Shopify Announced Its Financial Results for The First Quarter of 2019 (Part 1)

Shopify's financial results in first quarter 2019

On 30 April, OTTAWA, Ontario–(BUSINESS WIRE)–Shopify Inc. (NYSE:SHOP)(TSX:SHOP) announced its strong financial results for the first quarter of this year.

Tobi Lütke, Shopify’s CEO said “The information age is rapidly changing how commerce is done and by whom. By harnessing these changes to empower entrepreneurs, Shopify is meeting a need that is not only global and growing, but that is likely to continue growing for the foreseeable future.”

“We’re off to an incredible start this year, as more merchants around the globe choose Shopify to start, grow, and manage their businesses,” said Amy Shapero, Shopify’s CFO. “Entrepreneurs and enterprises alike recognize that Shopify’s merchant-driven mission helps them build their most successful business and thrive in an ever-changing retail landscape. That’s why we continue to invest in our platform, expanding our product and feature set, and the overall Shopify experience – making commerce easier, more accessible, and better for everyone, everywhere.”

About Shopify

Shopify, founded in Ottawa in 2004, the well-known e-commerce platform. The platform provides merchants cloud and software solutions to turn their ideas into a real business. With Shopify users also can easily design, set up, and manage their store across multiple sales channels, including mobile, web, social media, marketplaces, brick-and-mortar locations, and pop-up shops. Besides it, Shopify exists to help merchants every step to build their business from payment to shipping. Moreover, it can adapt to all sizes of business. Therefore, Shopify has become a reliable partner for more than 800,000 business in about 175 countries, including giant enterprises such as Unilever, Kylie Cosmetics, Allbirds, MVMT, and many more.

First-Quarter Financial Highlights

  • Total revenue in the first quarter was $320.5 million, a 50% increase from the comparable quarter in 2018.
  • Subscription Solutions revenue grew 40% to $140.5 million. The growth in Monthly Recurring Revenue* (“MRR”) was the primary factor driving this increase largely due to an increase in the number of merchants joining the Shopify platform.

*(Monthly Recurring Revenue, or MRR, is calculated by multiplying the number of merchants by the average monthly subscription plan fee in effect on the last day of that period and. Management uses it as a directional indicator of subscription solutions revenue going forward assuming merchants maintain their subscription plan the following month.)

  • Merchant Solutions revenue grew 58%, to $180.0 million, driven primarily by the growth of Gross Merchandise Volume* (“GMV”), as well as by robust growth in Shopify Capital and Shopify Shipping.

*( Gross Merchandise Volume, or GMV, represents the total dollar value of orders processed on the Shopify platform in the period, net of refunds, and inclusive of shipping and handling, duty and value-added taxes.)

  • MRR as of March 31, 2019, was $44.2 million, up 36%; compared with $32.5 million as of March 31, 2018. Shopify Plus contributed $11.3 million, or 26%, of MRR compared with 22% of MRR as of March 31, 2018.
  • Besides MRR, GMV for the first quarter also increased from $3.9 billion to $11.9 billion, or 50%, over the first quarter of 2018. Gross Payments Volume3 (“GPV”) grew to $4.9 billion, which accounted for 41% of GMV processed in the quarter, versus $3.0 billion, or 38%, for the first quarter of 2018.
  • Gross profit dollars grew 46%, to $180.3 million, compared with the $123.8 million recorded for the first quarter of 2018.
  • Operating loss for the first quarter of 2019 was $35.8 million, or 11% of revenue; versus a loss of $20.3 million, or 9% of revenue, for the comparable period a year ago.
  • Adjusted operating loss for the first quarter of 2019 was 0.4% of revenue, or $1.4 million; adjusted operating loss for the first quarter of 2018 was 0.1% of revenue, or $0.2 million.
  • Net loss for the first quarter of 2019 was $24.2 million, or $0.22 per share. Compared with $15.9 million, or $0.16 per share, for the first quarter of 2018.
  • Adjusted net income for the first quarter of 2019 was $10.3 million, or $0.09 per share; compared with adjusted net income of $4.2 million, or $0.04 per share, for the first quarter of 2018.
  • At March 31, 2019, Shopify had $2.0 billion in cash, cash equivalents, and marketable securities; compared with $1.97 billion on December 31, 2018.

You might also like: Three Emerging E-commerce Trends to Follow in 2019

First-Quarter Business Highlights

  • Shopify launched Shopify Studios, a full-service TV and film content development, and production house. With Shopify Studios, Shopify wants to redefine and inspire entrepreneurship through accessible, relevant, and entertaining content. And it also paves the path for future business owners and innovators.
  • Shopify launched a multi-currency feature for Shopify Plus merchants using Shopify Payments. It allows merchants to sell in multiple currencies and get money back in their local currency.
  • Shopify Shipping adoption continued to increase. In the first quarter of this year, more than 40% of eligible merchants in the United States and Canada using Shopify Shipping.
  • The number of purchases from merchants’ stores, which was coming from both mobile devices and desktop also increased. Compared with the first quarter of 2018, this number increased from 75% to 79% in traffic and from 64% to 69% in orders.
  • Shopify Capital issued $87.8 million in merchant cash advances and loans in the first quarter of 2019. There was an increase of 45% with the $60.4 million issued in the first quarter of last year. From April 2016 to the first quarter of 2019, Shopify Capital has grown to approximately $535 million in cumulative cash advanced. And approximately $107 million of which was outstanding on March 31, 2019.

Subsequent to the close of our first quarter:

  • The Tap & Chip Reader, Dock, and Stand, three new retail hardware was updated. It helps merchants deliver a better retail experience with the most flexible, seamless in-person selling solution.
  • Also in 2019, Shopify kicked off Shopify first integrated brand campaign, “Let’s Make You a Business”. This campaign was launched in 12 North American markets with the goal of raising brand awareness for Shopify. It also wants to encourage the next wave of independent business owners to turn their big ideas into businesses.
  • Shopify added two new native languages which are Dutch and Simplified Chinese to merchants in a limited beta. This raised the number of available language on the Shopify platform to nine.
  • Shopify hosted its first Commerce+ event in Sydney, Australia, attended by several top local merchants. This event discussed how Shopify Plus provides a centralized commerce platform for today’s high-growth and high-volume businesses.

Here is just the first part of Shopify’s financial results for the first quarter of 2019. Looking forward to the second part to get more information about Shopify’s financial and operating performance.

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