Shopify Inc.

Shopify Inc.

Type	Public
Traded as	TSX: SHOP (Class A) NYSE: SHOP S&P/TSX 60 component
ISIN	[https://stockhub.co/index.php?title=Toollabs:isin/&language=en&isin=CA82509L1076 CA82509L1076]
Industry	E-commerce
Founded	2006 (2006) Ottawa, Ontario, Canada
Founders	Tobias Lütke Daniel Weinand Scott Lake
Headquarters	Ottawa, Ontario , Canada
Area served	Worldwide
Services	Online shopping
Revenue	US$5.6 billion (2022)
Net income	US$-3.46 billion (2022)
Total assets	US$10.76 billion (2022)
Total equity	US$8.24 billion (2022)
Number of employees	11,600+
Website	shopify.com

Shopify Inc., a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company's platform enables merchants to displays, manages, markets, and sells its products through various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, manage cash, payments and transactions, and access financing. It also sells custom themes and apps, and registration of domain names; and merchant solutions, which include accepting payments, shipping and fulfillment, and securing working capital. The company was formerly known as Jaded Pixel Technologies Inc. and changed its name to Shopify Inc. in November 2011. Shopify Inc. was incorporated in 2004 and is headquartered in Ottawa, Canada.

The Idea

In 2004, Tobias Lütke, Daniel Weinand, and Scott Lake wanted to create a website for their own store called Snowdevil. However, not satisfied with existing e-commerce platforms, Lütke build an e-commerce platform by himself and Snowdevil was launched. In 2006, they officially launched Shopify which provides a set of tools merchants can use to build their own website. Initial products of Shopify assisted merchants to set up customized store templates, tracked orders in an RSS feed, and automated inventory organization. Also, payments could be processed through a PayPal or credit card processor integration. Shopify has redefined the point of sale (POS) for e-commerce. In 2013, Shopify launched Shopify payments. Instead of using third-party payment gateways, Shopify payments allowed merchants to use Shopify’s own payment. Furthermore, in 2017 they produced iPad POS that directly accepts debit and credit card payments. It is still widely used by physical business sites. 

Mission Statement

Shopify’s mission is to make commerce better for everyone[1]. In their own words “We help people achieve independence by making it easier to start, run, and grow a business. We believe the future of commerce has more voices, not fewer, so we’re reducing the barriers to business ownership to make commerce better for everyone.”[1] Essentially, Shopify's fundamental mission revolves around the advancement of commerce for the collective benefit of all individuals. The company is deeply committed to empowering aspiring entrepreneurs, facilitating their path towards independence by offering comprehensive tools and resources necessary for the initiation, operation, and expansion of successful businesses. Operating within a user-friendly platform, Shopify strives to streamline the intricacies associated with entrepreneurship, thus rendering the endeavour more approachable and less daunting.

• Shopify focuses on supporting independent businesses during their early stages.
• The platform is designed to cater to various needs of  entrepreneurs, including digital storefronts, inventory management, and seamless transactions.
• The company aims to promote growth by crafting a scalable platform to adapt to evolving businesses.
• Shopify values diversity and inclusivity, striving to  provide equal opportunities in commerce.
• They achieve this by making tools affordable and accessible to all individuals, regardless of scale.
• Shopify's guiding principles are accessibility, empowerment, and inclusivity.

References

1. https://www.shopify.com/uk/about

Segments

Shopify provides various services and tools for merchants to realize their business idea in offline and online commerce. Here are services Shopify offers:

[Building e-commerce platform]

• Storefronts: Shopify assists merchants to personalize their websites in which it is easily accessible with IOS or Android.
• Creator tools: It empowers merchants through providing tools they need to not only produce content but build a thriving business
• Brands/logo growth tools: It helps the merchant to create its brand using easy-to-use tools and Shopify’s logo maker, slogan maker, QR code generator, and more tools for growth.
• Domain / hosting: It provides unlimited bandwidth so merchants do not have to worry about increasing traffic. Also, Shopify makes it easy to create and register a domain name for merchants’ new websites. Also, it offers blazing-fast server access and level 1  PCL compliance so that customers’ data is always kept secure.
  
• Back Office / Shopify Fulfillment Network / Deliver: Shopify’s users can buy and print shipping labels in Shopify so they can prepare packages in advance and skip the line at the post office. Also, it simplifies day-to-day work as it fulfills orders from the same place where merchants manage products, customers, and inventory. Shipping carriers that work with Shopify are USPS / UPS / DHL / Canada Post / Evri / DPD UK / Sendle / Poste Italiane/ Colissimo / Correos / Chronopost
• Banking: With Shopify’s banking solution, merchants can manage their account from one place, and it provides fast, easy access to funding so that it accelerates business's growth.
• Shop Pay & Installments: It enables customers to checkout quickly using encryption to save their details, allows them to pay in full at checkout, or lets them split payments into installments.
• Mobile App: Use the Shopify app to run your business wherever merchants are and manage the Shopify store on-the-go, respond to information in real-time, manage orders, and more.

[For marketing]

• Social Channels Integrations / Sales Channels: Shopify allows merchants to sell products across different channels: social media like Facebook, Instagram, TikTok, Youtube, and popular marketplaces. Also, updates in Shopify website automatically sync to Facebook and Instagram so that merchants can easily create ads and shoppable posts
  
• Shop app: It assists customers in quick checkout, tracking order and shipment details. Furthermore, it brings other Shopify stores so that it helps customers to rediscover merchants’ business with Shop app

[Managing Business]

• POS System: It provides tools for sales reporting, inventory management.
• Shopify Market: It is the only global e-commerce solution where merchants can sell products to multiple countries and scale internationally from one Shopify store.
• Messaging/ Inbox / Chat: Merchants can talk to customers and manage conversations from anywhere with Shopify Inbox. Also, merchants can create automated messages and get insights to focus on chats that convert.
• Marketing Insights & Analytics: Make informed decisions for the business using marketing insights and data provided by Shopify’s reports and analytics. Also this aids to manage B2B and DTC customers, orders, and inventory all from one place, with separate storefronts.
• Merchandising:  From visual displays to product bundling, special offers, and more, merchandising can help merchants promote and sell products in your store.
• Central admin: It manages business easily from a central location. With Shopify’s Admin, you can access all of the different parts of your business from one place.

Revenue Breakdown by Segment

Shopify includes two main revenue streams: Subscription Solutions and Merchant Solutions. Let's break down the key points about each revenue stream:

1. Subscription Solutions:

• Subscription solutions revenue is generated through the sale of subscriptions to your platform, which includes variable platform fees.
• Additional sources of subscription solutions revenue come from the sale of subscriptions to POS Pro offering, themes, apps, and registration of domain names.
• Different pricing plans are offered to meet the needs of current and prospective merchants, allowing them to scale and receive more powerful tools as they upgrade to higher-priced options.
• Most of the Gross Merchandise Volume (GMV) comes from merchants subscribing to Shopify Plus plans, which offer advanced functionality and support for growing and scaling globally.
• Subscription plans typically have a one-month term, with the option for merchants to make an annual commitment.
• Subscription fees are paid at the start of the subscription period, except for Shopify Plus plans, which are paid in arrears on a ratable basis.

1. Merchant Solutions:

• Merchant solutions revenue is generated through various services offered to merchants, including payment processing fees, currency conversion fees, transaction fees, referral fees from partners, advertising revenue on the Shopify App Store, Shopify Capital, Shop Pay Installments, Shopify Balance, Shopify Shipping, service fees from Shopify Fulfillment Network, and sales of POS hardware, Shopify Email, and Shopify Markets.
• Shopify Payments is a fully integrated payment processing service that allows merchants to accept and process payment cards online and offline. It drives higher retention among merchants and eliminates the need for third-party payment gateways.
• Shopify Capital provides eligible merchants with access to financing and working capital through merchant cash advances and loans.
• Shop Pay Installments allows merchants to offer buyers interest-free or interest-bearing payment plans.
• Shopify Balance is a money management product that offers merchants a no-fee money management account and a card for spending.
• Shopify Shipping allows merchants to buy and print shipping labels and track orders directly within the Shopify platform.
• Shopify Fulfillment Network offers fast and reliable fulfillment services to independent businesses, leveraging logistics capabilities and partnerships.
• Shopify POS enables merchants to sell products and accept payments in person from a mobile device almost anywhere.

Additionally, Shopify Markets and Shopify Markets Pro are cross-border commerce product offerings designed to help merchants expand globally.

Overall, your business model aims to provide a comprehensive platform and a range of services to support merchants in their e-commerce operations while generating revenue through subscription fees, payment processing, financing, and various other solutions.

Projects

In the fast-paced world of e-commerce, staying ahead of the curve is vital for success. Shopify, one of the leading e-commerce platforms, has consistently demonstrated its commitment to innovation and customer satisfaction. The company has several exciting projects in the pipeline aimed at further enhancing its platform and services. Let’s delve into some of these initiatives and see how they are paving the way for a better online shopping experience.

Expanding the App Marketplace

Shopify’s App Marketplace has been a driving force behind the platform’s adaptability and versatility. In 2021, they were actively working to expand this marketplace, offering merchants an even broader range of third-party applications to extend their store’s functionalities. With a focus on quality and usefulness, the goal was to empower merchants to tailor their online stores to their specific needs, resulting in a more personalized shopping experience for customers.

Improving the Mobile App

Recognizing the growing significance of mobile commerce, Shopify has been investing heavily in optimizing its mobile app. The objective was to provide merchants with a seamless experience to manage their businesses on the go. By improving the app’s user interface, performance, and adding new features, Shopify aimed to empower merchants with the tools they need, right at their fingertips, no matter where they are.

Enhanced Payment Options

In a competitive digital landscape, providing a variety of payment options is crucial for attracting and retaining customers. Shopify acknowledged this importance and was working on expanding its payment options, allowing merchants to offer a wide array of payment gateways tailored to their target markets. This improvement aimed to minimize cart abandonment rates and streamline the checkout process, ultimately leading to increased sales and customer satisfaction.

Next-Level Analytics and Insights

To stay competitive, merchants need access to valuable data and insights about their customers’ behavior. Shopify understood this necessity and was dedicated to enhancing its analytics and reporting tools. By offering more in-depth analytics, businesses could gain a deeper understanding of their audience, optimize their marketing strategies, and make data-driven decisions to boost their overall performance.

Sustainability and Green Initiatives

In recent years, sustainability and environmental consciousness have become paramount concerns for businesses and consumers alike. As a responsible global player, Shopify demonstrated its commitment to sustainability by actively working on green initiatives. These efforts included exploring ways to reduce the carbon footprint of its data centers, improving packaging practices, and supporting merchants in adopting eco-friendly business practices.

The Team

Tobi Lütke, Founder & Chief Executive Officer

Tobi Lütke is the founder and Chief Executive Officer of Shopify. In 2004, Tobi began building software to launch an online snowboard store called Snowdevil. It quickly became obvious that the software was more valuable than the snowboards, so Tobi and his founding team launched the Shopify platform in 2006. He has served as CEO since 2008 at the company's headquarters in Ottawa, Canada. Tobi is an active advocate for sustainability, computer literacy, and education, and serves as a board member of Canada Learning Code, an organization working to give all Canadians access to digital skills. He also served as Chair of the Digital Industries Table, an advisory board commissioned by the federal government to provide recommendations on how to turn Canada into a digital leader.

Harley Finkelstein, President

Harley Finkelstein is President at Shopify and has been with the company since 2010. He oversees Shopify’s commercial teams, growth & external affairs. Harley holds a Bachelor degree in Economics from Concordia University and a J.D./M.B.A. joint degree in Law and Business from the University of Ottawa. Prior to his current role, Harley was Shopify’s COO and has founded numerous startups and ecommerce companies.

Jeff Hoffmeister, Chief Financial Officer

Jeff Hoffmeister is the Chief Financial Officer at Shopify and joined in October 2022. He previously worked in Morgan Stanley's Technology Investment Banking group for 22 years in their New York, London and Boston offices. His prior roles at Morgan Stanley included Head of the Americas Tech Banking team and Head of Technology Investment Banking for EMEA. Jeff began his professional career at PwC, serving in their auditing division. Jeff has significant experience leading high-profile tech companies in a variety of transactions, including initial public offerings, follow-on offerings of equity, debt and convertible notes, and both buyside and sellside M&A transactions. Notably, Jeff helped lead IPOs for dozens of companies, including Shopify. He graduated from Georgetown University with a Bachelor of Science in Business Administration and has a Master in Business Administration from the University of Virginia Darden School of Business. He also holds a license as a certified public accountant (CPA).

Kaz Nejatian, VP Product & Chief Operating Officer

Kaz Nejatian is Shopify’s VP of Product and Chief Operating Officer and has been at Shopify since 2019. Prior to becoming COO, Kaz was VP of Product, Merchant Services, and Commercial. Kaz oversees a cross-functional team that develops and delivers tools for entrepreneurs to supercharge their growth on Shopify. These products give independent merchants access to commerce innovations that have historically only been available to big businesses. After working as a lawyer in his early career, Kaz parlayed his life interests of entrepreneurship, finance, and technology into co-founding and serving as the CEO of Kash, a payment technology company which was acquired in 2017 by one of the largest fintech companies in the U.S. Kaz then served as Product Lead for Payments and Billing at Facebook, reducing the barriers for businesses in cash-dependent markets to purchase digital ads without a credit card. Kaz is a graduate of Queen’s University’s School of Business and the University of Toronto Faculty of Law. Along with being a key player in making commerce better for everyone, he is also a husband and the proud father of three children.

Jess Hertz, General Counsel

Jess Hertz is General Counsel at Shopify since 2021, where she oversees our global legal team. Jess is a U.S. lawyer with significant tech, policy, and operational experience. Before joining Shopify, she served as Deputy Assistant to the President and Staff Secretary to President Biden. She also served as General Counsel for the Biden-Harris Transition Team, where she oversaw all legal aspects for the presidential transition in 2020-2021. Prior to her work for the Biden administration, Jess led the North America regulatory team for Facebook, where she was responsible for managing the company's civil regulatory inquiries. Previous to her work at Facebook, Jess was a partner at Jenner & Block LLP, a Chicago-based private law firm. Jess earned her law degree from the University of Chicago Law School, and her undergraduate degree from Harvard College.

Tia Silas, Chief Human Resources Officer

Tia Silas is Shopify’s Chief Human Resources Officer, joining in 2022 to oversee Culture, Internal Operations, Employee Experience & Talent teams. Prior to joining Shopify, Tia was EVP of Human Resources at Wells Fargo, where she was responsible for leading people strategies across a number of areas such as Global Technology, Strategy, Digital and Innovation, as well as the Corporate and Investment Bank. Tia also worked at IBM as the Global Chief Diversity & Inclusion Officer where she was responsible for driving diversity and inclusion strategies across the globe with hundreds of thousands of employees. Tia graduated from Cornell University with a B.S. in industrial and labor relations, and attained her MBA from New York University, Stern School of Business.

Andrew Dunbar, Chief Information Security Officer

Andrew Dunbar is the Chief Information Security Officer at Shopify and has been with the company since 2012. He leads the team responsible for safeguarding the millions of merchants on the Shopify platform, educating all employees on the best security practices, and ensuring that Shopify implements innovative security techniques to meet the changing needs of commerce globally. Prior to joining Shopify, he worked as an IT Security Specialist and Programming Analyst for Global Affairs Canada (formerly known as the Department of Foreign Affairs, Trade, and Development). He began his journey in this space by completing a Bachelor’s of Engineering (Software) from Carleton University.

Glen Coates, VP Product

Glen is the VP of Product, Core, leading the development of Shopify’s core commerce platform: the storefront, checkout, backoffice, marketing and analytics tools that all merchants get “in the box”. He also oversees the core developer platform that Shopify’s theme and app developers build the future of commerce on and Shopify’s partner ecosystem, which includes over 10,000 publicly available apps in the Shopify App Store. Glen’s work at Shopify is the culmination of a career in software engineering, commerce, and entrepreneurship. Originally a CompSci grad who cut his teeth in video game development, he moved from Sydney to San Diego in 2008 to run US distribution and ecommerce for an Australian eco products company. In 2010, he attended Columbia Business School for one whole day before quitting to start Handshake, a SaaS B2B ecommerce platform headquartered in New York. Glen joined Shopify in May 2019 when the company acquired Handshake. Glen has been in the Vice President role since October 2020.

Ownership Structure

Top 10 Holders

Holder	Shares	Date Reported	%Out	Value
Baillie Gifford and Company	71,116,224	Mar 30, 2023	5.92%	4,859,727,101
Morgan Stanley	66,878,673	Mar 30, 2023	5.57%	4,570,154,058
Capital Research Global Investors	61,259,502	Mar 30, 2023	5.10%	4,186,168,013
Vanguard Group Inc	39,461,276	Mar 30, 2023	3.28%	2,696,586,259
Capital World Investors	29,575,096	Mar 30, 2023	2.46%	2,021,014,158
Price (T.Rowe) Associates Inc	28,790,842	Mar 30, 2023	2.40%	1,967,422,161
Sands Capital Management, LLC	23,648,206	Mar 30, 2023	1.97%	1,616,000,135
Royal Bank of Canada	22,052,119	Mar 30, 2023	1.84%	1,506,931,531
FMR, LLC	20,912,825	Mar 30, 2023	1.74%	1,429,077,877
JP Morgan Chase & Company	19,272,190	Mar 30, 2023	1.60%	1,316,965,086

Holding breakdown

Investor type	Holding (%)
Institutional investors:	64.99%
Mutual fund holders:	41.34%
Other institutions:	23.65%

Risks

Risks Related to Competitors

Shopify's main competitors are Wix, BigCommerce, and Squarespace. These competitors offer similar services, but Shopify has some advantages, such as its low starting price and its SSL certificate. However, the competition is fierce, and Shopify could lose market share if it does not continue to innovate.

1. Wix: Wix is a website builder that offers e-commerce functionality. It has a drag-and-drop interface that makes it easy to use. Wix is best suited for small businesses that want to create an online store quickly.

2. SquareSpace: SquareSpace is a website builder that offers e-commerce functionality. It has beautiful templates and is easy to use. SquareSpace is best suited for small businesses that want to create an online store with a modern look.

3. BigCommerce: BigCommerce is an e-commerce platform that offers a range of features for online stores. It has a drag-and-drop interface and is easy to use. BigCommerce is best suited for medium-sized businesses that want to sell products online.

Risks Related to Financials

Shopify has been growing rapidly, but it is still not profitable. The company has been investing heavily in growth, and this has led to a net loss of $1.9 billion in 2023. If Shopify cannot become profitable, its stock price could decline.

Risks Related to Operations

Shopify's operations are complex. The company relies on a network of independent merchants, and it must ensure that these merchants are able to deliver products on time and in good condition. Shopify also relies on its website and payment processing systems, and any disruptions to these systems could hurt the company's business.

1. Inventory

It's worth noting that many of the independent shops on Shopify are based in the East. Each shop owner is self-employed, so it is difficult to have a mature delivering system like amazon. May face a series of problems such as tax problems, transaction fee, hoarding backlog, geopolitical events and even there are even small businesses that don't have physical storage. If the goods are not delivered in accordance with the specified time, this would lead to consumer disapproval of the entire Shopify platform.

2. Technology and payment

Shopify heavily depends on websites and payment processing to do business. Server failures, system interruption or other technical issues could hurt sales while a data breach or failure to protect customers’ payment information may leave the company exposed to penalties under consumer-protection laws, while also harming the brand’s finances and reputation.

Risks Related to Markets

The global economy is facing some headwinds, such as rising inflation and interest rates. This could dampen consumer spending, which could hurt Shopify's business.

Risks Related to Growing the Business

Shopify is focused on growing its business by expanding into new markets and by offering new services. This could be a risky strategy, as it could lead to increased costs and decreased profitability.

Shopify is focused on releasing more tools that help more types of businesses growth their sales, both online and offline. It also rolled out a handheld tool called POS Go with a built-in barcode scanner, card reader and inventory tracker to power in-person sales. But such an approach would also increase R&D costs, manufacturing costs, and thus might make Shopify's net profit even lower

Furthermore, Shopify may have to be flexible in the way that it charges sellers for their services in order to show a clear ROI for their clients. This could potentially affect Shopify's reputation and thus their stock price.

Overall, Shopify is a high-growth company with a lot of potential. However, there are also some risks associated with investing in the company. Investors should carefully consider these risks before investing in Shopify.

Financial Statements

Income statement

Fiscal year is January-December. All values USD Millions.	2022	2021	2020	2019	2018
Sales/Revenue	5,600	4,612	2,929	1,578	1,073
Sales Growth	21.42%	57.43%	85.63%	47.05%	-
Cost of Goods Sold (COGS) incl. D&A	2,883	2,174	1,426	729	488
COGS excluding D&A	2,792	2,108	1,356	693	461
Depreciation & Amortization Expense	91	66	70	36	27
Depreciation	36	42	38	17	17
Amortization of Intangibles	54	24	32	19	10
Amortization of Deferred Charges	-	-	-	-	-
COGS Growth	32.62%	52.46%	95.56%	49.31%	-
Gross Income	2,717	2,438	1,504	849	585
Gross Income Growth	11.44%	62.14%	77.10%	45.17%	-
Gross Profit Margin	48.52%	-	-	-	-
SG&A Expense	3,381	2,110	1,374	985	673
Research & Development	1,472	847	531	344	226
Other SG&A	1,909	1,264	844	641	447
SGA Growth	60.20%	53.55%	39.54%	46.44%	-
Other Operating Expense	-	-	-	-	-
EBIT	-664	328	129	-136	-88
Unusual Expense	3,133	-2,778	-99	-	-
Non Operating Income/Expense	99	23	-2	-8	-6
Non-Operating Interest Income	79	15	23	48	29
Equity in Affiliates (Pretax)	-	-	-	-	-
Interest Expense	3	3	9	-	-
Interest Expense Growth	0.17%	-61.55%	0.00%	-	-
Gross Interest Expense	3	3	9	-	-
Interest Capitalized	-	-	-	-	-
Pretax Income	-3,623	3,141	240	-96	-65
Pretax Income Growth	-215.36%	1206.60%	350.86%	-48.43%	-
Pretax Margin	-64.70%	-	-	-	-
Income Tax	-162	226	-79	29	-
Income Tax - Current Domestic	1	2	-54	63	-
Income Tax - Current Foreign	24	33	20	2	-
Income Tax - Deferred Domestic	-180	192	13	-14	-
Income Tax - Deferred Foreign	-7	-1	-57	-22	-
Income Tax Credits	-	-	-	-	-
Equity in Affiliates	-	-	-	-	-
Other After Tax Income (Expense)	-	-	-	-	-
Consolidated Net Income	-3,460	2,915	320	-125	-65
Minority Interest Expense	-	-	-	-	-
Net Income	-3,460	2,915	320	-125	-65
Net Income Growth	-218.72%	812.23%	355.93%	-93.39%	-
Net Margin	-61.79%	-	-	-	-
Extraordinaries & Discontinued Operations	-	-	-	-	-
Extra Items & Gain/Loss Sale Of Assets	-	-	-	-	-
Cumulative Effect - Accounting Chg	-	-	-	-	-
Discontinued Operations	-	-	-	-	-
Net Income After Extraordinaries	-3,460	2,915	320	-125	-65
Preferred Dividends	-	-	-	-	-
Net Income Available to Common	-3,460	2,915	320	-125	-65
EPS (Basic)	-2.73	2.34	0.27	-0.11	-0.06
EPS (Basic) Growth	-216.88%	775.04%	341.81%	-80.85%	-
Basic Shares Outstanding	1,266	1,247	1,196	1,130	1,057
EPS (Diluted)	-2.73	2.29	0.26	-0.11	-0.06
EPS (Diluted) Growth	-219.42%	784.29%	334.30%	-80.81%	-
Diluted Shares Outstanding	1,266	1,274	1,235	1,130	1,057
EBITDA	-574	394	199	-100	-61
EBITDA Growth	-245.66%	97.66%	298.61%	-65.25%	-
EBITDA Margin	-10.24%	-	-	-	-
EBIT	-664	328	129	-136	-88

Balance Sheet

Fiscal year is January-December. All values USD Millions.	2022	2021	2020	2019	2018
Net Income before Extraordinaries	-	-	-	-	-
Cash & Short Term Investments	5,053	7,768	6,388	2,455	1,970
Cash Only	1,649	2,503	2,704	650	411
Short-Term Investments	-	-	-	-	-
Cash & Short Term Investments Growth	-34.95%	21.61%	160.18%	24.65%	-
Cash & ST Investments / Total Assets	46.97%	58.23%	82.29%	70.36%	87.19%
Total Accounts Receivable	858	668	422	241	133
Accounts Receivables, Net	203	127	64	41	24
Accounts Receivables, Gross	288	175	87	54	27
Bad Debt/Doubtful Accounts	-85	-48	-24	-12	-3
Other Receivables	655	541	358	199	109
Accounts Receivable Growth	28.43%	58.45%	75.13%	80.68%	-
Accounts Receivable Turnover	6.53	6.9	6.95	6.56	8.06
Inventories	-	-	-	-	-
Finished Goods	-	-	-	-	-
Work in Progress	-	-	-	-	-
Raw Materials	-	-	-	-	-
Progress Payments & Other	-	-	-	-	-
Other Current Assets	113	103	68	49	26
Prepaid Expenses	48	50	25	21	13
Miscellaneous Current Assets	65	53	43	28	13
Total Current Assets	6,023	8,539	6,878	2,745	2,129
Net Property, Plant & Equipment	486	302	211	246	62
Property, Plant & Equipment - Gross	640	402	311	292	92
Buildings	-	-	-	-	-
Land & Improvements	-	-	-	-	-
Machinery & Equipment	19	-	-	-	-
Construction in Progress	-	-	-	-	-
Leases	-	-	-	-	-
Computer Software and Equipment	40	24	24	18	14
Leased Property	-	-	-	-	-
Transportation Equipment	-	-	-	-	-
Other Property, Plant & Equipment	225	181	167	140	77
Accumulated Depreciation	154	100	100	46	30
Buildings	-	-	-	-	-
Land & Improvements	-	-	-	-	-
Machinery & Equipment	0	-	-	-	-
Construction in Progress	-	-	-	-	-
Leases	-	-	-	-	-
Computer Software and Equipment	17	15	15	11	8
Leased Property	-	-	-	-	-
Transportation Equipment	-	-	-	-	-
Other Property, Plant & Equipment	136	85	85	35	23
Total Investments and Advances	1,953	3,956	173	-	-
LT Investment - Affiliate Companies	-	-	-	-	-
Other Long-Term Investments	1,953	3,956	173	-	-
Long-Term Note Receivable	-	-	-	-	-
Intangible Assets	2,226	495	448	479	64
Net Goodwill	1,836	357	312	312	38
Net Other Intangibles	390	138	136	167	26
Other Assets	27	-	-	-	-
Deferred Charges	27	-	-	-	-
Tangible Other Assets	-	-	-	-	-
Total Assets	10,757	13,340	7,763	3,489	2,259
Assets - Total - Growth	-19.36%	71.85%	122.47%	54.47%	-
Asset Turnover	0.46	-	-	-	-
Return On Average Assets	-28.72%	-	-	-	-
All values USD Millions.	2022	2021	2020	2019	2018
ST Debt & Current Portion LT Debt	18	16	10	9	-
Short Term Debt	18	16	10	9	-
Current Portion of Long Term Debt	-	-	-	-	-
Accounts Payable	364	284	169	91	61
Accounts Payable Growth	28.09%	68.33%	86.40%	47.73%	-
Income Tax Payable	57	80	74	121	-
Other Current Liabilities	417	323	186	95	77
Dividends Payable	-	-	-	-	-
Accrued Payroll	68	72	62	32	14
Miscellaneous Current Liabilities	349	251	124	63	63
Total Current Liabilities	856	703	438	316	139
Total Current Assets FOR CALCULATION PURPOSES ONLY	6,023	8,539	6,878	2,745	2,129
Total Assets FOR CALCULATION PURPOSES ONLY	10,757	13,340	7,763	3,489	2,259
Inventories FOR CALCULATION PURPOSES ONLY	-	-	-	-	-
Cash & Short Term Investments FOR CALCULATION PURPOSES ONLY	5,053	7,768	6,388	2,455	1,970
Current Ratio	7.04	12.15	15.69	8.68	15.35
Quick Ratio	7.04	12.15	15.69	8.68	15.35
Cash Ratio	5.9	11.05	14.57	7.76	14.2
Long-Term Debt	1,378	1,158	903	143	-
Long-Term Debt excl. Capitalized Leases	913	911	758	-	-
Non-Convertible Debt	913	911	758	-	-
Convertible Debt	-	-	-	-	-
Capitalized Lease Obligations	-	-	-	-	-
Provision for Risks & Charges	-	-	-	-	-
Deferred Taxes	-25	135	-53	-11	1
Deferred Taxes - Credit	16	183	-	9	5
Deferred Taxes - Debit	41	48	53	19	4
Other Liabilities	268	163	21	6	24
Deferred Tax Liability-Untaxed Reserves	-	-	-	-	-
Other Liabilities (excl. Deferred Income)	-	-	-	-	22
Deferred Income	268	163	21	6	2
Total Liabilities	2,518	2,207	1,362	474	168
Non-Equity Reserves	-	-	-	-	-
Total Liabilities / Total Assets	23.41%	16.54%	17.55%	13.58%	7.45%
Preferred Stock (Carrying Value)	-	-	-	-	-
Redeemable Preferred Stock	-	-	-	-	-
Non-Redeemable Preferred Stock	-	-	-	-	-
Preferred Stock issues for ESOP	-	-	-	-	-
ESOP Guarantees - Preferred Stock	-	-	-	-	-
Common Equity (Total)	8,239	11,133	6,401	3,016	2,091
Common Stock Par/Carry Value	8,747	8,040	6,115	3,256	2,216
Additional Paid-In Capital/Capital Surplus	30	161	261	63	75
Retained Earnings	-522	2,938	15	-304	-188
ESOP Debt Guarantee	-	-	-	-	-
Cumulative Translation Adjustment/Unrealized For. Exch. Gain	-	-	-	-	-
Unrealized Gain/Loss Marketable Securities	-	-	-	-	-
Revaluation Reserves	-	-	-	-	-
Other Appropriated Reserves	-16	-6	9	1	-12
Unappropriated Reserves	-	-	-	-	-
Treasury Stock	-	-	-	-	-
Common Equity / Total Assets	76.59%	83.46%	82.45%	86.42%	92.55%
Total Shareholders' Equity	8,239	11,133	6,401	3,016	2,091
Total Shareholders' Equity / Total Assets	76.59%	83.46%	82.45%	86.42%	92.55%
Accumulated Minority Interest	-	-	-	-	-
Total Equity	8,239	11,133	6,401	3,016	2,091
Liabilities & Shareholders' Equity	10,757	13,340	7,763	3,489	2,259

Cash flow statement

Fiscal year is January-December. All values USD Thousands.	2022	2021	2020	2019	2018
Net Income before Extraordinaries	-3,460,418.00	2,914,659.00	319,509.00	-124,842.00	-64,553.00
Net Income Growth	-218.72%	812.23%	355.93%	-93.39%	-
Depreciation, Depletion & Amortization	90,520.00	66,308.00	70,060.00	35,651.00	27,052.00
Depreciation and Depletion	36,172.00	41,828.00	38,192.00	16,779.00	-
Amortization of Intangible Assets	54,348.00	24,480.00	31,868.00	18,872.00	-
Deferred Taxes & Investment Tax Credit	-186,571.00	190,963.00	-41,998.00	-37,918.00	-
Deferred Taxes	-186,571.00	190,963.00	-41,998.00	-37,918.00	-
Investment Tax Credit	-	-	-	-	-
Other Funds	3,518,292.00	-2,506,578.00	177,719.00	177,549.00	102,914.00
Funds from Operations	-38,177.00	665,352.00	525,290.00	50,440.00	65,413.00
Extraordinaries	-	-	-	-	-
Changes in Working Capital	-98,271.00	-160,924.00	-100,332.00	20,175.00	-56,089.00
Receivables	-127,908.00	-338,377.00	-141,867.00	-130,392.00	-83,343.00
Inventories	-	-	-	-	-
Accounts Payable	36,541.00	138,175.00	118,588.00	84,563.00	20,641.00
Income Taxes Payable	-3,941.00	45,263.00	-105,890.00	64,648.00	-
Other Accruals	-	-	-	-	-
Other Assets/Liabilities	-2,963.00	-5,985.00	28,837.00	1,356.00	6,613.00
Net Operating Cash Flow	-136,448.00	504,428.00	424,958.00	70,615.00	9,324.00
Net Operating Cash Flow Growth	-127.05%	18.70%	501.80%	657.35%	-
Net Operating Cash Flow / Sales	-2.44%	10.94%	14.51%	4.47%	0.87%
All values USD Thousands.	2022	2021	2020	2019	2018
Capital Expenditures	-50,018.00	-50,788.00	-41,995.00	-62,397.00	-41,545.00
Capital Expenditures (Fixed Assets)	-50,018.00	-50,788.00	-41,733.00	-56,759.00	-27,950.00
Capital Expenditures (Other Assets)	-	-	-262	-5,638.00	-13,595.00
Capital Expenditures Growth	1.52%	-20.94%	32.70%	-50.19%	-
Capital Expenditures / Sales	-0.89%	-1.10%	-1.43%	-3.95%	-3.87%
Net Assets from Acquisitions	-1,753,748.00	-59,627.00	-	-265,512.00	-19,397.00
Sale of Fixed Assets & Businesses	-	-	-	-	-
Purchase/Sale of Investments	1,243,882.00	-2,237,375.00	-1,889,853.00	-241,566.00	-749,691.00
Purchase of Investments	-5,646,285.00	-7,987,599.00	-5,611,258.00	-2,718,604.00	-2,447,955.00
Sale/Maturity of Investments	6,890,167.00	5,750,224.00	3,721,405.00	2,477,038.00	1,698,264.00
Other Uses	-525,538.00	-	-	-	-
Other Sources	366,855.00	-	-	-	-
Net Investing Cash Flow	-718,567.00	-2,347,790.00	-1,931,848.00	-569,475.00	-810,633.00
Net Investing Cash Flow Growth	69.39%	-21.53%	-239.23%	29.75%	-
Net Investing Cash Flow / Sales	-12.83%	-50.91%	-65.94%	-36.08%	-75.53%
All values USD Thousands.	2022	2021	2020	2019	2018
Cash Dividends Paid - Total	-	-	-	-	-
Common Dividends	-	-	-	-	-
Preferred Dividends	-	-	-	-	-
Change in Capital Stock	17,549.00	1,649,762.00	2,649,400.00	736,351.00	1,072,182.00
Repurchase of Common & Preferred Stk.	-	-	-	-	-
Sale of Common & Preferred Stock	17,549.00	1,649,762.00	2,649,400.00	736,351.00	1,072,182.00
Proceeds from Stock Options	-	1,541,168.00	2,578,591.00	688,014.00	1,041,688.00
Other Proceeds from Sale of Stock	17,549.00	108,594.00	70,809.00	48,337.00	30,494.00
Issuance/Reduction of Debt, Net	-	-	907,950.00	-	-
Change in Current Debt	-	-	-	-	-
Change in Long-Term Debt	-	-	907,950.00	-	-
Issuance of Long-Term Debt	-	-	907,950.00	-	-
Reduction in Long-Term Debt	-	-	-	-	-
Other Funds	-	-	-	-	-
Other Uses	-	-	-	-	-
Other Sources	-	-	-	-	-
Net Financing Cash Flow	17,549.00	1,649,762.00	3,557,350.00	736,351.00	1,072,182.00
Net Financing Cash Flow Growth	-98.94%	-53.62%	383.11%	-31.32%	-
Net Financing Cash Flow / Sales	0.31%	35.77%	121.43%	46.66%	99.90%
Exchange Rate Effect	-16,198.00	-7,005.00	3,221.00	1,742.00	-1,867.00
Miscellaneous Funds	-	-	-	-	-
Net Change in Cash	-853,664.00	-200,605.00	2,053,681.00	239,233.00	269,006.00
Free Cash Flow	-186,466.00	453,640.00	383,225.00	13,856.00	-18,626.00
Free Cash Flow Growth	-141.10%	18.37%	2665.77%	174.39%	-
Free Cash Flow Yield	-0.42%	-	-	-	-

Year	Current	2022	2021	2020	2019	2018	2017	2016	2015
	83,120	44,152	1,72,966	1,37,999	45,858	14,810	10,027	3,813	1,965
Market Cap Growth	-	-74.47%	25.34%	200.92%	209.65%	47.71%	162.98%	94.04%	-
Enterprise Value	78,693	40,495	1,66,371	1,32,523	43,555	12,865	9,088	3,420	1,775
PE Ratio	-31.87	-12.76	59.34	431.91	-367.33	-229.42	-250.69	-107.84	-104.57
PS Ratio	14.02	7.88	37.51	47.11	29.06	13.8	14.89	9.79	9.57
PB Ratio	9.79	5.36	15.54	21.56	15.21	7.08	10.02	9.29	10.06
EV/Sales Ratio	13.33	7.23	36.07	45.24	27.6	11.99	13.5	8.79	8.65
EV/EBITDA Ratio	-31.89	-11.48	51.82	414.77	-723.93	-343.06	-547.07	-159.92	-153.6
EV/EBIT Ratio	-30.16	-11.19	52.92	531.26	-454.57	-199.29	-227.24	-96.74	-94.45
EV/FCF Ratio	-1841.91	-217.17	343.09	346.05	5299.92	-399.28	-555.5	-279.92	-336.12
Debt / Equity Ratio	0.17	0.17	0.11	0.14	0.05	0.01	-	-	-
Asset Turnover	0.54	0.5	0.37	0.49	0.55	0.56	0.71	1.06	1.21
Interest Coverage	-720.52	-1034.4	900.11	27.46	-	-	-	-	-
Return on Equity (ROE)	-22.50%	-39.10%	27.90%	6.30%	-4.90%	-3.70%	-4.70%	-11.80%	-14.30%
Return on Assets (ROA)	-17.60%	-31.10%	23.50%	5.40%	-4.30%	-3.40%	-4.20%	-9.60%	-11.10%
Return on Capital (ROIC)	-25.00%	-45.00%	31.40%	7.10%	-5.10%	-4.40%	-5.80%	-18.40%	-32.20%

Valuation

DCF	2018	2019	2020	2021	2022	2023	2024	2025	2026	2027
Revenue	1,073	1,578	2,929	4,612	5,600	8,562	13,090	20,014	30,599	46,783
% growth	-	47.06%	85.61%	57.46%	21.42%	52.89%	52.89%	52.89%	52.89%	52.89%
EBIT	-88	-136	129	328	-664	347	367	388	410	434
% margin	-8.20%	-8.62%	4.40%	7.11%	-11.86%	5.76%	5.76%	5.76%	5.76%	5.76%
Taxes	0	29	-79	226	-162	231	235	240	245	250
% of EBIT	0.00%	-21.32%	-61.24%	68.90%	24.40%	2.00%	2.00%	2.00%	2.00%	2.00%
EBIAT	-88	-165	208	102	-502	116	132	148	166	184
D&A	27	36	70	66	91	93	95	96	98	100
% of sales	2.52%	2.28%	2.39%	1.43%	1.63%	1.93%	1.93%	1.93%	1.93%	1.93%
Capex	-42	-62	-42	-51	-50	(49)	(48)	(47)	(46)	(46)
% of slaes	-3.87%	-3.93%	-1.43%	-1.11%	-0.89%	-1.84%	-1.84%	-1.84%	-1.84%	-1.84%
Changes in NWC		-56	-20	-100	-161	0	0	0	0	0
% of sales		-3.55%	-0.68%	-2.17%	-2.88%	-2.32%	-2.32%	-2.32%	-2.32%	-2.32%
Unlevered FCF		-135	256	217	-300	160	178	197	218	239
Year count						0.52	1.52	2.52	3.52	4.52
Discount factor						0.94	0.82	0.72	0.64	0.56	TV
Present value of FCF						150	147	143	139	134	1442.206495

WACC
Risk free rate  (5 year US Bond)	4.17%
Market risk premium	4.72%
Levered beta	2.043
Cost of equity	13.81%
Cost of debt	4.72%
Share price	65.02
Shares outstanding (latest reported)	1,266.27
Market capitalization	82332
Total debt	1.40E+03
Total capital	8.37E+04
% debt capital	1.67%
% equity capital	98.33%
Internally calculated WACC	13.66%
Terminal growth rate	4%

		% of EV
Present vale of FCF	712	33.04%
Present value of TV	1442	66.96%
Enterprise value	2,154
(-) Net Debt	-252.00
Equity Value	2406
Shares	1,266
Share Price	1.90
Current Share Price	65.02

Sensitivity Analysis

TV	WACC
	1.900	12.00%	12.50%	13.00%	13.66%	14.00%	14.50%	15.00%
	2.5%	$   2.002	$          1.912	$          1.830	$          1.733	$          1.687	$          1.625	$  1.568
	3.0%	$   2.076	$          1.977	$          1.888	$          1.783	$          1.734	$          1.668	$  1.607
	3.5%	$   2.159	$          2.050	$          1.953	$          1.839	$          1.786	$          1.714	$  1.648
	4.0%	$   2.252	$          2.132	$          2.025	$                  1.900	$          1.843	$          1.765	$  1.694
	4.5%	$   2.358	$          2.223	$          2.105	$          1.968	$          1.905	$          1.821	$  1.744
	5.0%	$   2.478	$          2.327	$          2.195	$          2.044	$          1.975	$          1.882	$  1.799

Comparables

	SHOP	SNOW	MDB	VRSN	NET	AKAM
Company Name	Shopify Inc.	Snowflake Inc.	MongoDB, Inc.	VeriSign, Inc.	Cloudflare, Inc.	Akamai Technologies, Inc.
Industry	Internet Services and Infrastructure	Internet Services and Infrastructure	Internet Services and Infrastructure	Internet Services and Infrastructure	Internet Services and Infrastructure	Internet Services and Infrastructure
Price	66.17	174.8	410.58	211.88	65.39	92.8
Market Cap	84.00B	57.33B	28.92B	22.27B	22.10B	14.06B
Enterprise Value	80.54B	52.56B	28.25B	23.04B	21.96B	16.24B
Revenue	5.90B	2.27B	1.37B	1.44B	1.05B	3.63B
Revenue Growth (YoY)	22.30%	60.46%	39.82%	6.77%	44.17%	3.02%
Revenue Per Share	4.65	7.06	19.74	13.53	3.21	22.98
ROE	-21.03%	-15.95%	-44.00%	NM	-32.55%	11.51%
ROA	-8.25%	-12.47%	-13.45%	42.00%	-8.11%	6.70%
Price/Sales	14.23	24.76	20.80	15.66	20.37	4.04

Corporate Strategy

Ecosystem Development

Shopify has built an extensive ecosystem beyond its core e-commerce platform, integrating various apps, plugins, and third-party solutions. This approach enables merchants to customize their online stores with ease and access specialized functionalities. Moreover, Shopify's ecosystem fosters a vibrant community of developers, partners, and experts who contribute to the platform's growth and innovation. This mutually beneficial approach enhances Shopify's appeal to customers and strengthens its position in the market.

International Expansion

Global expansion constitutes a vital element of Shopify's corporate strategy. The company actively seeks opportunities to expand its services and products into new markets. By enabling multi-currency transactions, offering localized language support, and complying with regional regulations, Shopify empowers merchants worldwide to engage in cross-border commerce. This international focus not only opens new revenue streams but also diversifies risks associated with regional market fluctuations.

Acquisitions and Strategic Partnerships

To maintain its competitive edge and stay at the forefront of e-commerce innovation, Shopify pursues strategic acquisitions and partnerships. Integrating cutting-edge technologies and talented teams, Shopify enhances its offerings and keeps abreast of market trends. These collaborations enable the company to introduce new features and tools to its platform more rapidly, benefiting both Shopify and its customers.

Embracing New Sales Channels

Recognising the ever-changing e-commerce landscape, Shopify embraces new sales channels to empower merchants with omnichannel capabilities. Integrations with social media platforms, marketplaces, and in-person point-of-sale systems enable merchants to broaden their reach and enhance customer engagement. This adaptability ensures Shopify remains a relevant and invaluable partner for businesses seeking to thrive in the digital age.

Shopify's corporate strategy centre around empowering entrepreneurs and businesses in the e-commerce space. Through its customer-centric approach, platform diversification, ecosystem development, international expansion, strategic acquisitions, and integration of new sales channels, it has solidified its position as a leading e-commerce platform. Hence, Shopify's coherent and adaptable strategy positions it for long-term success in the dynamic and competitive world of e-commerce. With a robust foundation, a thriving ecosystem, and a history of consistent growth, Shopify appears well-positioned to deliver value to its stakeholders and capitalise on the ever-growing e-commerce market.

ESG Factors

Environmental

Carbon neutral since inception

• Shopify has purchased carbon offsets to cover the entire operational footprint

Renewable-powered home offices

• Shopify purchased renewable energy certificates for their office buildings and employee home-office electricity use around the world

Carbon-neutral platform

• The platform runs entirely on Google Cloud, which means merchants’ online stores are powered by renewable energy

Carbon-neutral corporate travel

• Shopify has purchased carbon removal for all corporate travel

Social

1. Shopify exists to lower the barriers to business ownership for entrepreneurs of all ages and backgrounds. We support the entire entrepreneurial journey—from discovery and development to growth and success.
2. But we know the playing field is far from level. Socioeconomics, race, and gender are just a few of the factors affecting who can participate and how.
3. Our merchant education and equitable entrepreneurship programs are designed to improve accessibility, instill an innovation mindset, and empower business owners to thrive. We believe entrepreneurship is an opportunity for everybody—and the future of commerce should be as diverse as it is bright.

Governance

1. As a merchant-first, product-centered, mission-driven company, the core values of entrepreneurship are at the heart of our culture. We foster this spirit of entrepreneurship within the Shopify community by encouraging creativity, diverse perspectives, and bold innovation.
2. By recruiting, developing, and supporting a diverse workforce that reflects the Shopify ecosystem, and by fostering a healthy work-life balance, we’re creating space where our employees can show up as their authentic and best selves.

Investment Thesis

Strengths

1. Wide Market Reach: Shopify serves businesses of all sizes, from small and medium-sized enterprises to large corporations, enabling the company to tap into a vast and diverse customer base.
2. Innovative Ecosystem and Partnerships: The Shopify ecosystem benefits from a vibrant community of developers, designers, and third-party app providers, fostering continuous innovation and expanding the platform's functionality.
3. User-Friendly Platform: Shopify's user-friendly interface and intuitive design allow merchants with limited technical expertise to set up and manage their online stores easily.
4. Scalability and Customization: The platform is highly scalable, enabling businesses to grow and adapt to changing needs while offering a wide array of customization options to create unique online shopping experiences.
5. Strong Financial Performance: Shopify has exhibited consistent revenue growth and impressive financial results, driven by an expanding merchant base and increased average revenue per user. Its subscription-based business model, coupled with transaction and payment processing fees, provides a diversified revenue stream.
6. Global Market Presence: Shopify has a strong international presence, enabling merchants to operate in multiple countries and currencies. As e-commerce adoption continues to grow worldwide, Shopify is well-positioned to benefit from global market expansion.
7. Expanding Merchant Base: The company has had successful continuous efforts to expand its merchant base, attracting new entrepreneurs and established brands. As the e-commerce market grows, Shopify will benefit from a broader customer base.

Challenges

1. Intense Competition: The e-commerce market is highly competitive, with established players and new entrants vying for market share. Shopify faces competition from platforms like WooCommerce, BigCommerce, and Wix.
2. Reliance on Third-Party Partners: While the developer ecosystem is a strength, it also poses a risk as the quality and reliability of third-party apps and services can impact the user experience.
3. Regulatory and Compliance Risks: As the company expands globally, it must navigate varying regulatory environments and compliance requirements, especially concerning data protection, taxation and payment processing, which could add complexities and costs.
4. Margin Pressure: As Shopify expands its services and offerings, it may face margin pressure due to increased operating costs.
5. Market Saturation: While e-commerce continues to grow, there might be limitations on the number of merchants entering the market or switching platforms. As the market matures, Shopify might experience slower growth rates and increased competition for market share.