01—Abstract
Summary
Summary of the 20-F filed February 17, 2016. Cited figures are marked; the original filing is the authoritative source.
Shopify Inc.'s 2015 10-K filing highlights a period of significant growth and the company's transition to a public entity following its IPO in May 2015.
The report details rapid expansion in both merchant numbers and Gross Merchandise Volume (GMV), indicating strong market adoption of its e-commerce platform. Revenue more than doubled year-over-year, demonstrating the company's successful business model which combines recurring subscriptions with merchant success-based components. Despite the impressive growth, Shopify reported net losses in 2015, consistent with its strategy of reinvesting in growth and innovation.
The company emphasizes its commitment to continuous platform development, ecosystem expansion through partners and apps, and a focus on making commerce accessible and efficient for small and medium-sized businesses. Investors should note the company's substantial investments in R&D and sales/marketing to fuel future expansion. As a relatively young public company, Shopify also outlines various risk factors, including market competition, evolving regulations, and the potential impact of stock sales by insiders.
02—Key points
Key Highlights
- Record growth in 2015 with total revenue reaching $205.2 million, a 95.4% increase from 2014.
- Significant expansion in merchant base, growing by 68.3% to 243,468 merchants by year-end 2015.
- Gross Merchandise Volume (GMV) more than doubled, reaching $7.7 billion in 2015.
- Completed its Initial Public Offering (IPO) in May 2015, raising approximately $136.3 million in net proceeds.
- Continued to invest heavily in Research and Development, accounting for 19.4% of total revenues in 2015.
- Maintained a focus on reinvesting earnings into growth and platform innovation, resulting in net losses ($18.8 million in 2015) as expected for a growth-stage company.
- Operates as a cloud-based, multi-channel e-commerce platform targeting small and medium-sized businesses.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2015, Shopify Inc. lost $0.09.
- Revenue$205.2M100.0%
- Cost of revenue−$92.0M44.8%
- Gross profit$113.3M55.2%
- Operating costs−$131.0M63.8%
- Operating income−$17.8M8.7%
- Interest, other & tax−$1.0M0.5%
- Net income−$18.8M9.2%
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 17, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $205.23M$105.02M | +95.4% |
| Gross Profit | $113.25M$61.80M | +83.3% |
| R&D Expenses | $39.72M$25.91M | +53.3% |
| Operating Expenses | $131.01M$83.41M | +57.1% |
| Operating Income | -$17.76M-$21.61M | +17.9% |
| Net Income | -$18.79M-$22.31M | +15.8% |
| EPS (Basic) | $-0.03$-0.06 | +47.4% |
| Shares Outstanding (Basic) | 617.16M389.40M | +58.5% |
05—Questions
Frequently Asked Questions
What is Shopify's primary business model?
Shopify provides a leading cloud-based, multi-channel commerce platform for small and medium-sized businesses. Its business model has two main revenue streams: a recurring subscription fee from merchants for using the platform and a merchant success-based component, primarily derived from transaction fees when merchants process orders through Shopify Payments and other merchant solutions.
What was Shopify's financial performance in 2015?
In 2015, Shopify experienced substantial growth. Total revenue reached $205.2 million, an increase of 95.4% from 2014. The number of merchants grew by 68.3% to 243,468, and Gross Merchandise Volume (GMV) processed through the platform increased by 104.8% to $7.7 billion. Despite this strong revenue growth, the company reported a net loss of $18.8 million, reflecting its strategy of reinvesting in growth and development.
What are the key risks for Shopify mentioned in the filing?
Key risks include market competition, changes in general economic and industry conditions, reliance on key personnel, potential sales of shares by insiders, and the challenges associated with being a public company, including increased costs and regulatory burdens. As a foreign private issuer, Shopify also faces specific disclosure and compliance differences compared to U.S. domestic issuers, and the potential for its foreign private issuer status to change. Risks related to internal controls over financial reporting are also highlighted as management will be required to report on their effectiveness starting in 2016.
Does Shopify plan to pay dividends to shareholders?
No, Shopify has never declared or paid cash dividends and does not anticipate paying any in the foreseeable future. The company intends to retain future earnings to fund business growth and development. Any future dividend decisions will be at the discretion of the board of directors.
06—Continue