Hi Everybody,
Here is a tabular presentation for the various important metrics one can attain from the releases:
Quarter MRR S+ Ratio GMV GPV SCap Hi Lo Close WAS P/S/S P/EV
Mar-15 39.3
Jun-15 $42.13 $24.11 $33.95 53.0
Sep-15 $41.11 $22.70 $35.20 75.9
Dec-15 $39.29 $24.06 $25.80 78.0 9.8 8.9
Mar-16 12.8 1.4 11% 2.7 1.0 $28.78 $18.48 $28.21 80.5 9.4 8.7
Jun-16 14.4 1.9 13% 3.3 1.3 $32.39 $24.96 $30.76 81.3 8.9 8.3
Sep-16 16.3 2.4 15% 3.8 1.5 9.2 $45.20 $30.00 $42.92 84.9 11.1 9.9
Dec-16 18.5 3.1 17% 5.5 2.2 14.7 $45.45 $37.74 $42.87 89.1 9.8 8.8
Mar-17 20.7 3.5 17% 4.8 1.8 19.0 $73.00 $42.14 $68.09 90.2 13.8 13.0
Jun-17 23.7 4.3 18% 5.8 2.2 37.2 $100.80 $67.22 $86.90 94.3 16.1 14.3
Sep-17 26.8 5.3 20% 6.4 2.4 44.1 $123.94 $84.80 $116.49 98.8 19.8 18.2
Dec-17 29.9 6.3 21% 9.1 3.5 39.7 $120.69 $89.35 $116.49 99.5 17.2 13.6
Mar-18 32.5 7.0 22% 8.0 3.0 60.4 $154.82 $101.02 $124.59 102.3 16.8 13.5
MRR: Monthly Recurring Revenue (millions)
S+: Shopify Plus MRR (millions)
GMV: Gross Merchandise Volume (billions)
GPV: Gross Payments Volume (billions)
SCap: Shopify Capital Issued (millions)
WAS: Weighted Average Shares (millions)
*P/S/S: Price to Sales per Share
*P/EV: Price to Enterprise Value
*The quarter close price is used for these calculations.
Also, regarding the revenue mix, the relatively higher growth of Merchant Solutions compared to Subscription Solutions could have been a negative due to the lower margins of Merchant Solutions. However, Merchant Solutions margins show constant improvement, more than compensating for the dip in Subscription Solution margins:
Mer Mar Jun Sep Dec
2015 15.0 19.5 23.2 35.7
2016 34.0 43.0 49.7 74.0
2017 65.3 80.1 89.0 128.9
2018 114.1
Grth Mar Jun Sep Dec
2015
2016 126.8% 120.7% 114.2% 107.5%
2017 92.0% 86.3% 79.0% 74.2%
2018 74.8%
MerGP Mar Jun Sep Dec
2015 4.2 5.2 5.6 9.6
2016 8.8 11.6 13.2 23.3
2017 22.4 28.9 33.1 47.1
2018 46.8
GP% Mar Jun Sep Dec
2015 28.3% 26.8% 24.1% 27.0%
2016 25.9% 27.0% 26.5% 31.5%
2017 34.3% 36.1% 37.1% 36.5%
2018 **41.0%**
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Sub Mar Jun Sep Dec
2015 22.4 25.5 29.6 34.6
2016 38.7 43.7 49.8 56.4
2017 62.1 71.6 82.4 93.9
2018 100.2
Grth Mar Jun Sep Dec
2015
2016 73.2% 71.5% 68.6% 62.9%
2017 60.4% 63.9% 65.4% 66.6%
2018 61.4%
SubGP Mar Jun Sep Dec
2015 17.3 20.0 23.1 26.9
2016 30.5 34.6 39.3 44.4
2017 49.8 57.9 67.0 74.1
2018 77.0
GP% Mar Jun Sep Dec
2015 77.5% 78.7% 78.3% 77.9%
2016 78.7% 79.2% 78.8% 78.8%
2017 80.3% 80.9% 81.2% 78.8%
2018 **76.9%**
On the call, Shopify mentioned that Merchant Solutions margins got a bump by one-time adjustments, which won’t occur going forward. However, they said that margins will improve over their year to year comps. They mentioned that their Subscription Solution margins were impacted by their move to the cloud, which will have run its way through by the 4th quarter when we’ll see improvements.
With their investments in the business at the expense of profitability now, I wonder what kind of leverage they’ll get when they don’t need to invest as much. In light of this, it’s even more impressive that they continue to improve margins.
The company is growing revenues really fast. Here is a look at the total revenues and gross margins:
Rev Mar Jun Sep Dec GrPr Mar Jun Sep Dec
2015 37.3 44.9 52.8 70.2 2015 21.6 25.3 28.7 35.5
2016 72.7 86.6 99.6 130.4 2016 39.3 46.2 52.5 68.1
2017 127.4 151.7 171.5 222.8 2017 72.2 86.8 100.0 121.1
2018 214.3 2018 123.8
Grth Mar Jun Sep Dec GrPr% Mar Jun Sep Dec
2015 2015
2016 94.7% 92.9% 88.6% 85.8% 2016 54.0% 53.3% 52.7% 52.3%
2017 75.2% 75.0% 72.2% 70.9% 2017 56.7% 57.3% 58.3% 54.4%
2018 68.3% 2018 **57.8%**
Regarding the guidance, I just listened to the call and had the feeling that they are setting an easily attainable figure that they’ll blow past. And on the analysts’ desired breakout of metrics for Shopify Plus, management stopped any detailed discussions. I’m not concerned with this as I feel like this is changing so much that they don’t want to nail down metrics that will inevitably change going forward (perhaps this is confirmation bias).
The business is executing really well, and I am okay paying up for future growth. At 60% annual growth, they’ll double their revenue in less than 1.5 years and, which would take their P/EV ratio lower than at any time since they’ve been a public company.
DJ