01—Abstract
Summary
Summary of the 40-F filed February 16, 2022. Cited figures are marked; the original filing is the authoritative source.
This 10-K filing for Shopify Inc. (SHOP) for the fiscal year ending December 30, 2021, primarily focuses on the company's disclosures regarding its internal controls over financial reporting and corporate governance.
Management, along with independent auditors PricewaterhouseCoopers LLP, has affirmed the effectiveness of Shopify's internal controls and disclosure procedures as of December 31, 2021. There were no identified material weaknesses or changes that materially affected these controls during the fiscal year.
The report also details the composition and expertise of the Audit Committee, including the designation of Colleen Johnston as an 'audit committee financial expert.' Furthermore, it outlines the fees paid to PricewaterhouseCoopers LLP for audit and non-audit services, with a commitment to maintaining auditor independence. Shopify, as a foreign private issuer, also notes its compliance with Canadian corporate governance practices regarding meeting quorums on the NYSE.
02—Key points
Key Highlights
- Shopify Inc. has affirmed the effectiveness of its internal controls over financial reporting and disclosure controls and procedures as of December 31, 2021.
- PricewaterhouseCoopers LLP, the independent registered public accounting firm, has also attested to the effectiveness of Shopify's internal control over financial reporting.
- No material weaknesses were identified in Shopify's internal control over financial reporting during the fiscal year ended December 31, 2021.
- The Audit Committee, comprised of independent directors, has an appointed 'audit committee financial expert' and adheres to NYSE listing standards for independence.
- Aggregate fees paid to PricewaterhouseCoopers LLP for audit, tax, and other services in 2021 were $1.724 million, an increase from $1.502 million in 2020.
- The company has no material off-balance sheet arrangements beyond disclosed operating leases and unconditional purchase obligations.
- Shopify, as a foreign private issuer, complies with Canadian corporate governance practices for NYSE quorum requirements, which may offer less investor protection than U.S. domestic issuer rules.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Shopify Inc. kept $0.63.
- Revenue$4.61B100.0%
- Cost of revenue−$2.13B46.2%
- Gross profit$2.48B53.8%
- Operating costs−$2.21B48.0%
- Operating income$268.6M5.8%
- Interest, other & tax$2.65B57.4%
- Net income$2.91B63.2%
Where FY2021 revenue went
$4.61B- Cost of revenue: $2.13B, 46% of revenue
- Other operating costs: $1.36B, 29% of revenue
- R&D: $854.4M, 19% of revenue
- Operating income: $268.6M, 5.8% of revenue
Kept 5.8% as operating incomeOperating income $268.6M · 5.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 16, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $4.61B$2.93B | +57.4% |
| Cost of Revenue | $2.13B$1.39B | +53.5% |
| Gross Profit | $2.48B$1.54B | +61.0% |
| R&D Expenses | $854.38M$552.13M | +54.7% |
| Operating Expenses | $2.21B$1.45B | +52.4% |
| Operating Income | $268.64M$90.15M | +198.0% |
| Interest Expense | $3.49M$9.09M | −61.6% |
| Net Income | $2.91B$319.51M | +812.2% |
| EPS (Basic) | $2.34$0.27 | +776.4% |
| EPS (Diluted) | $2.29$0.26 | +784.2% |
| Shares Outstanding (Basic) | 1.25B1.20B | +4.3% |
| Shares Outstanding (Diluted) | 1.27B1.23B | +3.2% |
05—Questions
Frequently Asked Questions
What is the primary focus of this 10-K filing for Shopify?
This 10-K filing primarily focuses on Shopify's disclosures regarding its internal controls over financial reporting, disclosure procedures, and corporate governance. It includes affirmations of control effectiveness from management and independent auditors, details about the Audit Committee, and information on auditor fees.
Has Shopify experienced any material weaknesses in its financial reporting controls?
No, based on the assessment conducted by management and the independent registered public accounting firm, there were no material weaknesses identified in Shopify's internal control over financial reporting as of December 31, 2021.
How does Shopify ensure the independence of its external auditor?
Shopify's Audit Committee is responsible for pre-approving all audit and non-audit services provided by its independent registered public accounting firm. The committee assesses whether requested services could impair auditor independence and has determined that the fees paid are compatible with maintaining this independence. They also limit non-audit services provided by the principal accounting firm.
What are the implications of Shopify being a 'foreign private issuer' regarding NYSE rules?
As a foreign private issuer, Shopify has elected to comply with certain Canadian corporate governance practices instead of specific NYSE provisions, such as those related to the quorum required for shareholder meetings. This compliance with home country practices may offer less investor protection than is typically provided to investors under NYSE listing requirements for U.S. domestic issuers.
06—Continue