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Shopify Announces First-Quarter 2021 Financial Results

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·24 min read
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First-Quarter Revenue Growth Accelerates to 110% on GMV Growth of 114% Year on Year

Shopify reports in U.S. dollars and in accordance with U.S. GAAP

Internet, Everywhere--(Newsfile Corp. - April 28, 2021) - Shopify Inc. (NYSE: SHOP) (TSX: SHOP), a leading global commerce company, announced today strong financial results for the quarter ended March 31, 2021.

"More entrepreneurs around the world are choosing Shopify to launch and grow their businesses, and for good reason," said Harley Finkelstein, Shopify's President. "Our singular focus is on making entrepreneurship easier, and making it easier for entrepreneurs to succeed. Merchant sales growth on our platform accelerated in the first quarter as merchants leveraged our modern commerce technology, which helps them compete in any retail environment and engage directly with their customers wherever they are."

"Shopify's momentum continued into 2021 as digital commerce tailwinds remained strong and merchants took advantage of the range of capabilities offered by our platform," said Amy Shapero, Shopify's CFO. "We are focused on building a commerce operating system that will help shape the future of retail. Our merchant-first business model positions us to capture the massive opportunity presented by the growth of digital commerce, benefiting both our merchants and Shopify."

First-Quarter Financial Highlights

  • Total revenue in the first quarter was $988.6 million, with growth accelerating to 110% year over year.

  • Subscription Solutions revenue was $320.7 million, with growth accelerating to 71% year over year, primarily due to more merchants joining the platform.

  • Merchant Solutions revenue was $668.0 million, with growth accelerating to 137%, driven primarily by the growth of Gross Merchandise Volume1 ("GMV").

  • Monthly Recurring Revenue2 ("MRR") as of March 31, 2021 was $89.9 million. Growth accelerated to 62% year-over-year with MRR up from $55.4 million as of March 31, 2020 as more merchants joined the platform and POS Pro contributed its first full quarter of revenue. Shopify Plus contributed $23.1 million, or 26%, of MRR compared with 28% of MRR as of March 31, 2020 as a result of the significantly higher number of merchants on standard plans joining the platform in the past 12 months and our first full quarter of revenue from our Retail POS Pro subscription offering.

  • GMV for the first quarter was $37.3 billion, an increase of $19.9 billion, with growth accelerating to 114% over the first quarter of 2020. Gross Payments Volume3 ("GPV") grew to $17.3 billion, which accounted for 46% of GMV processed in the quarter, versus $7.3 billion, or 42%, for the first quarter of 2020.

  • Gross profit dollar growth accelerated, up 117% to $558.7 million in the first quarter of 2021, compared with $257.0 million for the first quarter of 2020.

  • Adjusted gross profit4 growth accelerated, up 114% to $565.1 million in the first quarter of 2021, compared with $263.8 million for the first quarter of 2020.

  • Operating income for the first quarter of 2021 was $118.9 million, or 12% of revenue, versus a loss of $73.2 million, or 16% of revenue, for the comparable period a year ago.

  • Adjusted operating income4 for the first quarter of 2021 was $210.8 million, or 21% of revenue, compared with adjusted operating loss of $7.3 million or 2% of revenue in the first quarter of 2020.

  • Net income for the first quarter of 2021 was $1,258.4 million, or $9.94 per diluted share, compared with a net loss of $31.4 million, or $0.27 per diluted share, for the first quarter of 2020. Q1 2021 net income includes a $1.3 billion unrealized gain on our equity investment in Affirm as a result of its IPO in January 2021.

  • Adjusted net income4 for the first quarter of 2021 was $254.1 million, or $2.01 per diluted share, compared with adjusted net income of $22.3 million, or $0.19 per diluted share, for the first quarter of 2020.

  • At March 31, 2021, Shopify had $7.87 billion in cash, cash equivalents and marketable securities, compared with $6.39 billion on December 31, 2020. The increase reflects $1.5 billion of net proceeds from Shopify's offering of Class A subordinate voting shares in the first quarter of 2021.

First-Quarter Business Highlights

  • Shopify continued to build the foundation of Shopify Fulfillment Network, focusing on optimizing our software and network, and introduced features that offer merchants greater insights into their inventory and increased flexibility to manage their orders.

  • Shopify continued to develop Shop, our all-in-one mobile shopping assistant, reducing friction for buyers with the introduction of an in-app buy button and adding more ways that merchants can be discovered, including filters to find Asian-owned businesses, women-owned businesses in March, and merchants practicing and promoting sustainable commerce. At the end of Q1 2021, Shop had more than 107 million registered users, including buyers using Shop Pay as well as the Shop App, of which more than 24 million were Monthly Active Users. At the end of March 2021, Shop Pay had facilitated over $24 billion in cumulative GMV since its launch in 2017.

  • Shopify announced that it had purchased more Direct Air Capture (DAC) carbon removal than any other company in history. This milestone came with our agreement to purchase 10,000 tonnes of removal from Carbon Engineering, adding to a previous 5,000-tonne commitment to Climeworks. The goal of Shopify's Sustainability Fund is to engineer market forces to get momentum behind new technologies that at scale could have a material impact on tackling climate change, and the Fund earmarks $1 million or more per year specifically for carbon sequestration.

  • Shopify released the documentary, "Own the Room", co-produced with Saville Productions for National Geographic Documentary Films, which premiered on Disney Plus in March. Own the Room showcases the real stories of five young entrepreneurs as they compete in the prestigious Global Student Entrepreneur Awards.

  • Merchants in the U.S., Canada, and the U.K. received a record $308.6 million in merchant cash advances and loans from Shopify Capital in the first quarter of 2021, an increase of 90% versus the $162.4 million received by U.S. merchants in the first quarter of last year. Shopify Capital has grown to approximately $2.0 billion in cumulative capital advanced since its launch in April 2016, approximately $312.8 million of which was outstanding on March 31, 2021.

  • Shopify's partner ecosystem continued to expand, as approximately 45,800 partners referred a merchant to Shopify over the past 12 months, up 73% compared with 26,400 over the 12 months ended March 31, 2020.

Subsequent to First Quarter 2021

  • Shopify introduced a new integrated card reader using our All-New POS software in the U.K. and Ireland, strengthening our Shopify POS offering to merchants in these regions and laying the groundwork to put Shopify POS with integrated payments into the hands of new and existing merchants worldwide.

  • Shopify published its 2020 Global Economic Impact Report showcasing Shopify as a platform that drives substantial business growth and expansion for entrepreneurs and economies around the world. In 2020, businesses on Shopify generated over $307 billion in global economic impact, supporting over three million jobs worldwide. In addition, our partner ecosystem generated $12.5 billion in revenue as our merchants' selling drove massive volumes of economic activity.

Outlook

The outlook that follows constitutes forward-looking information within the meaning of applicable securities laws and is based on a number of assumptions and subject to a number of risks. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond Shopify's control. Please see "Forward-looking Statements" below.

In addition to the other assumptions and factors described in this press release, Shopify's outlook assumes the continuation of growth trends in our industry, our ability to manage our growth effectively, the absence of material changes in our industry or the global economy and other assumptions related to the COVID-19 pandemic, which are described in detail below. The following statements supersede all prior statements made by Shopify and are based on current expectations. As these statements are forward-looking, actual results may differ materially.

These statements do not give effect to the potential impact of mergers, acquisitions, divestitures or business combinations that may be announced or closed after the date hereof. All numbers provided in this section are approximate.

Our full-year 2021 outlook is guided by assumptions that remain unchanged from February: that as countries continue to roll out vaccines in 2021 and populations are able to move about more freely, the overall economic environment will likely improve; some consumer spending will likely rotate back to offline retail and services; and the ongoing shift to ecommerce, which accelerated in 2020, will likely resume a more normalized pace of growth.

In March 2021, the US government passed a coronavirus relief package, and began processing stimulus payments in early March. The benefit to Shopify's GMV from this latest round of stimulus ended in early April.

In view of these factors, we continue to expect to grow revenue rapidly in 2021, but at a lower rate than in 2020. For the full year 2021, we continue to expect the following:

  • Subscriptions solutions revenue growth to be driven by more merchants around the world joining the platform in a number lower than the record in 2020, but higher than any year prior to 2020;

  • The growth rates of subscription solutions and merchant solutions revenues to be more similar to each other than in the recent past, as we do not expect the surge in GMV that drove merchant solutions in 2020 to repeat;

  • Merchant solutions revenue growth to be driven by continued GMV growth from existing merchants, new merchants joining the platform, and expanded adoption of Shopify's growing menu of merchant solutions, including established offerings such as Shopify Payments, Shopify Shipping, and Shopify Capital, both geographically and as merchants grow into them, while newer solutions such as Shopify Fulfillment Network and 6 River Systems contribute nascent but incremental revenue in their early stages.

While we expect that the first quarter will likely still contribute the smallest share of full-year revenue and the fourth quarter the largest, the revenue spread may be more evenly distributed across the four quarters than it has been historically if the rollout of a vaccine shifts more consumer spending to services and offline shopping towards the back half of the year.

2020 catapulted commerce into a period of incredibly rapid change, presenting Shopify with unprecedented opportunities in 2021 to accelerate innovation. We continue to expect rapid growth in gross profit dollars in 2021 and plan to reinvest back into our business as aggressively as we can, with the year-over-year growth in operating expenses accelerating each quarter throughout the rest of the year. As such, we expect full year 2021 adjusted operating income to be below the level we achieved in 2020.

For 2021, we now anticipate stock-based compensation expenses and related payroll taxes of $425 million and amortization of acquired intangibles of $21 million.

Quarterly Conference Call

Shopify's management team will hold a conference call to discuss our first-quarter results today, April 28, 2021, at 8:30 a.m. ET. The conference call will be webcast on the investor relations section of Shopify's website at https://investors.shopify.com/news-and-events/. An archived replay of the webcast will be available following the conclusion of the call.

Shopify's First Quarter 2021 Interim Unaudited Condensed Consolidated Financial Statements and Notes and its First Quarter 2021 Management's Discussion and Analysis are available on Shopify's website at www.shopify.com and will be filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

About Shopify

Shopify is a leading global commerce company, providing trusted tools to start, grow, market, and manage a retail business of any size. Shopify makes commerce better for everyone with a platform and services that are engineered for reliability, while delivering a better shopping experience for consumers everywhere. Proudly founded in Ottawa, Shopify powers over 1.7 million businesses in more than 175 countries and is trusted by brands such as Allbirds, Gymshark, Heinz, Staples Canada, and many more. For more information, visit www.shopify.com.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with United States generally accepted accounting principles ("GAAP"), Shopify uses certain non-GAAP financial measures to provide additional information in order to assist investors in understanding our financial and operating performance.

Adjusted gross profit, adjusted operating income, non-GAAP operating expenses, adjusted net income and adjusted net income per share are non-GAAP financial measures that exclude the effect of stock-based compensation expenses and related payroll taxes and amortization of acquired intangibles. Adjusted net income and adjusted net income per share also exclude unrealized gains on equity and other investments and tax effects related to non-GAAP adjustments.

Management uses non-GAAP financial measures internally for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Shopify believes that these non-GAAP measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. Non-GAAP financial measures are not recognized measures for financial statement presentation under U.S. GAAP and do not have standardized meanings, and may not be comparable to similar measures presented by other public companies. Such non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. See the financial tables below for a reconciliation of the non-GAAP measures.

Forward-looking Statements

This press release contains certain forward-looking statements within the meaning of applicable securities laws, including statements regarding Shopify's planned business initiatives and operations and outlook, the performance of Shopify's merchants, the impact of Shopify's business on its merchants and other entrepreneurs, and economic activity and consumer spending. Words such as "believe", "continue", "will", "plan", "anticipate", and "expect" or similar expressions are intended to identify forward-looking statements.

These forward-looking statements are based on Shopify's current projections and expectations about future events and financial trends that management believes might affect its financial condition, results of operations, business strategy and financial needs, and on certain assumptions and analysis made by Shopify in light of the experience and perception of historical trends, current conditions and expected future developments and other factors management believes are appropriate. These projections, expectations, assumptions and analyses are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause actual results, performance, events and achievements to differ materially from those anticipated in these forward-looking statements. Although Shopify believes that the assumptions underlying these forward-looking statements are reasonable, they may prove to be incorrect, and readers cannot be assured that actual results will be consistent with these forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements as a result of numerous factors, including certain risk factors, many of which are beyond Shopify's control, including but not limited to: (i) merchant acquisition and retention; (ii) managing our growth; (iii) our potential inability to compete successfully against current and future competitors; (iv) the security of personal information we store relating to merchants and their customers and consumers with whom we have a direct relationship; (v) our history of losses and our ability to maintain profitability; (vi) a disruption of service or security breach; (vii) our limited operating history in new markets and geographic regions; (viii) our ability to innovate; (ix) international sales and operations and the use of our platform in various countries; (x) our reliance on a single supplier to provide the technology we offer through Shopify Payments; (xi) our potential inability to hire, retain and motivate qualified personnel; (xii) our use of a single cloud-based platform to deliver our services; (xiii) uncertainty around the duration and scope of the COVID-19 pandemic and the impact of the pandemic and actions taken in response on global and regional economies and economic activity; (xiv) the reliance of our growth in part on the success of our strategic relationships with third parties; (xv) complex and changing laws and regulations worldwide; (xvi) our dependence on the continued services of management and other key employees; (xvii) our potential failure to effectively maintain, promote and enhance our brand; (xviii) payments processed through Shopify Payments; (xix) serious errors or defects in our software or hardware or issues with our hardware supply chain; (xx) our potential inability to achieve or maintain data transmission capacity; (xxi) activities of merchants or partners or the contents of merchants' shops; (xxii) evolving privacy laws and regulations, cross-border data transfer restrictions, data localization requirements and other domestic or foreign regulations may limit the use and adoption of our services; (xxiii) changes in tax laws or adverse outcomes related to our taxes; (xiv) other one-time events and other important factors disclosed previously and from time to time in Shopify's filings with the U.S. Securities and Exchange Commission and the securities commissions or similar securities regulatory authorities in each of the provinces or territories of Canada. The forward-looking statements contained in this news release represent Shopify's expectations as of the date of this news release, or as of the date they are otherwise stated to be made, and subsequent events may cause these expectations to change. Shopify undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

CONTACT:

INVESTORS:
Katie Keita
Senior Director, Investor Relations
613-241-2828 x 1024
IR@shopify.com
SOURCE: Shopify

MEDIA:
Rebecca Feigelsohn
Communications Lead
416-238-6705 x 302
press@shopify.com

Shopify Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Expressed in US $000's, except share and per share amounts, unaudited)

Three months ended

March 31, 2021

March 31, 2020

$

$

Revenues

Subscription solutions

320,681

187,609

Merchant solutions

667,966

282,392

988,647

470,001

Cost of revenues

Subscription solutions

58,382

37,712

Merchant solutions

371,549

175,339

429,931

213,051

Gross profit

558,716

256,950

Operating expenses

Sales and marketing

186,223

154,862

Research and development

175,886

116,396

General and administrative

67,102

44,842

Transaction and loan losses

10,606

14,083

Total operating expenses

439,817

330,183

Income (loss) from operations

118,899

(73,233

)

Other income, net

1,250,645

13,109

Income (loss) before income taxes

1,369,544

(60,124

)

(Provision for) recovery of income taxes

(111,099

)

28,695

Net income (loss)

1,258,445

(31,429

)

Other comprehensive loss

(2,724

)

(16,633

)

Comprehensive income (loss)

1,255,721

(48,062

)

Net income (loss) per share attributable to shareholders:

Basic

10.21

(0.27

)

Diluted

9.94

(0.27

)

Shares used to compute net income (loss) per share attributable to shareholders:

Basic

123,243,650

116,806,549

Diluted

126,674,388

116,806,549

Shopify Inc.
Condensed Consolidated Balance Sheets
(Expressed in US $000's except share amounts, unaudited)

As at

March 31, 2021

December 31, 2020

$

$

Assets

Current assets

Cash and cash equivalents

2,785,571

2,703,597

Marketable securities

5,086,877

3,684,370

Trade and other receivables, net

163,461

120,752

Merchant cash advances, loans and related receivables, net

312,771

244,723

Income taxes receivable

56,572

56,067

Other current assets

77,854

68,247

8,483,106

6,877,756

Long-term assets

Property and equipment, net

87,152

92,104

Intangible assets, net

129,692

135,676

Right-of-use assets, net

128,026

119,373

Deferred tax assets

54,097

52,677

Equity and other investments

1,630,950

173,454

Goodwill

311,865

311,865

2,341,782

885,149

Total assets

10,824,888

7,762,905

Liabilities and shareholders' equity

Current liabilities

Accounts payable and accrued liabilities

338,876

300,795

Income taxes payable

25,935

19,677

Deferred revenue

114,725

107,809

Lease liabilities

15,567

10,051

495,103

438,332

Long-term liabilities

Deferred revenue

22,417

21,006

Lease liabilities

153,918

144,836

Convertible senior notes

909,205

758,008

Deferred tax liabilities

102,374

-

1,187,914

923,850

Commitments and contingencies

Shareholders' equity

Common stock, unlimited Class A subordinate voting shares authorized, 112,775,983 and 110,929,570 issued and outstanding; unlimited Class B multiple voting shares authorized, 11,551,329 and 11,599,301 issued and outstanding

7,760,984

6,115,232

Additional paid-in capital

92,913

261,436

Accumulated other comprehensive income

6,046

8,770

Retained earnings

1,281,928

15,285

Total shareholders' equity

9,141,871

6,400,723

Total liabilities and shareholders' equity

10,824,888

7,762,905

Shopify Inc.
Condensed Consolidated Statements of Cash Flows
(Expressed in US $000's, unaudited)

Three months ended

March 31, 2021

March 31, 2020

$

$

Cash flows from operating activities

Net income (loss) for the period

1,258,445

(31,429

)

Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:

Amortization and depreciation

15,800

14,366

Stock-based compensation

69,156

53,752

Amortization of debt offering costs

585

-

Provision for transaction and loan losses

4,236

6,103

Deferred income tax expense (recovery)

100,954

(6,643

)

Unrealized gain on equity and other investments

(1,250,944

)

-

Unrealized foreign exchange loss (gain)

1,734

(3,779

)

Changes in operating assets and liabilities:

Trade and other receivables

(39,063

)

(2,378

)

Merchant cash advances, loans and related receivables

(74,561

)

(46,478

)

Other current assets

(13,205

)

(15,349

)

Accounts payable and accrued liabilities

39,756

30,621

Income tax assets and liabilities

9,525

(90,375

)

Deferred revenue

8,327

5,804

Lease assets and liabilities

4,938

830

Net cash provided (used) by operating activities

135,683

(84,955

)

Cash flows from investing activities

Purchase of marketable securities

(2,444,955

)

(496,224

)

Maturity of marketable securities

1,038,316

913,178

Purchase of equity and other investments

(206,552

)

-

Acquisitions of property and equipment

(5,188

)

(16,740

)

Acquisitions of intangible assets

-

(219

)

Net cash (used) provided by investing activities

(1,618,379

)

399,995

Cash flows from financing activities

Proceeds from public equity offerings, net of issuance costs

1,541,168

-

Proceeds from the exercise of stock options

22,925

19,427

Net cash provided by financing activities

1,564,093

19,427

Effect of foreign exchange on cash and cash equivalents

577

(15,020

)

Net increase in cash and cash equivalents

81,974

319,447

Cash and cash equivalents - Beginning of Period

2,703,597

649,916

Cash and cash equivalents - End of Period

2,785,571

969,363

Shopify Inc.
Reconciliation from GAAP to Non-GAAP Results
(Expressed in US $000's, except share and per share amounts, unaudited)

Three months ended

March 31, 2021

March 31, 2020

$

$

GAAP Gross profit

558,716

256,950

% of Revenue

57%

55%

add: stock-based compensation

1,515

1,148

add: payroll taxes related to stock-based compensation

336

176

add: amortization of acquired intangibles

4,531

5,569

Non-GAAP Gross profit

565,098

263,843

% of Revenue

57%

56%

GAAP Sales and marketing

186,223

154,862

% of Revenue

19%

33%

less: stock-based compensation

8,853

11,207

less: payroll taxes related to stock-based compensation

2,032

1,227

less: amortization of acquired intangibles

386

388

Non-GAAP Sales and marketing

174,952

142,040

% of Revenue

18%

30%

GAAP Research and development

175,886

116,396

% of Revenue

18%

25%

less: stock-based compensation

44,289

32,604

less: payroll taxes related to stock-based compensation

11,738

3,817

less: amortization of acquired intangibles

58

58

Non-GAAP Research and development

119,801

79,917

% of Revenue

12%

17%

GAAP General and administrative

67,102

44,842

% of Revenue

7%

10%

less: stock-based compensation

14,499

8,793

less: payroll taxes related to stock-based compensation

3,706

974

Non-GAAP General and administrative

48,897

35,075

% of Revenue

5%

7%

GAAP Transaction and loan losses

10,606

14,083

% of Revenue

1%

3%

GAAP Operating expenses

439,817

330,183

% of Revenue

44%

70%

less: stock-based compensation

67,641

52,604

less: payroll taxes related to stock-based compensation

17,476

6,018

less: amortization of acquired intangibles

444

446

Non-GAAP Operating expenses

354,256

271,115

% of Revenue

36%

58%

Shopify Inc.
Reconciliation from GAAP to Non-GAAP Results (continued)
(Expressed in US $000's, except share and per share amounts, unaudited)

Three months ended

March 31, 2021

March 31, 2020

$

$

GAAP Operating income (loss)

118,899

(73,233

)

% of Revenue

12%

(16)%


add: stock-based compensation

69,156

53,752

add: payroll taxes related to stock-based compensation

17,812

6,194

add: amortization of acquired intangibles

4,975

6,015

Adjusted Operating income (loss)

210,842

(7,272

)

% of Revenue

21%

(2)%


GAAP Net income (loss)

1,258,445

(31,429

)

% of Revenue

127%

(7)%


add: stock-based compensation

69,156

53,752

add: payroll taxes related to stock-based compensation

17,812

6,194

add: amortization of acquired intangibles

4,975

6,015

less: unrealized gain on equity and other investments

(1,250,944

)

-

add: income tax effects related to non-GAAP adjustments

154,666

(12,200

)

Adjusted Net income

254,110

22,332

% of Revenue

26%

5%

Basic GAAP Net income (loss) per share attributable to shareholders

10.21

(0.27

)

add: stock-based compensation

0.56

0.46

add: payroll taxes related to stock-based compensation

0.14

0.05

add: amortization of acquired intangibles

0.04

0.05

less: unrealized gain on equity and other investments

(10.15

)

0.00

add: income tax effects related to non-GAAP adjustments

1.25

(0.10

)

Basic Adjusted Net income per share attributable to shareholders

2.06

0.19

Weighted average shares used to compute GAAP and non-GAAP basic net income (loss) per share attributable to shareholders

123,243,650

116,806,549

Diluted GAAP Net income (loss) per share attributable to shareholders

9.94

(0.27

)

add: stock-based compensation

0.55

0.46

add: payroll taxes related to stock-based compensation

0.14

0.05

add: amortization of acquired intangibles

0.04

0.05

less: unrealized gain on equity and other investments

(9.88

)

0.00

add: income tax effects related to non-GAAP adjustments

1.22

(0.10

)

Diluted Adjusted Net income per share attributable to shareholders

2.01

0.19

Weighted average shares used to compute GAAP and non-GAAP diluted net income (loss) per share attributable to shareholders

126,674,388

116,806,549

1. Gross Merchandise Volume, or GMV, represents the total dollar value of orders facilitated through the Shopify platform including certain apps and channels for which a revenue-sharing arrangement is in place in the period, net of refunds, and inclusive of shipping and handling, duty and value-added taxes.
2. 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 is used by management as a directional indicator of subscription solutions revenue going forward assuming merchants maintain their subscription plan the following month.
3. Gross Payments Volume, or GPV, is the amount of GMV processed through Shopify Payments.
4. Non-GAAP financial measures exclude the effect of stock-based compensation expenses and related payroll taxes, amortization of acquired intangibles, unrealized gains on equity and other investments, and tax effects related to non-GAAP adjustments. Please refer to "Non-GAAP Financial Measures" in this press release for more information.

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