Shopify Full-Year 2020 Revenue Grows 86%

Shopify Inc. (NYSE:SHOP)(TSX:SHOP), a leading global commerce company, announced today strong financial results for the fourth quarter and full year ended December 31, 2020.

“The spirit of entrepreneurship was strong in 2020, as our merchants’ resilience and ability to adapt helped many of them thrive in a difficult year,” said Harley Finkelstein, Shopify’s President. “Shopify is at the heart of our merchants’ businesses with entrepreneurs around the world trusting us with their livelihoods. This year, we are doubling down on creating a frictionless path to successful entrepreneurship, as we continue to build a future-proof commerce solution to serve generations to come.”

“Our fourth-quarter results capped off an outstanding 2020, thanks to the success of our merchants in a year that truly tested their mettle and triggered more entrepreneurs around the world to start their journey toward economic independence,” said Amy Shapero, Shopify’s CFO. “Shopify was prepared to ship the features that our merchants needed during the pandemic because we had invested for several years in a future that arrived early with the acceleration of online commerce. We’re amplifying our efforts in 2021, as we focus on executing on a portfolio of initiatives that will fuel further growth for our merchants and for Shopify.”

Fourth-Quarter Financial Highlights

• Total revenue in the fourth quarter was $977.7 million, a 94% increase from the comparable quarter in 2019.
• Subscription Solutions revenue was $279.4 million, up 53% year over year, primarily due to more merchants joining the platform.
• Merchant Solutions revenue growth increased 117%, to $698.3 million, driven primarily by the growth of Gross Merchandise Volume (“GMV”).
• Monthly Recurring Revenue (“MRR”) as of December 31, 2020 was $82.6 million. Growth accelerated to 53% year-over-year with MRR up from $53.9 million as of December 31, 2019 due to the continued high number of new merchants joining the platform in the quarter following record merchant additions in the third quarter. Q4 2020 MRR also benefited from incremental new revenue from our Retail POS Pro subscription offering, as subscription pricing came into effect in November 2020. Shopify Plus contributed $21.0 million, or 25%, of MRR compared with 27% of MRR as of December 31, 2019 as a result of the significantly higher number of merchants on standard plans joining the platform in 2020.
• GMV for the fourth quarter was $41.1 billion, an increase of $20.5 billion, or 99% over the fourth quarter of 2019. Gross Payments Volume (“GPV”) grew to $19.1 billion, which accounted for 46% of GMV processed in the quarter, versus $8.9 billion, or 43%, for the fourth quarter of 2019.
• Gross profit dollars grew 91% to $504.4 million in the fourth quarter of 2020, compared with $263.9 million for the fourth quarter of 2019.
• Adjusted gross profit grew 89% to $510.6 million in the fourth quarter of 2020, compared with $269.9 million for the fourth quarter of 2019.
• Operating income for the fourth quarter of 2020 was $112.5 million, or 12% of revenue, versus a loss of $30.1 million, or 6% of revenue, for the comparable period a year ago.
• Adjusted operating income for the fourth quarter of 2020 was $200.0 million, or 20% of revenue, compared with adjusted operating income of $28.5 million or 6% of revenue in the fourth quarter of 2019.
• Net income for the fourth quarter of 2020 was $123.9 million, or $0.99 per diluted share, compared with a net income of $0.8 million, or $0.01 per diluted share, for the fourth quarter of 2019.
• Adjusted net income⁴ for the fourth quarter of 2020 was $198.8 million, or $1.58 per diluted share, compared with adjusted net income of $50.0 million, or $0.43 per diluted share, for the fourth quarter of 2019.
• At December 31, 2020, Shopify had $6.39 billion in cash, cash equivalents and marketable securities, compared with $2.46 billion on December 31, 2019. The increase reflects $2.03 billion of net proceeds from Shopify’s offering of Class A subordinate voting shares and convertible senior notes in the third quarter of 2020 and $1.46 billion of net proceeds from Shopify’s offering of Class A subordinate voting shares in the second quarter of 2020.

Fourth-Quarter Business Highlights

• From the start of Black Friday in New Zealand, through the end of Cyber Monday in California, sales on Shopify’s platform reached more than $5.1 billion. This compares with more than $2.9 billion in GMV for the global Black Friday Cyber Monday period in 2019. Shopify also offset all carbon emissions from the delivery of every order placed on Shopify’s platform during the weekend, resulting in nearly 62,000 tonnes of carbon emissions offset.
• Shopify continued to build the foundation of Shopify Fulfillment Network, advancing the development of our software, support capabilities, and fulfillment operations. In the fourth quarter, we continued to harden our systems, executed multiple flash sales, processed record volume through the peak holiday season smoothly, and shipped our first self-service onboarding system, making it easier for merchants to start fulfilling their orders.
• 52% of eligible merchants in the United States and Canada utilized Shopify Shipping in the fourth quarter of 2020, versus 45% in the fourth quarter of 2019.
• Merchants in the U.S., Canada, and the U.K. received $226.9 million in merchant cash advances and loans from Shopify Capital in the fourth quarter of 2020, an increase of 96% versus the $115.9 million received by U.S. merchants in the fourth quarter of last year. Shopify Capital has grown to approximately $1.7 billion in cumulative capital advanced since its launch in April 2016, approximately $244.7 million of which was outstanding on December 31, 2020.
• Shopify’s partner ecosystem continued to expand, as approximately 42,200 partners referred a merchant to Shopify over the past 12 months, up 72% compared with 24,500 over the 12 months ended December 31, 2019.

Full-Year Financial Highlights

• Total revenue for the full year 2020 was $2,929.5 million, an 86% increase over 2019. Within this, Subscription Solutions revenue grew 41% to $908.8 million, while Merchant Solutions revenue grew 116% to $2,020.7 million.
• GMV¹ for 2020 was $119.6 billion, an increase of 96% over 2019. GPV grew to $53.9 billion, which accounted for 45% of GMV processed versus $25.7 billion, or 42%, for 2019.
• Gross profit grew 78% to $1,541.5 million in 2020, compared with $865.6 million for 2019.
• Adjusted gross profit grew 78% to $1,568.5 million in 2020, compared with $879.4 million in 2019.
• Operating income for 2020 was $90.2 million, or 3% of revenue, versus an operating loss of $141.1 million, or 9% of revenue, for 2019.
• Adjusted operating income for 2020 was $437.4 million or 15% of revenue; adjusted operating income for 2019 was $45.8 million or 3% of revenue.
• Net income for 2020 was $319.5 million, or $2.59 per diluted share, compared with net loss of $124.8 million, or $1.10 per basic and diluted share, for 2019.
• Adjusted net income for 2020 was $491.3 million, or $3.98 per diluted share, compared with adjusted net income of $34.3 million, or $0.30 per diluted share, for 2019.