For the month of
|
May
|
|
2020
|
Commission File Number
|
001-37400
|
|
|
Shopify Inc.
|
|||
(Translation of registrant’s name into English)
|
|||
150 Elgin Street, 8th Floor
Ottawa, Ontario, Canada K2P 1L4
|
|||
(Address of principal executive offices)
|
Form 20-F
|
|
Form 40-F
|
X
|
99.1
|
Shopify Inc. – Interim Financial Statements for the First Quarter ended March 31, 2020
|
|
|
99.2
|
Shopify Inc. – Interim Management’s Discussion and Analysis for the First Quarter ended March 31, 2020
|
|
|
99.3
|
Shopify Inc. – Form 52-109F2 Certificate of Interim Filings by CEO (pursuant to Canadian regulations)
|
|
|
99.4
|
Shopify Inc. – Form 52-109F2 Certificate of Interim Filings by CFO (pursuant to Canadian regulations)
|
|
Shopify Inc.
|
||||
|
(Registrant)
|
||||
Date:
|
|
May 6, 2020
|
|
By:
|
/s/ Joseph A. Frasca
|
|
Name: Joseph A. Frasca
Title: Chief Legal Officer and Corporate Secretary
|
|
|
|
As at
|
||||
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||
|
Note
|
|
$
|
|
$
|
||
Assets
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
4
|
|
969,363
|
|
|
649,916
|
|
Marketable securities
|
4
|
|
1,391,209
|
|
|
1,805,278
|
|
Trade and other receivables, net
|
5
|
|
88,139
|
|
|
90,529
|
|
Merchant cash advances, loans and related receivables, net
|
6
|
|
191,863
|
|
|
150,172
|
|
Income taxes receivable
|
13
|
|
28,402
|
|
|
—
|
|
Other current assets
|
|
|
58,912
|
|
|
48,833
|
|
|
|
|
2,727,888
|
|
|
2,744,728
|
|
Long-term assets
|
|
|
|
|
|
||
Property and equipment, net
|
|
|
116,832
|
|
|
111,398
|
|
Intangible assets, net
|
|
|
159,004
|
|
|
167,282
|
|
Right-of-use assets
|
7
|
|
133,786
|
|
|
134,774
|
|
Deferred tax assets
|
13
|
|
21,541
|
|
|
19,432
|
|
Goodwill
|
8
|
|
311,865
|
|
|
311,865
|
|
|
|
|
743,028
|
|
|
744,751
|
|
Total assets
|
|
|
3,470,916
|
|
|
3,489,479
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
|
|
214,431
|
|
|
181,193
|
|
Income taxes payable
|
13
|
|
1,461
|
|
|
69,432
|
|
Deferred revenue
|
5
|
|
62,884
|
|
|
56,691
|
|
Lease liabilities
|
7
|
|
9,781
|
|
|
9,066
|
|
|
|
|
288,557
|
|
|
316,382
|
|
Long-term liabilities
|
|
|
|
|
|
||
Deferred revenue
|
5
|
|
5,580
|
|
|
5,969
|
|
Lease liabilities
|
7
|
|
131,709
|
|
|
142,641
|
|
Deferred tax liabilities
|
|
|
4,219
|
|
|
8,753
|
|
|
|
|
141,508
|
|
|
157,363
|
|
Commitments and contingencies
|
7, 10
|
|
|
|
|
||
Shareholders’ equity
|
|
|
|
|
|
||
Common stock, unlimited Class A subordinate voting shares authorized, 105,327,498 and 104,518,173 issued and outstanding; unlimited Class B multiple voting shares authorized, 11,897,199 and 11,910,802 issued and outstanding
|
11
|
|
3,333,407
|
|
|
3,256,284
|
|
Additional paid-in capital
|
|
|
58,684
|
|
|
62,628
|
|
Accumulated other comprehensive income (loss)
|
12
|
|
(15,587
|
)
|
|
1,046
|
|
Accumulated deficit
|
|
|
(335,653
|
)
|
|
(304,224
|
)
|
Total shareholders’ equity
|
|
|
3,040,851
|
|
|
3,015,734
|
|
Total liabilities and shareholders’ equity
|
|
|
3,470,916
|
|
|
3,489,479
|
|
|
|
|
Three months ended
|
||||||
|
|
|
March 31, 2020
|
|
March 31, 2019
|
||||
|
Note
|
|
$
|
|
$
|
||||
Revenues
|
|
|
|
|
|
||||
Subscription solutions
|
|
|
187,609
|
|
|
140,451
|
|
||
Merchant solutions
|
|
|
282,392
|
|
|
180,031
|
|
||
|
|
|
470,001
|
|
|
320,482
|
|
||
Cost of revenues
|
|
|
|
|
|
|
|
||
Subscription solutions
|
|
|
37,712
|
|
|
27,985
|
|
||
Merchant solutions
|
|
|
175,339
|
|
|
112,206
|
|
||
|
|
|
213,051
|
|
|
140,191
|
|
||
Gross profit
|
|
|
256,950
|
|
|
180,291
|
|
||
Operating expenses
|
|
|
|
|
|
||||
Sales and marketing
|
|
|
154,862
|
|
|
105,022
|
|
||
Research and development
|
|
|
116,396
|
|
|
76,355
|
|
||
General and administrative
|
15
|
|
44,842
|
|
|
30,303
|
|
||
Transaction and loan losses
|
3, 15
|
|
14,083
|
|
|
4,401
|
|
||
Total operating expenses
|
|
|
330,183
|
|
|
216,081
|
|
||
Loss from operations
|
|
|
(73,233
|
)
|
|
(35,790
|
)
|
||
Other income
|
|
|
|
|
|
||||
Interest income, net
|
|
|
10,467
|
|
|
12,078
|
|
||
Foreign exchange gain (loss)
|
|
|
2,642
|
|
|
(439
|
)
|
||
|
|
|
13,109
|
|
|
11,639
|
|
||
Loss before income taxes
|
|
|
(60,124
|
)
|
|
(24,151
|
)
|
||
Recovery of income taxes
|
13
|
|
28,695
|
|
|
—
|
|
||
Net loss
|
|
|
(31,429
|
)
|
|
(24,151
|
)
|
||
Other comprehensive income (loss)
|
|
|
|
|
|
||||
Unrealized gain (loss) on cash flow hedges
|
12
|
|
(22,631
|
)
|
|
9,274
|
|
||
Tax effect on unrealized gain (loss) on cash flow hedges
|
|
|
5,998
|
|
|
—
|
|
||
Comprehensive loss
|
|
|
(48,062
|
)
|
|
(14,877
|
)
|
||
|
|
|
|
|
|
||||
Basic and diluted net loss per share attributable to shareholders
|
14
|
|
$
|
(0.27
|
)
|
|
$
|
(0.22
|
)
|
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders
|
14
|
|
116,806,549
|
|
|
110,921,276
|
|
|
|
Common Stock
|
|
Additional
Paid-In Capital $ |
|
Accumulated Other Comprehensive Income (Loss)
$
|
|
Accumulated Deficit
$
|
|
Total
$
|
||||||||
|
|
Shares
|
|
Amount
$
|
|
|||||||||||||
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
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
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
|
|
747,686
|
|
|
18,964
|
|
|
(6,908
|
)
|
|
—
|
|
|
—
|
|
|
12,056
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
31,596
|
|
|
—
|
|
|
—
|
|
|
31,596
|
|
Vesting of restricted share units
|
|
342,152
|
|
|
30,340
|
|
|
(30,340
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss and comprehensive loss for the period
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,274
|
|
|
(24,151
|
)
|
|
(14,877
|
)
|
As at March 31, 2019
|
|
111,482,527
|
|
|
2,265,240
|
|
|
69,153
|
|
|
(2,942
|
)
|
|
(203,533
|
)
|
|
2,127,918
|
|
|
|
Common Stock
|
|
Additional
Paid-In Capital $ |
|
Accumulated Other Comprehensive Income (Loss)
$
|
|
Accumulated Deficit
$
|
|
Total
$
|
||||||||
|
|
Shares
|
|
Amount
$
|
|
|||||||||||||
As at December 31, 2019
|
|
116,428,975
|
|
|
3,256,284
|
|
|
62,628
|
|
|
1,046
|
|
|
(304,224
|
)
|
|
3,015,734
|
|
Exercise of stock options
|
|
409,965
|
|
|
30,753
|
|
|
(11,326
|
)
|
|
—
|
|
|
—
|
|
|
19,427
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
53,752
|
|
|
—
|
|
|
—
|
|
|
53,752
|
|
Vesting of restricted share units
|
|
385,757
|
|
|
46,370
|
|
|
(46,370
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss and comprehensive loss for the period
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,633
|
)
|
|
(31,429
|
)
|
|
(48,062
|
)
|
As at March 31, 2020
|
|
117,224,697
|
|
|
3,333,407
|
|
|
58,684
|
|
|
(15,587
|
)
|
|
(335,653
|
)
|
|
3,040,851
|
|
|
|
|
Three months ended
|
||||
|
|
|
March 31, 2020
|
|
March 31, 2019
|
||
|
|
|
$
|
|
$
|
||
Cash flows from operating activities
|
|
|
|
|
|
||
Net loss for the period
|
|
|
(31,429)
|
|
|
(24,151)
|
|
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
|
|
|
|
|
|
||
Amortization and depreciation
|
|
|
14,366
|
|
|
6,832
|
|
Stock-based compensation
|
|
|
53,752
|
|
|
31,164
|
|
Provision for transaction and loan losses
|
|
|
6,103
|
|
|
2,747
|
|
Deferred income taxes
|
|
|
(6,643)
|
|
|
—
|
|
Unrealized foreign exchange (gain) loss
|
|
|
(3,779)
|
|
|
60
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Trade and other receivables
|
|
|
(2,378)
|
|
|
(10,551)
|
|
Merchant cash advances, loans and related receivables
|
|
|
(46,478)
|
|
|
(18,117)
|
|
Other current assets
|
|
|
(15,349)
|
|
|
(2,917)
|
|
Accounts payable and accrued liabilities
|
|
|
30,621
|
|
|
34,321
|
|
Income tax assets and liabilities
|
|
|
(90,375)
|
|
|
—
|
|
Deferred revenue
|
|
|
5,804
|
|
|
3,696
|
|
Lease assets and liabilities
|
|
|
830
|
|
|
1,260
|
|
Net cash (used) provided by operating activities
|
|
|
(84,955)
|
|
|
24,344
|
|
Cash flows from investing activities
|
|
|
|
|
|
||
Purchase of marketable securities
|
|
|
(496,224)
|
|
|
(700,052)
|
|
Maturity of marketable securities
|
|
|
913,178
|
|
|
679,467
|
|
Acquisitions of property and equipment
|
|
|
(16,740)
|
|
|
(9,552)
|
|
Acquisitions of intangible assets
|
|
|
(219)
|
|
|
(1,440)
|
|
Acquisition of businesses, net of cash acquired
|
|
|
—
|
|
|
(5,715)
|
|
Net cash provided (used) by investing activities
|
|
|
399,995
|
|
|
(37,292)
|
|
Cash flows from financing activities
|
|
|
|
|
|
||
Proceeds from the exercise of stock options
|
|
|
19,427
|
|
|
12,056
|
|
Net cash provided by financing activities
|
|
|
19,427
|
|
|
12,056
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
|
(15,020)
|
|
|
655
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
319,447
|
|
|
(237)
|
|
Cash and cash equivalents – Beginning of Period
|
|
|
649,916
|
|
|
410,683
|
|
Cash and cash equivalents – End of Period
|
|
|
969,363
|
|
|
410,446
|
|
|
|
|
|
|
|
||
Supplemental cash flow information:
|
|
|
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities included in cash flows from operating activities
|
|
|
4,742
|
|
|
3,521
|
|
Lease liabilities arising from obtaining right-of-use assets
|
|
|
2,718
|
|
|
103,310
|
|
Acquired property and equipment remaining unpaid
|
|
|
2,441
|
|
|
4,890
|
|
1.
|
Nature of Business
|
2.
|
Basis of Presentation and Consolidation
|
3.
|
Significant Accounting Policies
|
|
Three months ended
|
||||||||||||
|
March 31, 2020
|
|
March 31, 2019
|
||||||||||
|
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
|
470,001
|
|
946
|
|
470,947
|
|
|
320,482
|
|
551
|
|
321,033
|
|
Cost of revenues
|
(213,051
|
)
|
(1,277
|
)
|
(214,328
|
)
|
|
(140,191
|
)
|
(914
|
)
|
(141,105
|
)
|
Operating expenses
|
(330,183
|
)
|
(11,769
|
)
|
(341,952
|
)
|
|
(216,081
|
)
|
(10,933
|
)
|
(227,014
|
)
|
Loss from operations
|
(73,233
|
)
|
(12,100
|
)
|
(85,333
|
)
|
|
(35,790
|
)
|
(11,296
|
)
|
(47,086
|
)
|
|
Level 1
$ |
|
Level 2
$ |
|
Level 3
$ |
|||||||||
|
Carrying Amount
|
Fair Value
|
|
Carrying Amount
|
Fair Value
|
|
Carrying Amount
|
Fair Value
|
||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||
Marketable securities:
|
|
|
|
|
|
|
|
|
||||||
U.S. term deposits
|
275,000
|
|
277,255
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
U.S. federal bonds
|
204,004
|
|
205,811
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Canadian federal bonds
|
29,913
|
|
29,930
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
Corporate bonds and commercial paper
|
—
|
|
—
|
|
|
882,292
|
|
884,383
|
|
|
—
|
|
—
|
|
Derivative assets:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange forward contracts
|
—
|
|
—
|
|
|
560
|
|
560
|
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange forward contracts
|
—
|
|
—
|
|
|
17,361
|
|
17,361
|
|
|
—
|
|
—
|
|
|
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
|
|
|
—
|
|
—
|
|
|
March 31, 2020
$ |
|
December 31, 2019
$ |
|
January 1, 2019
$ |
|||
Indirect taxes receivable
|
35,032
|
|
|
36,821
|
|
|
3,774
|
|
Unbilled revenues
|
28,414
|
|
|
31,629
|
|
|
12,653
|
|
Trade receivables
|
13,092
|
|
|
9,660
|
|
|
11,191
|
|
Accrued interest
|
6,213
|
|
|
5,754
|
|
|
5,109
|
|
Other receivables
|
5,388
|
|
|
6,665
|
|
|
8,620
|
|
|
88,139
|
|
|
90,529
|
|
|
41,347
|
|
|
Three months ended
|
||||
|
March 31, 2020
$ |
|
March 31, 2019
$ |
||
Allowance, beginning of the period
|
2,894
|
|
|
1,023
|
|
Provision for credit losses related to uncollectible receivables(1)
|
1,706
|
|
|
716
|
|
Write-offs
|
(24
|
)
|
|
(525
|
)
|
Allowance, end of the period
|
4,576
|
|
|
1,214
|
|
|
Three months ended
|
||||
|
March 31, 2020
$ |
|
March 31, 2019
$ |
||
Balance, beginning of the period
|
62,660
|
|
|
41,061
|
|
Deferral of revenue
|
35,332
|
|
|
26,646
|
|
Recognition of deferred revenue
|
(29,528
|
)
|
|
(22,950
|
)
|
Balance, end of the period
|
68,464
|
|
|
44,757
|
|
|
|
|
|
||
Current portion
|
62,884
|
|
|
42,746
|
|
Long term portion
|
5,580
|
|
|
2,011
|
|
|
68,464
|
|
|
44,757
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
January 1, 2019
|
|||
|
$
|
|
$
|
|
$
|
|||
Merchant cash advances receivable, gross
|
172,440
|
|
|
131,227
|
|
|
77,653
|
|
Related receivables(1)
|
4,116
|
|
|
3,179
|
|
|
4,482
|
|
Allowance for credit losses related to uncollectible merchant cash advances receivable
|
(15,317
|
)
|
|
(10,420
|
)
|
|
(6,249
|
)
|
Loans receivable, gross
|
34,417
|
|
|
28,547
|
|
|
16,959
|
|
Allowance for credit losses related to uncollectible loans receivable
|
(3,793
|
)
|
|
(2,361
|
)
|
|
(972
|
)
|
Merchant cash advances, loans and related receivables, net
|
191,863
|
|
|
150,172
|
|
|
91,873
|
|
|
Three months ended
|
||||
|
March 31, 2020
|
|
March 31, 2019
|
||
|
$
|
|
$
|
||
Allowance, beginning of the period
|
12,781
|
|
|
7,221
|
|
Provision for credit losses related to uncollectible merchant cash advances receivable(2)
|
7,096
|
|
|
2,923
|
|
Merchant cash advances receivable charged off, net of recoveries
|
(2,199
|
)
|
|
(1,584
|
)
|
Provision for credit losses related to uncollectible loans receivable(2)
|
1,807
|
|
|
354
|
|
Loans receivable charged off, net of recoveries
|
(375
|
)
|
|
(48
|
)
|
Allowance, end of the period
|
19,110
|
|
|
8,866
|
|
Related receivables(1)
|
(4,116
|
)
|
|
(4,603
|
)
|
Allowance, net of related receivables
|
14,994
|
|
|
4,263
|
|
|
Three months ended
|
||||
|
March 31, 2020
|
|
March 31, 2019
|
||
|
$
|
|
$
|
||
Operating lease expense
|
5,600
|
|
|
3,638
|
|
Variable lease expense, including non-lease components
|
3,482
|
|
|
3,224
|
|
Total lease expense
|
9,082
|
|
|
6,862
|
|
Fiscal Year
|
Operating Leases
$
|
|
Remainder of 2020
|
18,083
|
|
2021
|
38,217
|
|
2022
|
46,428
|
|
2023
|
41,722
|
|
2024
|
45,095
|
|
Thereafter
|
338,261
|
|
Total future minimum payments
|
527,806
|
|
Minimum payments related to leases that have not yet commenced
|
(133,272
|
)
|
Minimum payments related to variable lease payments, including non-lease components
|
(214,636
|
)
|
Imputed interest
|
(38,408
|
)
|
Total lease liabilities
|
141,490
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||
|
$
|
|
$
|
||
Balance, beginning of the year
|
311,865
|
|
|
38,019
|
|
Acquisition of 6 River Systems, Inc.
|
—
|
|
|
264,527
|
|
Other acquisitions
|
—
|
|
|
9,319
|
|
Balance, end of the period
|
311,865
|
|
|
311,865
|
|
10.
|
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, 2019
|
3,812,242
|
|
|
54.59
|
|
|
6.14
|
|
|
1,307,565
|
|
|
—
|
|
|
1,939,918
|
|
|
159.13
|
|
Stock options granted
|
236,910
|
|
|
465.60
|
|
|
—
|
|
|
—
|
|
|
179.32
|
|
|
—
|
|
|
—
|
|
Stock options exercised
|
(409,965
|
)
|
|
47.40
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock options forfeited
|
(23,899
|
)
|
|
135.13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
RSUs granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
280,295
|
|
|
465.60
|
|
RSUs settled
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(385,757
|
)
|
|
120.21
|
|
RSUs forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,585
|
)
|
|
174.98
|
|
March 31, 2020
|
3,615,288
|
|
|
81.81
|
|
|
6.15
|
|
|
1,211,573
|
|
|
—
|
|
|
1,798,871
|
|
|
214.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock options exercisable as of March 31, 2020
|
2,434,311
|
|
|
32.01
|
|
|
5.16
|
|
|
937,011
|
|
|
|
|
|
|
|
|
Three months ended
|
|||
|
March 31, 2020
|
|
March 31, 2019
|
|
|
$
|
|
$
|
|
Cost of revenues
|
1,148
|
|
|
714
|
Sales and marketing
|
11,207
|
|
|
6,835
|
Research and development
|
32,604
|
|
|
18,115
|
General and administrative
|
8,793
|
|
|
5,500
|
|
53,752
|
|
|
31,164
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||
|
Three months ended
|
||||
|
March 31, 2020
|
|
March 31, 2019
|
||
|
$
|
|
$
|
||
Balance, beginning of the period
|
1,046
|
|
|
(12,216
|
)
|
|
|
|
|
||
Other comprehensive income (loss) before reclassifications
|
(23,926
|
)
|
|
5,996
|
|
Loss on cash flow hedges reclassified from accumulated other comprehensive income (loss) to earnings were as follows:
|
|
|
|
||
Cost of revenues
|
59
|
|
|
182
|
|
Sales and marketing
|
336
|
|
|
963
|
|
Research and development
|
714
|
|
|
1,658
|
|
General and administrative
|
186
|
|
|
475
|
|
Tax effect on unrealized gain (loss) on cash flow hedges
|
5,998
|
|
|
—
|
|
Other comprehensive income (loss), net of tax
|
(16,633
|
)
|
|
9,274
|
|
Balance, end of the period
|
(15,587
|
)
|
|
(2,942
|
)
|
|
Three months ended
|
||||
|
March 31, 2020
|
|
March 31, 2019
|
||
Basic and diluted weighted average number of shares outstanding
|
116,806,549
|
|
|
110,921,276
|
|
The following items have been excluded from the diluted weighted average number of shares outstanding because they are anti-dilutive:
|
|
|
|
||
Stock options
|
3,615,288
|
|
|
5,054,120
|
|
Restricted share units
|
1,798,871
|
|
|
2,580,154
|
|
Deferred share units
|
713
|
|
|
478
|
|
|
5,414,872
|
|
|
7,634,752
|
|
•
|
the extent of the impact of the novel coronavirus ("COVID-19") on our business, financial performance, revenues, and results of operations, in particular a potential decrease in gross merchandise volume as a result of lower consumer spending which may be partially offset by more businesses moving online, the expected expansion of Shopify Capital in 2020 in response to COVID-19, our expectation that merchants will use funding from Shopify Capital for business continuity and continue to downgrade their subscription
|
•
|
disruption to our operations due to the impact of COVID-19 and the impact of COVID-19 on our employees, suppliers, partners, and our merchants and their customers, the success of and risk related to new products and initiatives launched in response to COVID-19, and the effect of economic conditions as a result of COVID-19 on the value of our investments and our share price;
|
•
|
our exploration of new ways to accelerate checkout;
|
•
|
our ability to make it easier for merchants to manage their storefronts via their mobile devices;
|
•
|
the achievement of innovations and enhancements to, and expansion of, our platform and our solutions;
|
•
|
whether a merchant using Shopify will ever need to re-platform;
|
•
|
the continued growth of our app developer, theme designer and partner ecosystem and the effect on the growth of our merchant base;
|
•
|
the continued expansion of the number of channels for merchants to transact through;
|
•
|
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 intention to 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 6 River Systems Inc. ("6RS");
|
•
|
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 our results of operations will be adversely impacted by an increase in the value of the Canadian dollar ("CAD") relative to the USD;
|
•
|
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 transaction and loan losses related to Shopify Payments and Shopify Capital will increase on an absolute dollar basis over time, including as a result of the ongoing COVID-19 pandemic;
|
•
|
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;
|
•
|
expected credit losses related to the impact of COVID-19;
|
•
|
our belief that we have sufficient liquidity to meet our current and planned financial obligations over the next 12 months, including any potential negative impacts to cash that may occur as a result of the potential impact from COVID-19;
|
•
|
our future financing requirements and the availability of capital;
|
•
|
the future value of our investment income, in particular as a result of changes in interest rates;
|
•
|
our expectations regarding contractual obligations and contingencies;
|
•
|
the impact of inflation on our costs and operations;
|
•
|
our accounting estimates, allowances, provisions, and assumptions made in the preparation of our financial statements, including the potential impact from COVID-19; and
|
•
|
our expectations regarding the impact of recently adopted accounting standards.
|
•
|
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 an increasing awareness among buyers that Shopify provides a superior and secure checkout experience is an additional advantage for our merchants;
|
•
|
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 a portion of increased funding to Shopify Capital will go toward business continuity instead of growth activities;
|
•
|
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.
|
•
|
the COVID-19 pandemic and its impact on our business, financial condition and results of operations including the impact of measures taken to contain the virus and the impact on the global economy and consumer spending and on our merchants' and partners' ecosystem;
|
•
|
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.
|
|
Three months ended March 31,
|
|
||||||
|
2020
|
|
2019
|
|
||||
|
(in thousands)
|
|
||||||
Monthly Recurring Revenue
|
$
|
55,397
|
|
|
$
|
44,213
|
|
|
Gross Merchandise Volume
|
$
|
17,415,252
|
|
|
$
|
11,913,826
|
|
(1)
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands, except share and per share data)
|
||||||
Revenues:
|
|
|
|
||||
Subscription solutions
|
$
|
187,609
|
|
|
$
|
140,451
|
|
Merchant solutions
|
282,392
|
|
|
180,031
|
|
||
|
470,001
|
|
|
320,482
|
|
||
Cost of revenues(1)(2):
|
|
|
|
||||
Subscription solutions
|
37,712
|
|
|
27,985
|
|
||
Merchant solutions
|
175,339
|
|
|
112,206
|
|
||
|
213,051
|
|
|
140,191
|
|
||
Gross profit
|
256,950
|
|
|
180,291
|
|
||
Operating expenses:
|
|
|
|
||||
Sales and marketing(1)(2)
|
154,862
|
|
|
105,022
|
|
||
Research and development(1)(2)
|
116,396
|
|
|
76,355
|
|
||
General and administrative(1)
|
44,842
|
|
|
30,303
|
|
||
Transaction and loan losses
|
14,083
|
|
|
4,401
|
|
||
Total operating expenses
|
330,183
|
|
|
216,081
|
|
||
Loss from operations
|
(73,233
|
)
|
|
(35,790
|
)
|
||
Other income
|
13,109
|
|
|
11,639
|
|
||
Loss before income taxes
|
(60,124
|
)
|
|
(24,151
|
)
|
||
Recovery of income taxes
|
28,695
|
|
|
—
|
|
||
Net loss
|
$
|
(31,429
|
)
|
|
$
|
(24,151
|
)
|
Basic and diluted net loss per share attributable to shareholders
|
$
|
(0.27
|
)
|
|
$
|
(0.22
|
)
|
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders
|
116,806,549
|
|
|
110,921,276
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Cost of revenues
|
$
|
1,324
|
|
|
$
|
814
|
|
Sales and marketing
|
12,434
|
|
|
7,645
|
|
||
Research and development
|
36,421
|
|
|
19,923
|
|
||
General and administrative
|
9,767
|
|
|
6,031
|
|
||
|
$
|
59,946
|
|
|
$
|
34,413
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Cost of revenues
|
$
|
5,569
|
|
|
$
|
1,625
|
|
Sales and marketing
|
388
|
|
|
—
|
|
||
Research and development
|
58
|
|
|
58
|
|
||
|
$
|
6,015
|
|
|
$
|
1,683
|
|
|
Three months ended March 31,
|
|
2020 vs. 2019
|
|||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Revenues:
|
|
|
|
|
|
|||||
Subscription solutions
|
$
|
187,609
|
|
|
$
|
140,451
|
|
|
33.6
|
%
|
Merchant solutions
|
282,392
|
|
|
180,031
|
|
|
56.9
|
%
|
||
|
$
|
470,001
|
|
|
$
|
320,482
|
|
|
46.7
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|||||
Subscription solutions
|
39.9
|
%
|
|
43.8
|
%
|
|
|
|||
Merchant solutions
|
60.1
|
%
|
|
56.2
|
%
|
|
|
|||
Total revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
Three months ended March 31,
|
|
2020 vs. 2019
|
|||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Cost of subscription solutions
|
$
|
37,712
|
|
|
$
|
27,985
|
|
|
34.8
|
%
|
Cost of merchant solutions
|
175,339
|
|
|
112,206
|
|
|
56.3
|
%
|
||
Total cost of revenues
|
$
|
213,051
|
|
|
$
|
140,191
|
|
|
52.0
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|||||
Cost of subscription solutions
|
8.0
|
%
|
|
8.7
|
%
|
|
|
|||
Cost of merchant solutions
|
37.3
|
%
|
|
35.0
|
%
|
|
|
|||
|
45.3
|
%
|
|
43.7
|
%
|
|
|
|
Three months ended March 31,
|
|
2020 vs. 2019
|
|||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Gross profit
|
$
|
256,950
|
|
|
$
|
180,291
|
|
|
42.5
|
%
|
Percentage of total revenues
|
54.7
|
%
|
|
56.3
|
%
|
|
|
|
Three months ended March 31,
|
|
2020 vs. 2019
|
|||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Sales and marketing
|
$
|
154,862
|
|
|
$
|
105,022
|
|
|
47.5
|
%
|
Percentage of total revenues
|
32.9
|
%
|
|
32.8
|
%
|
|
|
|
Three months ended March 31,
|
|
2020 vs. 2019
|
|||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Research and development
|
$
|
116,396
|
|
|
$
|
76,355
|
|
|
52.4
|
%
|
Percentage of total revenues
|
24.8
|
%
|
|
23.8
|
%
|
|
|
|
Three months ended March 31,
|
|
2020 vs. 2019
|
|||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
General and administrative
|
$
|
44,842
|
|
|
$
|
30,303
|
|
|
48.0
|
%
|
Percentage of total revenues
|
9.5
|
%
|
|
9.5
|
%
|
|
|
|
Three months ended March 31,
|
|
2020 vs. 2019
|
|||||||
|
2020
|
|
2019
|
|
% Change
|
|||||
|
(in thousands, except percentages)
|
|||||||||
Transaction and loan losses
|
$
|
14,083
|
|
|
$
|
4,401
|
|
|
220.0
|
%
|
Percentage of total revenues
|
3.0
|
%
|
|
1.4
|
%
|
|
|
|
Three months ended March 31,
|
|
2020 vs. 2019
|
||||||
|
2020
|
|
2019
|
|
% Change
|
||||
|
(in thousands, except percentages)
|
||||||||
Other income (expenses), net
|
$
|
13,109
|
|
|
$
|
11,639
|
|
|
*
|
*
|
Not a meaningful comparison
|
|
Three months ended March 31,
|
|
2020 vs. 2019
|
||||||
|
2020
|
|
2019
|
|
% Change
|
||||
|
(in thousands, except percentages)
|
||||||||
Recovery of income taxes
|
$
|
28,695
|
|
|
$
|
—
|
|
|
*
|
*
|
Not a meaningful comparison
|
|
Three months ended
|
||||||||||||||||||||||||||||||
|
Mar 31, 2020
|
|
Dec 31, 2019
|
|
Sep 30, 2019
|
|
Jun 30, 2019
|
|
Mar 31, 2019
|
|
Dec 31, 2018
|
|
Sep 30, 2018
|
|
Jun 30, 2018
|
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription solutions
|
$
|
187,609
|
|
|
$
|
183,166
|
|
|
$
|
165,577
|
|
|
$
|
153,047
|
|
|
$
|
140,451
|
|
|
$
|
133,560
|
|
|
$
|
120,517
|
|
|
$
|
110,721
|
|
Merchant solutions
|
282,392
|
|
|
321,994
|
|
|
224,975
|
|
|
208,932
|
|
|
180,031
|
|
|
210,302
|
|
|
149,547
|
|
|
134,242
|
|
||||||||
|
470,001
|
|
|
505,160
|
|
|
390,552
|
|
|
361,979
|
|
|
320,482
|
|
|
343,862
|
|
|
270,064
|
|
|
244,963
|
|
||||||||
Cost of revenues:(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription solutions
|
37,712
|
|
|
37,369
|
|
|
33,263
|
|
|
29,538
|
|
|
27,985
|
|
|
26,706
|
|
|
26,600
|
|
|
24,524
|
|
||||||||
Merchant solutions
|
175,339
|
|
|
203,900
|
|
|
140,593
|
|
|
127,676
|
|
|
112,206
|
|
|
131,413
|
|
|
93,737
|
|
|
83,484
|
|
||||||||
|
213,051
|
|
|
241,269
|
|
|
173,856
|
|
|
157,214
|
|
|
140,191
|
|
|
158,119
|
|
|
120,337
|
|
|
108,008
|
|
||||||||
Gross profit
|
256,950
|
|
|
263,891
|
|
|
216,696
|
|
|
204,765
|
|
|
180,291
|
|
|
185,743
|
|
|
149,727
|
|
|
136,955
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sales and marketing(1)(2)
|
154,862
|
|
|
132,063
|
|
|
116,546
|
|
|
119,210
|
|
|
105,022
|
|
|
95,163
|
|
|
91,635
|
|
|
87,487
|
|
||||||||
Research and development(1)(2)
|
116,396
|
|
|
102,753
|
|
|
90,387
|
|
|
85,520
|
|
|
76,355
|
|
|
67,024
|
|
|
61,629
|
|
|
54,305
|
|
||||||||
General and administrative(1)
|
44,842
|
|
|
50,518
|
|
|
38,022
|
|
|
34,922
|
|
|
30,303
|
|
|
29,980
|
|
|
25,661
|
|
|
24,043
|
|
||||||||
Transaction and loan losses
|
14,083
|
|
|
8,636
|
|
|
7,399
|
|
|
4,733
|
|
|
4,401
|
|
|
3,034
|
|
|
2,170
|
|
|
1,881
|
|
||||||||
Total operating expenses
|
330,183
|
|
|
293,970
|
|
|
252,354
|
|
|
244,385
|
|
|
216,081
|
|
|
195,201
|
|
|
181,095
|
|
|
167,716
|
|
||||||||
Loss from operations
|
(73,233
|
)
|
|
(30,079
|
)
|
|
(35,658
|
)
|
|
(39,620
|
)
|
|
(35,790
|
)
|
|
(9,458
|
)
|
|
(31,368
|
)
|
|
(30,761
|
)
|
||||||||
Other income
|
13,109
|
|
|
11,539
|
|
|
11,212
|
|
|
10,942
|
|
|
11,639
|
|
|
7,944
|
|
|
8,184
|
|
|
6,808
|
|
||||||||
Loss before income taxes
|
$
|
(60,124
|
)
|
|
$
|
(18,540
|
)
|
|
$
|
(24,446
|
)
|
|
$
|
(28,678
|
)
|
|
$
|
(24,151
|
)
|
|
$
|
(1,514
|
)
|
|
$
|
(23,184
|
)
|
|
$
|
(23,953
|
)
|
Provision for (recovery of) income taxes
|
$
|
(28,695
|
)
|
|
$
|
(19,311
|
)
|
|
$
|
48,338
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income (loss)
|
$
|
(31,429
|
)
|
|
$
|
771
|
|
|
$
|
(72,784
|
)
|
|
$
|
(28,678
|
)
|
|
$
|
(24,151
|
)
|
|
$
|
(1,514
|
)
|
|
$
|
(23,184
|
)
|
|
$
|
(23,953
|
)
|
Basic and diluted net income (loss) per share attributable to shareholders
|
$
|
(0.27
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.64
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.23
|
)
|
|
Three months ended
|
||||||||||||||||||||||||||||||
|
Mar 31, 2020
|
|
Dec 31, 2019
|
|
Sep 30, 2019
|
|
Jun 30, 2019
|
|
Mar 31, 2019
|
|
Dec 31, 2018
|
|
Sep 30, 2018
|
|
Jun 30, 2018
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Cost of revenues
|
$
|
1,324
|
|
|
$
|
1,209
|
|
|
$
|
1,041
|
|
|
$
|
1,026
|
|
|
$
|
814
|
|
|
$
|
660
|
|
|
$
|
655
|
|
|
$
|
637
|
|
Sales and marketing
|
12,434
|
|
|
11,319
|
|
|
9,692
|
|
|
9,511
|
|
|
7,645
|
|
|
6,641
|
|
|
6,397
|
|
|
6,249
|
|
||||||||
Research and development
|
36,421
|
|
|
32,361
|
|
|
25,913
|
|
|
26,448
|
|
|
19,923
|
|
|
16,769
|
|
|
15,669
|
|
|
15,221
|
|
||||||||
General and administrative
|
9,767
|
|
|
8,533
|
|
|
7,853
|
|
|
7,444
|
|
|
6,031
|
|
|
5,356
|
|
|
5,007
|
|
|
4,386
|
|
||||||||
|
$
|
59,946
|
|
|
$
|
53,422
|
|
|
$
|
44,499
|
|
|
$
|
44,429
|
|
|
$
|
34,413
|
|
|
$
|
29,426
|
|
|
$
|
27,728
|
|
|
$
|
26,493
|
|
|
Three months ended
|
||||||||||||||||||||||||||||||
|
Mar 31, 2020
|
|
Dec 31, 2019
|
|
Sep 30, 2019
|
|
Jun 30, 2019
|
|
Mar 31, 2019
|
|
Dec 31, 2018
|
|
Sep 30, 2018
|
|
Jun 30, 2018
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Cost of revenues
|
$
|
5,569
|
|
|
$
|
4,820
|
|
|
$
|
1,649
|
|
|
$
|
1,530
|
|
|
$
|
1,625
|
|
|
$
|
1,447
|
|
|
$
|
1,241
|
|
|
$
|
1,120
|
|
Sales and marketing
|
388
|
|
|
283
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Research and development
|
58
|
|
|
58
|
|
|
58
|
|
|
58
|
|
|
58
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
$
|
6,015
|
|
|
$
|
5,161
|
|
|
$
|
1,707
|
|
|
$
|
1,588
|
|
|
$
|
1,683
|
|
|
$
|
1,447
|
|
|
$
|
1,241
|
|
|
$
|
1,120
|
|
|
Three months ended
|
||||||||||||||||||||||
|
Mar 31, 2020
|
|
Dec 31, 2019
|
|
Sep 30, 2019
|
|
Jun 30, 2019
|
|
Mar 31, 2019
|
|
Dec 31, 2018
|
|
Sep 30, 2018
|
|
Jun 30, 2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Subscription solutions
|
39.9
|
%
|
|
36.3
|
%
|
|
42.4
|
%
|
|
42.3
|
%
|
|
43.8
|
%
|
|
38.8
|
%
|
|
44.6
|
%
|
|
45.2
|
%
|
Merchant solutions
|
60.1
|
%
|
|
63.7
|
%
|
|
57.6
|
%
|
|
57.7
|
%
|
|
56.2
|
%
|
|
61.2
|
%
|
|
55.4
|
%
|
|
54.8
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Subscription solutions
|
8.0
|
%
|
|
7.4
|
%
|
|
8.5
|
%
|
|
8.2
|
%
|
|
8.7
|
%
|
|
7.8
|
%
|
|
9.8
|
%
|
|
10.0
|
%
|
Merchant solutions
|
37.3
|
%
|
|
40.4
|
%
|
|
36.0
|
%
|
|
35.3
|
%
|
|
35.0
|
%
|
|
38.2
|
%
|
|
34.7
|
%
|
|
34.1
|
%
|
|
45.3
|
%
|
|
47.8
|
%
|
|
44.5
|
%
|
|
43.5
|
%
|
|
43.7
|
%
|
|
46.0
|
%
|
|
44.5
|
%
|
|
44.1
|
%
|
Gross profit
|
54.7
|
%
|
|
52.2
|
%
|
|
55.5
|
%
|
|
56.6
|
%
|
|
56.3
|
%
|
|
54.0
|
%
|
|
55.4
|
%
|
|
55.9
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
32.9
|
%
|
|
26.1
|
%
|
|
29.8
|
%
|
|
32.9
|
%
|
|
32.8
|
%
|
|
27.7
|
%
|
|
33.9
|
%
|
|
35.7
|
%
|
Research and development
|
24.8
|
%
|
|
20.3
|
%
|
|
23.1
|
%
|
|
23.6
|
%
|
|
23.8
|
%
|
|
19.5
|
%
|
|
22.8
|
%
|
|
22.2
|
%
|
General and administrative
|
9.5
|
%
|
|
10.0
|
%
|
|
9.7
|
%
|
|
9.7
|
%
|
|
9.4
|
%
|
|
8.7
|
%
|
|
9.5
|
%
|
|
9.8
|
%
|
Transaction and loan losses
|
3.0
|
%
|
|
1.7
|
%
|
|
1.9
|
%
|
|
1.3
|
%
|
|
1.4
|
%
|
|
0.9
|
%
|
|
0.8
|
%
|
|
0.8
|
%
|
|
70.2
|
%
|
|
58.1
|
%
|
|
64.5
|
%
|
|
67.5
|
%
|
|
67.4
|
%
|
|
56.8
|
%
|
|
67.0
|
%
|
|
68.5
|
%
|
Loss from operations
|
(15.6
|
)%
|
|
(5.9
|
)%
|
|
(9.1
|
)%
|
|
(10.9
|
)%
|
|
(11.2
|
)%
|
|
(2.8
|
)%
|
|
(11.6
|
)%
|
|
(12.6
|
)%
|
Other income
|
2.8
|
%
|
|
2.3
|
%
|
|
2.9
|
%
|
|
3.0
|
%
|
|
3.6
|
%
|
|
2.3
|
%
|
|
3.0
|
%
|
|
2.8
|
%
|
Loss before income taxes
|
(12.8
|
)%
|
|
(3.6
|
)%
|
|
(6.3
|
)%
|
|
(7.9
|
)%
|
|
(7.5
|
)%
|
|
(0.4
|
)%
|
|
(8.6
|
)%
|
|
(9.8
|
)%
|
Provision for (recovery of) income taxes
|
(6.1
|
)%
|
|
(3.8
|
)%
|
|
12.4
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Net income (loss)
|
(6.7
|
)%
|
|
0.2
|
%
|
|
(18.6
|
)%
|
|
(7.9
|
)%
|
|
(7.5
|
)%
|
|
(0.4
|
)%
|
|
(8.6
|
)%
|
|
(9.8
|
)%
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(in thousands)
|
||||||
Cash, cash equivalents and marketable securities
|
$
|
2,360,572
|
|
|
$
|
2,455,194
|
|
Total assets
|
3,470,916
|
|
|
3,489,479
|
|
||
Total liabilities
|
430,065
|
|
|
473,745
|
|
||
Total non-current liabilities
|
141,508
|
|
|
157,363
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Cash, cash equivalents and marketable securities (end of period)
|
$
|
2,360,572
|
|
|
$
|
1,997,014
|
|
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(84,955
|
)
|
|
$
|
24,344
|
|
Investing activities
|
399,995
|
|
|
(37,292
|
)
|
||
Financing activities
|
19,427
|
|
|
12,056
|
|
||
Effect of foreign exchange on cash and cash equivalents
|
(15,020
|
)
|
|
655
|
|
||
Net increase (decrease) in cash and cash equivalents
|
319,447
|
|
|
(237
|
)
|
||
Change in marketable securities
|
(414,069
|
)
|
|
27,581
|
|
||
Net (decrease) increase in cash, cash equivalents and marketable securities
|
$
|
(94,622
|
)
|
|
$
|
27,344
|
|
|
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)
|
50,568
|
|
|
96,633
|
|
|
85,276
|
|
|
327,196
|
|
|
559,673
|
|
|||||
Total contractual obligations
|
$
|
50,568
|
|
|
$
|
96,633
|
|
|
$
|
85,276
|
|
|
$
|
327,196
|
|
|
$
|
559,673
|
|
|
Three months ended March 31,
|
||||||||||||
|
2020
|
|
2019
|
||||||||||
|
GAAP Amounts As Reported
|
Exchange Rate Effect (1)
|
At Prior Year Effective Rates (2)
|
|
GAAP Amounts As Reported
|
||||||||
|
(in thousands)
|
||||||||||||
Revenues
|
$
|
470,001
|
|
$
|
325
|
|
$
|
470,326
|
|
|
$
|
320,482
|
|
Cost of revenues
|
(213,051
|
)
|
(777
|
)
|
(213,828
|
)
|
|
(140,191
|
)
|
||||
Operating expenses
|
(330,183
|
)
|
(5,193
|
)
|
(335,376
|
)
|
|
(216,081
|
)
|
||||
Loss from operations
|
$
|
(73,233
|
)
|
$
|
(5,645
|
)
|
$
|
(78,878
|
)
|
|
$
|
(35,790
|
)
|
1.
|
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Shopify Inc. (the “issuer”) for the interim period ended March 31, 2020.
|
2.
|
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
3.
|
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
4.
|
Responsibility: The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuer's Annual and Interim Filings, for the issuer.
|
5.
|
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings
|
6.
|
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on January 1, 2020 and ended on March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
|
/s/ Tobias Lütke
|
Tobias Lütke
|
Chief Executive Officer
|
1.
|
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Shopify Inc. (the “issuer”) for the interim period ended March 31, 2020.
|
2.
|
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
3.
|
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
4.
|
Responsibility: The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuer's Annual and Interim Filings, for the issuer.
|
5.
|
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings
|
6.
|
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on January 1, 2020 and ended on March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
|
/s/ Amy Shapero
|
Amy Shapero
|
Chief Financial Officer
|