SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K | |||
Report of Foreign Private Issuer | |||
Pursuant to Rule 13a-16 or 15d-16 of | |||
the Securities Exchange Act of 1934 | |||
For the month of | May | 2024 | |
Commission File Number | 001-37400 | ||
Shopify Inc. | |||
(Translation of registrant's name into English) | |||
151 O'Connor Street, Ground Floor | |||
Ottawa, Ontario, Canada K2P 2L8 | |||
(Address of principal executive offices) |
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F | Form 40-F | X | |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
DOCUMENTS INCLUDED AS PART OF THIS REPORT
Exhibits
- Shopify Inc. - Interim Financial Statements for the First Quarter ended March 31, 2024
- Shopify Inc. - Interim Management's Discussion and Analysis for the First Quarter ended March 31, 2024
- Shopify Inc. - Form 52-109F2 Certificate of Interim Filings by CEO (pursuant to Canadian regulations)
- Shopify Inc. - Form 52-109F2 Certificate of Interim Filings by CFO (pursuant to Canadian regulations)
Exhibits 99.1 and 99.2 of this Report on Form 6-K are incorporated by reference into the Registration Statement on Form F-10 of the Registrant, which was originally filed with the Securities and Exchange Commission (the "SEC") on September 9, 2022 (File No. 333-267353), the Registration Statement on Form S-8 of the Registrant, which was originally filed with the SEC on May 29, 2015 (File No. 333-204568), the Registration Statement on Form S-8 of the Registrant, which was originally filed with the SEC on May 12, 2016 (File No. 333-211305), the Registration Statement on Form S- 8 of the Registrant, which was originally filed with the SEC on July 28, 2021 (File No. 333-258230), the Registration Statement on Form S-8 of the Registrant, which was originally filed with the SEC on July 21, 2022 (File No. 333-266243), and the Registration Statement on Form S-8 of the Registrant, which was originally filed with the SEC on September 9, 2022 (File No. 333-267364).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Shopify Inc. | ||||
(Registrant) | ||||
Date: | May 8, 2024 | By: | /s/ Michael L Johnson | |
Name: Michael L Johnson | ||||
Title: Corporate Secretary |
EXHIBIT 99.1
Condensed Consolidated
Financial Statements
(unaudited)
March 31, 2024
Shopify Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(Expressed in US millions, except share amounts)
As of | ||||
March 31, 2024 | December 31, 2023 | |||
$ | $ | |||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | 1,623 | 1,413 | ||
Marketable securities | 3,554 | 3,595 | ||
Trade and other receivables, net | 265 | 282 | ||
Loans and merchant cash advances, net | 815 | 816 | ||
Other current assets | 183 | 169 | ||
6,440 | 6,275 | |||
Long-term assets | ||||
Property and equipment, net | 52 | 49 | ||
Operating lease right-of-use assets, net | 96 | 98 | ||
Intangible assets, net | 25 | 29 | ||
Deferred tax assets | 43 | 44 | ||
Equity and other investments ($2,621 and $2,977, carried at fair value) | 3,294 | 3,597 | ||
Equity method investment | 735 | 780 | ||
Goodwill | 427 | 427 | ||
4,672 | 5,024 | |||
Total assets | 11,112 | 11,299 | ||
Liabilities and shareholders' equity | ||||
Current liabilities | ||||
Accounts payable and accrued liabilities | 589 | 579 | ||
Deferred revenue | 296 | 302 | ||
Operating lease liabilities | 17 | 17 | ||
902 | 898 | |||
Long-term liabilities | ||||
Deferred revenue | 183 | 196 | ||
Operating lease liabilities | 212 | 217 | ||
Convertible senior notes | 916 | 916 | ||
Deferred tax liabilities | 6 | 6 | ||
1,317 | 1,335 | |||
Contingencies (Note 10) | ||||
Shareholders' equity | ||||
Common stock, unlimited Class A subordinate voting shares authorized, 1,208,869,243 and 1,207,318,947, issued | ||||
and outstanding; unlimited Class B restricted voting shares authorized, 79,258,749 and 79,251,346 issued and | 9,283 | 9,201 | ||
outstanding; 1 Founder share authorized, 1 and 1 issued and outstanding | ||||
Additional paid-in capital | 277 | 251 | ||
Accumulated other comprehensive (loss) income | (4) | 4 | ||
Accumulated deficit | (663) | (390) | ||
Total shareholders' equity | 8,893 | 9,066 | ||
Total liabilities and shareholders' equity | 11,112 | 11,299 | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Shopify Inc.
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
(unaudited)
(Expressed in US millions, except share and per share amounts)
Three months ended | |||||
March 31, 2024 | March 31, 2023 | ||||
$ | $ | ||||
Revenues | |||||
Subscription solutions | 511 | 382 | |||
Merchant solutions | 1,350 | 1,126 | |||
1,861 | 1,508 | ||||
Cost of revenues | |||||
Subscription solutions | 95 | 84 | |||
Merchant solutions | 809 | 707 | |||
904 | 791 | ||||
Gross profit | 957 | 717 | |||
Operating expenses | |||||
Sales and marketing | 361 | 287 | |||
Research and development | 335 | 458 | |||
General and administrative | 124 | 123 | |||
Transaction and loan losses | 51 | 42 | |||
Total operating expenses | 871 | 910 | |||
Income (loss) from operations | 86 | (193) | |||
Other (expense) income, net | |||||
Interest income | 79 | 52 | |||
Net unrealized (loss) gain on equity and other investments | (373) | 215 | |||
Net loss on equity method investment | (44) | - | |||
Foreign exchange (loss) gain | (4) | 2 | |||
Total other (expense) income, net | (342) | 269 | |||
(Loss) income before income taxes | (256) | 76 | |||
Provision for income taxes | (17) | (8) | |||
Net (loss) income | (273) | 68 | |||
Net (loss) income per share attributable to shareholders: | |||||
Basic | $ | (0.21) | $ | 0.05 | |
Diluted | $ | (0.21) | $ | 0.05 | |
Weighted average shares used to compute net (loss) income per share attributable to shareholders: | |||||
Basic | 1,287,376,719 | 1,276,884,726 | |||
Diluted | 1,287,376,719 | 1,291,682,051 | |||
Other comprehensive (loss) income | |||||
Unrealized (loss) gain on cash flow hedges | (8) | 9 | |||
Tax effect on unrealized (loss) gain on cash flow hedges | - | - | |||
Total other comprehensive (loss) income | (8) | 9 | |||
Comprehensive (loss) income | (281) | 77 | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Shopify Inc.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(unaudited)
(Expressed in US millions, except share amounts)
Accumulated | |||||||||||||||||||||||
Common Stock | Other | ||||||||||||||||||||||
Additional | Comprehensive | Accumulated | |||||||||||||||||||||
Shares | Amount | Paid-In Capital | Income (Loss) | Deficit | Total | ||||||||||||||||||
$ | $ | $ | $ | $ | |||||||||||||||||||
As of December 31, 2022 | 1,275,128,567 | 8,747 | 30 | (16) | (522) | 8,239 | |||||||||||||||||
Exercise of stock options | 624,667 | 13 | (7) | - | - | 6 | |||||||||||||||||
Stock-based compensation | - | - | 135 | - | - | 135 | |||||||||||||||||
Vesting of restricted share units | 2,923,934 | 116 | (116) | - | - | - | |||||||||||||||||
Issuance of restricted shares related to business acquisitions | 238,468 | 10 | (10) | - | - | - | |||||||||||||||||
Net income and comprehensive income for the period | - | - | - | 9 | 68 | 77 | |||||||||||||||||
As of March 31, 2023 | 1,278,915,636 | 8,886 | 32 | (7) | (454) | 8,457 | |||||||||||||||||
Accumulated | |||||||||||||||||||||||
Common Stock | Other | ||||||||||||||||||||||
Additional | Comprehensive | Accumulated | |||||||||||||||||||||
Total | |||||||||||||||||||||||
Shares | Amount | Paid-In Capital | Income (Loss) | Deficit | |||||||||||||||||||
$ | $ | $ | $ | $ | |||||||||||||||||||
As of December 31, 2023 | 1,286,570,294 | 9,201 | 251 | 4 | (390) | 9,066 | |||||||||||||||||
Exercise of stock options | 351,486 | 6 | (3) | - | - | 3 | |||||||||||||||||
Stock-based compensation | - | - | 105 | - | - | 105 | |||||||||||||||||
Vesting of restricted share units | 1,206,213 | 76 | (76) | - | - | - | |||||||||||||||||
Net loss and comprehensive loss for the period | - | - | - | (8) | (273) | (281) | |||||||||||||||||
As of March 31, 2024 | 1,288,127,993 | 9,283 | 277 | (4) | (663) | 8,893 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Shopify Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(Expressed in US millions)
Three months ended | |||
March 31, 2024 | March 31, 2023 | ||
$ | $ | ||
Cash flows from operating activities | |||
Net (loss) income for the period | (273) | 68 | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Amortization and depreciation | 10 | 30 | |
Stock-based compensation | 105 | 135 | |
Provision for transaction and loan losses | 28 | 28 | |
Deferred income tax expense | 1 | 1 | |
Revenue related to non-cash consideration | (35) | (48) | |
Net loss (gain) on equity and other investments | 373 | (215) | |
Net loss on equity method investment | 44 | - | |
Unrealized foreign exchange loss (gain) | 6 | (3) | |
Changes in operating assets and liabilities | (21) | 104 | |
Net cash provided by operating activities | 238 | 100 | |
Cash flows from investing activities | |||
Purchases of property and equipment | (6) | (14) | |
Purchases of marketable securities | (2,137) | (1,098) | |
Maturities of marketable securities | 2,147 | 1,397 | |
Purchases and originations of loans | (575) | (349) | |
Repayments and sales of loans | 545 | 166 | |
Purchases of equity and other investments | (1) | (90) | |
Acquisition of businesses, net of cash acquired | - | (31) | |
Net cash used in investing activities | (27) | (19) | |
Cash flows from financing activities | |||
Proceeds from the exercise of stock options | 3 | 6 | |
Net cash provided by financing activities | 3 | 6 | |
Effect of foreign exchange on cash and cash equivalents | (4) | 2 | |
Net increase in cash and cash equivalents | 210 | 89 | |
Cash and cash equivalents - Beginning of Period | 1,413 | 1,649 | |
Cash and cash equivalents - End of Period | 1,623 | 1,738 | |
Supplemental cash flow information: | |||
Cash paid for income taxes, net | 9 | 10 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Shopify Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
(Expressed in US millions, except share and per share amounts)
-
Nature of Business
Shopify Inc. ("Shopify" or the "Company") was incorporated as a Canadian corporation on September 28, 2004. Shopify is a leading global commerce company that provides essential internet infrastructure for commerce, offering trusted tools to start, scale, market, and run a business of any size. Shopify makes commerce better for everyone with a software platform and services that are engineered for simplicity and reliability, while delivering a better shopping experience for consumers everywhere. The Company's software enables merchants to run their business across all of their sales channels, including web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces. The Shopify platform provides merchants with a single view of their business across all of their sales channels and enables them to manage products and inventory, process orders and payments, fulfill and ship orders, build customer relationships, source products, leverage analytics and reporting, and access financing, all from one integrated back office.
Founded in Ottawa, Canada, the Company's principal place of business is the internet. - Basis of Presentation and Consolidation
These unaudited condensed consolidated financial statements include the accounts of the Company and its directly and indirectly held wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.
These unaudited condensed consolidated financial statements of the Company have been presented in U.S. dollars ("USD") and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), including the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of its financial position, results of operations and comprehensive (loss) income, changes in shareholders' equity and cash flows for the interim periods. The financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023. The condensed consolidated balance sheet at December 31, 2023 was derived from the audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements.
The interim results for the three months ended March 31, 2024 are not necessarily indicative of the results expected for the full fiscal year. - Significant Accounting Policies
There have been no material changes to the Company's significant accounting policies during the three months ended March 31, 2024, as compared to the significant accounting policies described in the Company's annual consolidated financial statements for the year ended December 31, 2023.
Use of Estimates
The preparation of the condensed consolidated financial statements, in accordance with U.S. GAAP, requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from the estimates made by management. Significant estimates, judgments and assumptions in these condensed consolidated financial statements include: key judgments related to revenue recognition in determining whether the Company is the principal or an agent to the arrangements with merchants; estimates and judgments
6
Shopify Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
(Expressed in US millions, except share and per share amounts)
involved in applying the measurement alternative associated with equity and other investments in private companies, including revenue growth rates and revenue multiples based on market comparables; estimates involved in our equity method investment; probabilities of achieving performance milestones associated with non-cash revenue consideration from strategic partnerships; and the probability and amount of loss contingencies.
Concentration of Credit Risk
The Company's cash and cash equivalents, marketable securities, trade and other receivables, loans, merchant cash advances, and foreign exchange derivative instruments subject the Company to concentrations of credit risk. Management mitigates this risk associated with cash and cash equivalents by making deposits and entering into foreign exchange derivative products only with large banks and financial institutions that are considered to be highly creditworthy. We limit the amount of credit exposure with any one financial institution and conduct timely evaluations of the credit worthiness of these financial institutions. Management mitigates the risks associated with marketable securities by adhering to its investment policy, which stipulates minimum rating requirements, maximum investment exposures and maximum maturities. Due to the Company's diversified merchant base, there is no particular concentration of credit risk related to the Company's trade and other receivables, and loans receivable and merchant cash advances. Trade and other receivables, and loans receivable and merchant cash advances are monitored on an ongoing basis to ensure timely collection of amounts. The Company has mitigated some of the risks associated with Shopify Capital by opening insurance policies with Export Development Canada ("EDC"), a wholly-owned corporation of the Government of Canada, who is AAA rated as of March 31, 2024. The Company pays EDC a monthly premium based on total eligible dollars advanced, and records this as "General and administrative" expense in the condensed consolidated statements of operations and comprehensive (loss) income. All policies include a deductible set at either a specified dollar loss threshold or calculated as a percentage of eligible advances issued. After considering the Company's deductible and the insurer's maximum liability under the policies, the majority of the Company's gross outstanding balance of loans and merchant cash advances as of March 31, 2024 is covered. The receivable related to insurance recoveries, if any, is included in "Loans and merchant cash advances, net" in the condensed consolidated balance sheets. There are no receivables from individual merchants accounting for 10% or more of revenues or receivables.
Equity and Other Investments Risk
The Company holds equity and other investments that are subject to a wide variety of market-related risks that could substantially reduce or increase the fair value of our holdings. The Company's equity and other investments in public companies are recorded at fair value, which is subject to market price volatility. The Company also holds an investment option to purchase Series B common shares in Klaviyo, Inc., which is accounted for as a derivative instrument and valued using the Black-Scholes model, and is subject to market price volatility as well as a discount for lack of marketability. The Company's equity investments in private companies are recorded using the measurement alternative and are assessed each reporting period for observable price changes and impairments, which may involve estimates and judgments given the lack of readily available market data. Certain equity investments in private companies are in the early stages of development and are inherently risky due to their lack of operational history. Furthermore, for the equity method investment, Shopify's share of income and loss from these investments may cause volatility to Shopify's earnings. The Company's debt investments in convertible notes of private companies are recorded at fair value, which are impacted by the underlying entities' valuations and interest rates.
The Company has a high concentration of risk associated with a small number of equity and other investments that are impacted by fluctuations in their fair values or by observable changes or impairments.
7
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Shopify Inc. published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 11:20:02 UTC.