01—Abstract
Summary
Summary of the 40-F filed February 15, 2018. Cited figures are marked; the original filing is the authoritative source.
Shopify Inc.'s 2017 Form 40-F filing provides an overview of its financial reporting structure and compliance as of December 31, 2017.
The company, an emerging growth company, reported effective disclosure controls and procedures and internal controls over financial reporting, as assessed by management and audited by PricewaterhouseCoopers LLP. There were no significant changes in internal controls during the fiscal year. The filing also details the composition and responsibilities of the Audit Committee, including the designation of an audit committee financial expert and adherence to NYSE listing standards as a foreign private issuer.
Investors can find comprehensive financial details and operational discussions within the referenced exhibits, such as the audited consolidated financial statements and Management's Discussion and Analysis. Notably, Shopify elected to comply with Canadian law regarding quorum requirements for shareholder meetings, which may offer less investor protection than typical NYSE rules for U.S. domestic companies.
The company also disclosed its principal accountant fees, highlighting that all services provided by PricewaterhouseCoopers LLP have been pre-approved by the Audit Committee to ensure auditor independence. Shopify confirmed no material off-balance sheet arrangements beyond standard operating leases.
02—Key points
Key Highlights
- Shopify Inc. reported effective disclosure controls and procedures as of December 31, 2017.
- The company's internal control over financial reporting was deemed effective, with no material weaknesses identified.
- PricewaterhouseCoopers LLP audited the effectiveness of Shopify's internal control over financial reporting.
- The Audit Committee comprises three independent directors, with Steven Collins designated as an audit committee financial expert.
- As a foreign private issuer, Shopify utilizes Canadian law for meeting quorum requirements, which differs from typical NYSE standards for U.S. domestic companies.
- All audit and non-audit services provided by the principal accountant, PricewaterhouseCoopers LLP, were pre-approved by the Audit Committee.
- The filing confirms no material off-balance sheet arrangements beyond operating leases.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2017, Shopify Inc. lost $0.06.
- Revenue$673.3M100.0%
- Cost of revenue−$293.1M43.5%
- Gross profit$380.3M56.5%
- Operating costs−$429.4M63.8%
- Operating income−$49.2M7.3%
- Interest, other & tax$9.2M1.4%
- Net income−$40.0M5.9%
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 15, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $673.30M$389.33M | +72.9% |
| Cost of Revenue | $293.05M— | — |
| Gross Profit | $380.25M$209.50M | +81.5% |
| R&D Expenses | $136.00M$74.34M | +82.9% |
| Operating Expenses | $429.41M$246.66M | +74.1% |
| Operating Income | -$49.16M-$37.16M | −32.3% |
| Net Income | -$39.99M-$35.35M | −13.1% |
| EPS (Basic) | $-0.04$-0.04 | 0.0% |
| Shares Outstanding (Basic) | 957.75M839.89M | +14.0% |
05—Questions
Frequently Asked Questions
What is the status of Shopify's internal controls and financial reporting for 2017?
For the fiscal year ended December 31, 2017, Shopify reported that its disclosure controls and procedures were effective. Management, along with the CEO and CFO, assessed the effectiveness of the company's internal control over financial reporting, concluding it was effective and that no material weaknesses existed. PricewaterhouseCoopers LLP, an independent registered public accounting firm, also audited and concurred with the effectiveness of these internal controls.
How does Shopify comply with NYSE listing requirements as a foreign private issuer?
As a foreign private issuer, Shopify has elected to comply with practices permitted under Canadian law in lieu of certain NYSE listing requirements, specifically concerning the quorum for shareholder meetings. Instead of the typically higher quorum required for U.S. domestic companies, Shopify's bylaws provide for a quorum of at least 25% of the shares entitled to vote, present in person or by proxy, along with at least two persons entitled to vote present in person or by proxy. The company may utilize other foreign private issuer exemptions in the future, noting that following home country governance practices might offer less investor protection than U.S. domestic issuer requirements.
What are the details regarding Shopify's auditor and related fees for 2017?
PricewaterhouseCoopers LLP served as Shopify's principal accountant for the fiscal year 2017. The total fees paid to the auditor amounted to $602,000, with $600,000 attributed to Audit Fees and $22,000 to All Other Fees. Audit-related fees and Tax fees were nil for 2017. The Audit Committee pre-approves all audit and non-audit services to ensure auditor independence, and all services rendered in 2017 were pre-approved.
Are there any off-balance sheet arrangements that investors should be aware of?
Shopify stated that it has no material off-balance sheet arrangements beyond standard operating leases, which are disclosed under 'Contractual Obligations and Contingencies' in their Management's Discussion and Analysis (MD&A).
06—Continue