10-KPeriod: FY2016

SHOPIFY INC. Annual Report, Year Ended Dec 31, 2016

Filed February 15, 2017For Securities:SHOP

Summary

Shopify Inc.'s 2016 Form 40-F filing reports on its fiscal year ended December 31, 2016. As a foreign private issuer, the company utilizes this form to fulfill its annual reporting obligations in the United States. A key aspect for investors is the confirmation of effective disclosure controls and procedures and internal control over financial reporting, as assessed by management and audited by PricewaterhouseCoopers LLP. This indicates a commitment to reliable financial reporting and compliance with regulatory standards. Investors should note the company's adherence to NYSE listing requirements, highlighting its election to comply with Canadian corporate governance practices in lieu of certain NYSE provisions for foreign private issuers. While this may offer less protection than U.S. domestic issuer requirements, Shopify's Audit Committee, comprised of independent directors with an identified financial expert, oversees these matters. The filing also details auditor fees, with a significant portion allocated to audit services, and notes a policy of limited non-audit services to maintain auditor independence.

Financial Highlights

42 data points
Beta

Revenue

$389.33M

53.8% Gross Margin

Net Income

-$35.35M

-9.1% Net Margin

EPS (Diluted)

$-0.04

Total Assets

$490.56M

Cash & Equivalents

$84.01M

Free Cash Flow

-$9.76M

Financial Statements
Beta
Revenue$389.33M
Gross Profit$209.50M
R&D Expenses$74.34M
Operating Expenses$246.66M
Operating Income-$37.16M
Net Income-$35.35M
EPS (Basic)$-0.04
Shares Outstanding (Basic)839.89M

Key Highlights

  • 1Shopify Inc. filed its annual report on Form 40-F for the fiscal year ended December 31, 2016.
  • 2The company confirmed the effectiveness of its disclosure controls and procedures as of December 31, 2016.
  • 3Management and an independent auditor (PricewaterhouseCoopers LLP) assessed Shopify's internal control over financial reporting and found it to be effective, with no material weaknesses.
  • 4Shopify, as a foreign private issuer, utilizes certain Canadian corporate governance practices allowed by the NYSE, which may differ from U.S. domestic issuer standards.
  • 5The Audit Committee comprises four independent directors, and one member is designated as an audit committee financial expert.
  • 6Audit fees represented the majority of services provided by PricewaterhouseCoopers LLP, with limited non-audit services approved to maintain auditor independence.
  • 7The company reported 77,030,952 Class A Subordinate Voting Shares and 12,374,528 Class B Multiple Voting Shares outstanding as of December 31, 2016.

Frequently Asked Questions

This Form 40-F filing serves as Shopify Inc.'s annual report to the U.S. Securities and Exchange Commission (SEC) for the fiscal year ended December 31, 2016. As a Canadian company and a foreign private issuer, this form allows Shopify to meet its reporting obligations in the U.S. market.

The confirmation that Shopify's internal controls over financial reporting are effective, with no material weaknesses identified, is crucial for investor confidence. It suggests that the company has robust processes in place to ensure the reliability and accuracy of its financial statements, adhering to U.S. generally accepted accounting principles (GAAP).

As a foreign private issuer, Shopify has elected to comply with certain Canadian corporate governance practices permitted by the NYSE, rather than adhering strictly to all provisions applicable to U.S. domestic companies. Specifically, its quorum requirements for shareholder meetings are based on Canadian law, which may offer different levels of investor protection compared to the NYSE's standard requirements for U.S. companies.

The fee breakdown indicates that the majority of expenses paid to PricewaterhouseCoopers LLP in 2016 were for audit services. The limited engagement in 'All Other Fees' and the absence of 'Audit-Related Fees' and 'Tax Fees' suggest a focus on core audit functions and a commitment to auditor independence, as all services were pre-approved by the Audit Committee.