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Shopify Tops Forecasts - Guides Up

February 12, 2020

Shopify strong financial results for the fourth quarter and full year ended December 31, 2019.

The firm noted Q4 earnings of 43 cents per share, topping the 24 cents per share which was expected. Revenue surged 47% up to $505.2 million, much better than the $482.1 million consensus estimate.

Shopify now sees revenue in the range from $2.13 billion to $2.16 billion, with estimates pegged at $2.11 billion.

“2019 was a milestone year for us,” said Tobi Lütke, Shopify’s CEO. “We’ve earned the trust of more than one million merchants, and we are motivated more than ever to keep lowering the learning curve so anyone, anywhere can become an entrepreneur.”

“Shopify’s merchants had a tremendous fourth quarter, powered by our ongoing efforts to help them sell more and manage their businesses more effectively,” said Amy Shapero, Shopify’s CFO. “Our investments to enhance our product offerings and expand internationally are attracting entrepreneurs worldwide and helping them succeed, as demonstrated by strong GMV growth in 2019. In 2020, we will continue to invest in our portfolio of growth initiatives to better serve merchants and energize the flywheel well into the future.”

Fourth-Quarter Financial Highlights

Total revenue in the fourth quarter was $505.2 million, a 47% increase from the comparable quarter in 2018.
Subscription Solutions revenue grew 37% to $183.2 million. This increase was driven primarily by growth in Monthly Recurring Revenue ("MRR"), largely as a result of an increase in the number of merchants joining the Shopify platform.

Merchant Solutions revenue grew 53%, to $322.0 million, driven primarily by the growth of Gross Merchandise Volume ("GMV").

MRR as of December 31, 2019 was $53.9 million, up 32% compared with $40.9 million as of December 31, 2018. Shopify Plus contributed $14.6 million, or 27%, of MRR compared with 25% of MRR as of December 31, 2018.

GMV for the fourth quarter was $20.6 billion, an increase of $6.6 billion, or 47%, over the fourth quarter of 2018. Gross Payments Volume3 ("GPV") grew to $8.9 billion, which accounted for a record 43% of GMV processed in the quarter, versus $5.8 billion, or 41%, for the fourth quarter of 2018.

Gross profit dollars grew 42% to $263.9 million in the fourth quarter of 2019, compared with $185.7 million for the fourth quarter of 2018.

Adjusted gross profit4 grew 44% to $269.9 million in the fourth quarter of 2019, compared with $187.9 million for the fourth quarter of 2018.

Operating loss for the fourth quarter of 2019 was $30.1 million, or 6% of revenue, versus a loss of $9.5 million, or 3% of revenue, for the comparable period a year ago.

Adjusted operating income for the fourth quarter of 2019 was 6% of revenue, or $28.5 million; adjusted operating income for the fourth quarter of 2018 was 6% of revenue, or $21.4 million.

Net income for the fourth quarter of 2019 was $0.8 million, or $0.01 per share, compared with a net loss of $1.5 million, or $0.01 per share, for the fourth quarter of 2018.

Adjusted net income4 for the fourth quarter of 2019 was $50.0 million, or $0.43 per share, compared with adjusted net income of $29.4 million, or $0.27 per share, for the fourth quarter of 2018.

At December 31, 2019, Shopify had $2.46 billion in cash, cash equivalents and marketable securities, compared with $1.97 billion on December 31, 2018.

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