
|
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)
|
31,743
|
|
|
107,003
|
|
|
89,286
|
|
|
366,675
|
|
|
594,707
|
|
|||||
Total contractual obligations
|
$
|
31,743
|
|
|
$
|
107,003
|
|
|
$
|
89,286
|
|
|
$
|
366,675
|
|
|
$
|
594,707
|
|
|
Years ended December 31,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
|
GAAP Amounts As Reported
|
Exchange Rate Effect (1)
|
At Prior Year Effective Rates (2)
|
|
GAAP Amounts As Reported
|
||||||||
|
(in thousands)
|
||||||||||||
Revenues
|
$
|
1,578,173
|
|
$
|
452
|
|
$
|
1,578,625
|
|
|
$
|
1,073,229
|
|
Cost of revenues
|
(712,530
|
)
|
(1,272
|
)
|
(713,802
|
)
|
|
(476,962
|
)
|
||||
Operating expenses
|
(1,006,790
|
)
|
(7,270
|
)
|
(1,014,060
|
)
|
|
(688,187
|
)
|
||||
Loss from operations
|
$
|
(141,147
|
)
|
$
|
(8,090
|
)
|
$
|
(149,237
|
)
|
|
$
|
(91,920
|
)
|
•
|
Identify the contract with a merchant;
|
•
|
Identify the performance obligations in the contract;
|
•
|
Determine the transaction price;
|
•
|
Allocate the transaction price; and
|
•
|
Recognize revenue when, or as, we satisfy a performance obligation.
|
/s/ Tobias Lütke
|
Tobias Lütke
|
Chief Executive Officer
|
/s/ Amy Shapero
|
Amy Shapero
|
Chief Financial Officer
|
/s/ Tobias Lütke
|
Tobias Lütke
|
Chief Executive Officer
|
/s/ Amy Shapero
|
Amy Shapero
|
Chief Financial Officer
|