Shopify Reports Subscription Revenue of $56.4 Million for Q4 2016

Last week Shopify* (NYSE: SHOP)(TSX: SHOP) reported its fourth quarter and full-year 2016 results, including total revenue for Q4 of $130.4 million, an 86

Subscription News: Shopify Reports Subscription Revenue of $56.4 Million for Q4 2016

Source: Shopify

Last week Shopify* (NYSE: SHOP)(TSX: SHOP) reported its fourth quarter and full-year 2016 results, including total revenue for Q4 of $130.4 million, an 86 percent increase over the same period last year. As part of total revenue, Subscription Solutions revenue for Q4 was $56.4 million, representing a 63 percent increase year-over-year. Shopify also reported that there are now more than 375,000 merchants using the Shopify platform, a record number for the company.

*Note: Shopify is based in Ottawa, Ontario, but all figures reported are in U.S. dollars.

Fourth quarter financial highlights include:

  • Total revenue was $130.4 million, an 86 percent increase year-over-year.
  • Subscription Solutions revenue was $56.4 million, a 63 percent increase year-over-year, and Merchant Solutions revenue was $74.0 million, a 108 percent increase year-over-year.
  • Monthly recurring revenue (MRR) was $18.5 million, a 63 percent increase year-over-year.
  • Gross Merchandise Volume (GMV) was $5.5 billion, a 94 percent increase year-over-year.
  • Gross profit was $68.1 million, an 87 percent increase.
  • Net loss was $8.9 million, or $0.10 per share, compared to a net loss of $6.3 million, or $0.08 per share, this time last year.
  • Adjusted net loss was $0.4 million, or $0.00 per share, compared to an adjusted net loss of $1.1 million, or $0.01 per share this time last year.

Operational highlights for Q4 include:

  • GMV from Black Friday through Cyber Monday more than doubled, reaching a peak of nearly 3 million requests per minute.
  • Mobile traffic to merchant stores grew to 69 percent of traffic and 55 percent of orders, compared to 61 percent and 46 percent, respectively, in 2015.
  • Shopify’s Sell on Amazon integration was made available to merchants in December

Full-year 2016 highlights include:

  • Total revenue for 2016 was $389.3 million, a 90 percent increase over 2015.
  • Subscription Solutions revenue was $188.6 million, a 68 percent increase, and Merchant Solutions revenue was $200.7 million, a 115 percent increase over 2015.
  • GMV was $15.4 billion, a 99 percent increase over 2015.
  • Gross profit was $209.5 million, an 85 percent increase over 2015.
  • Net loss was $35.4 million, or $0.42 per share, compared to $18.8 million, or $0.30 per share, in 2015.
  • Adjusted net loss for the year was $10.3 million, or $0.12 per share, compared to $7.7 million loss, or $0.13 per share, in 2015.

Operational highlights for 2016 include:

  • More than 133,000 net new merchants began selling on Shopify last year.
  • There are now approximately 377,500 merchants selling on the Shopify platform at the end of the year.
  • Average Revenue Per User (ARPU) grew 15 percent to $1,243, compared to $1,077 in 2015.
  • Shopify integrated with Facebook Messenger and Amazon last year to give merchants more selling options.
  • Shopify launched Apple Pay. By year end, more than 150,000 Shopify merchants accept it as a means for payment.
  • Shopify completed three acquisitions.

Subscription News: Shopify Reports Subscription Revenue of $56.4 Million for Q4 2016

Source: Shopify

“Our work at Shopify is to help entrepreneurs thrive in a space that’s changing all the time, and we did our job especially well this past holiday season,” stated Tobi L tke, founder and CEO of Shopify in a press release. “That eight of our ten top sellers over the Black Friday Cyber Monday weekend were merchants that had upgraded from lower-priced plans reminds us that today’s startups become tomorrow’s superstars, at a velocity that appears to be increasing all the time. As the engine powering the growth of these merchants, Shopify has an opportunity that stretches years into the future.”

Russ Jones, CFO for Shopify, also commented on the company’s 2016 results.

“That we grew revenue by 90% and GMV by 99% for the full year 2016 speaks to the enormous opportunity in retail right now and our strategic position within it. Throughout 2017 we will continue to build out our ability to seize this opportunity by expanding not only our existing features, such as channels, payments, shipping and capital, but also our facilities and infrastructure. These investments are timely, as we expect the number of merchants on Shopify to continue expanding rapidly and their collective sales volumes to continue to grow at a rate several times that of overall retail,” said Jones.

For the full year 2017, Shopify offered these projections: revenue between $580 million and $600 million, and adjusted operating loss between $18 million and $22 million. For the first quarter of 2017, Shopify, anticipates revenue between $120 million and $122 million, and adjusted operating loss between $9 million and $11 million.

Investors have reacted favorably to the news. Shopify stock started out at $55.07 on February 15, the day of the earnings report, and rose to $60.59 by 4 PM EST that day. As of 4 PM on February 21, Shopify stock was valued at $63.08 per share. On February 23, 2016, Shopify stock was only valued at $20.04 so it has more than tripled in a year’s time.

Subscription News: Shopify Reports Subscription Revenue of $56.4 Million for Q4 2016

Source: Google Finance – Yahoo Finance – MSN Money

Insider Take:

While Shopify is still unprofitable, it scored positive results in every revenue category. Shopify is adding new merchants, integrating with other marketplaces, and investing in product and marketing. The company is still growing, so we are likely to see losses for a while, but if the fourth quarter and full-year 2016 results are any indication, Shopify seems to have its formula for success down. It just needs to lather, rinse and repeat throughout 2017 to continue on this positive trajectory.

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