SHOP 1st Quarter Results

I’m still into SHOP as it is in one of my other MF portfolios, plus it’s still been a very good performer.

Some highlights:

Total revenue in the first quarter was $320.5 million, a 50% increase from the comparable quarter in 2018.
Subscription Solutions revenue grew 40% to $140.5 million. This increase was driven primarily by growth in Monthly Recurring Revenue1 (“MRR”), largely due to an increase in the number of merchants joining the Shopify platform.
Merchant Solutions revenue grew 58%, to $180.0 million, driven primarily by the growth of Gross Merchandise Volume2 (“GMV”), as well as by robust growth in Shopify Capital and Shopify Shipping.
MRR as of March 31, 2019 was $44.2 million, up 36% compared with $32.5 million as of March 31, 2018. Shopify Plus contributed $11.3 million, or 26%, of MRR compared with 22% of MRR as of March 31, 2018.
GMV for the first quarter was $11.9 billion, an increase of $3.9 billion, or 50%, over the first quarter of 2018. Gross Payments Volume3 (“GPV”) grew to $4.9 billion, which accounted for 41% of GMV processed in the quarter, versus $3.0 billion, or 38%, for the first quarter of 2018.


So Shopify’s revenue growth was 50%. Here is the revenue growth yoy for the March quarter for the past four years.

March 2016 - 95%
March 2017 - 75%
March 2018 - 68%
March 2019 - 50%

As you can see, the rate of dropping accelerated.

Last five quarters sequentially. You would think as the numbers get smaller the sequential drops would become smaller.

**Mar 2018 from Mar 2017 - Growth rate fell from 75% to 68%, a drop of  7 points**
**Jun 2018 from Jun 2017 - Growth rate fell from 75% to 62%, a drop of 13 points**
**Sep 2018 from Sep 2017 - Growth rate fell from 72% to 58%, a drop of 14 points**
**Dec 2018 from Dec 2017 - Growth rate fell from 71% to 54%, a drop of 17 points**
**Mar 2019 from Mar 2018 - Growth rate fell from 68% to 50%, a drop of 18 points**

As I read that, as the growth rate is shrinking, it isn’t leveling off as you would expect, but the rate of shrinkage is accelerating.




I realize while SHOP is no longer a great Saul stock (I did sell half when you bailed) I “agreed” to keep it in that MF portfolio for a minimum of 5yrs. Sort of an investment experiment. Today it jumped to my #4 position so I’m willing to let it ride for a few more years.

Most of my portfolio is not locked up so I do follow the advice here carefully.
Thanks again,


It’s possible that Market is seeing re-acceleration in the near future due to cannabis and new business lines encroaching into SQ, but the numbers sure do pale in comparison to some of the other companies on this board. Valued higher than TWLO or AYX, and it’s already 27B mkt cap

That said, it’s handily beat a lot of the stocks on this board in the past half year, a dollar is a dollar

I don’t own SHOP. Never did. Saul, I agree that the drop in revenues is troubling, but what should be far, FAR more troubling to investors is the rise in operating losses (there are no profits):

Operating loss for the first quarter of 2019 was $35.8 million, or 11% of revenue, versus a loss of $20.3 million, or 9% of revenue, for the comparable period a year ago.

Adjusted operating loss for the first quarter of 2019 was 0.4% of revenue, or $1.4 million; adjusted operating loss for the first quarter of 2018 was 0.1% of revenue, or $0.2 million.

Net loss for the first quarter of 2019 was $24.2 million, or $0.22 per share, compared with $15.9 million, or $0.16 per share, for the first quarter of 2018.

Color me decidedly unimpressed.


It is very surprising if you compared SQ vs. SHOP performance in past year, former’s revenue accelerating and latter one decelerating, while market seems knowing something we don’t know? Only thing I see is leadership difference, one is laser focus to build an e-commerce giant, one is trying to expand to too many business lines.


“I agree that the drop in revenues is troubling…”

Oops. I should have written “the drop in revenue growth”. My bad.

50% of revenue growth for >1 billion business is very impressive. SHOP have a very big CAP and TAM. It could be one of the biggest winners in the long term (10 years or more).


SHOP is a generational stock just like MSFT, AMZN, WMT, HD. Its impact to the society is enormous. It eliminated the barrier between big corporations and individuals with a dream. It has no close competitors. Always focused and continue to innovate. The hyper growth has to come down but it will grow for a very long time. That is the character of long term winners.


I agree growth is slowing, but that is going to be the case for almost all companies once they get larger, say north of 20B market cap! If we have a concentrated portfolio, they yes, accelerated growth north of 50% is best. However, SHOP @TTM~55% is still good growth and perhaps can be part of a larger portfolio – one with more stocks.

We can keep an eye on Growth, but TAM is still reasonable large as they expand internationally and accept multiple currencies. For example, their innovative solution for selling control items (e.g cannabis) via governments is being looked at by several countries. They are adding new products and features to their business model every quarter.

Some observations:
P/S is still in the middle of the pack for our SaaS - 23
From 52 weeks low – up 106%
Gain in last 2Qs – from $122 to $242
Subscription is still growing (40%) and Margin is 80%
Cash - $2B

I have reduced my position in SHOP, but it’s still #6 with an 8%

My 2 cents


SHOP is a generational stock just like MSFT, AMZN, WMT, HD. Its impact to the society is enormous. It eliminated the barrier between big corporations and individuals with a dream. It has no close competitors. Always focused and continue to innovate. The hyper growth has to come down but it will grow for a very long time. That is the character of long term winners.

This the thesis in a nutshell that Shopify is still worth investing in. We don’t know the future, but it’s not a bad bet.

Growth is falling now, but if Shopify truly is a generational business, revenue could grow 20% for 10 years or more. If Shopify is a generational business, it’s not hard to imagine a $100 billion market cap or more 10 years from now. That’s a five bagger. A 10% return from holding SPY would only net you a 2.6 bagger over the same period. That’s a pretty outstanding return over such a long stretch of time if one’s goal is to simply beat the market. Nobody should feel unhappy by doubling the market return. But on this board, investors are much more agile. From an agile standpoint, it’s easy to see more enticing opportunities.

On a free live presentation, Tom Gardner last year said Shopify was his top pick for the next ten years. From the standpoint of buying a single stock and holding it for 10 years, he may be on to something. I think there is a lot of synergy between Shopify, Instagram, and Pinterest. Instagram and Pinterest allow SMBs to get exposure for their products and Shopify gives them the means of selling those products. This is enabling SMBs to take increasingly larger shares of retail sales.


Matt Cochrane posted his usual great write up of SHOP earnings on the premium boards if you have a subscription:…

Maybe he’ll post it here, I don’t know, but I have been, and continue to be, a happy shareholder of SHOP (first purchase April 2016, last purchase Oct 2018). I hold about 20 stocks, so more than most here, and SHOP definitely has a place in my portfolio. It was my #1 holding for a while, until I had to sell some to pay for some college tuition and taxes, which dropped it to my #3 holding, but even with trimming it, it is now back to my #2 holding again (surrounded by MDB, AYX, TWLO, TTD, ZS, and all the other usual suspects from around here, and then some).

I find most here are not as patient as I am with my stock holdings (or they are more agile, I guess is another way of looking at it). Afterall, I still hold my NVDA and NTNX and think I’ll be happy with their performance long term (not necessarily 2 quarters from now, but 2 years or more from now), as I feel the stumbles they’ve had are short term issues that can/will be fixed. And even with holding the larger portfolio, I’m right at up 40% YTD, just like Saul and so many others here.

Couldn’t be happier with my port makeup and performance, and all I’ve learned from everyone on this board! I’ve been here quite a while now (I think about 4 years), but it took me some time to get comfortable enough to trim my 80 position portfolio down to a more manageable size and also to get comfortable with the cloud/SaaS/enterprise software stocks now held.


X post from NPI…

I’m holding and happy with the results here but…

  1. 50% is actually 49.5% rounded up so really Shopify is now in the 40%+ growth club and out of the 50%+ growth club

  2. Whilst they said they had ~800k+ customers in a vague reference in the call and that they matched Q4 Shopify plus additions they didn’t actually mention the number of Shopify plus merchants which I thought was off.

(In Q4 prepared remarks they said they had 820k total merchants and 5300 Shopify plus merchants)

  1. SBC continues to be ridiculously high

  2. There seemed to be no sign where the terminal growth rate is going to end. TOP line growth dropped from 54.33 to 49.5, Subscriptions dropped from 42 to 40 MMR dropped from 37 to 36 and merchant solutions from 63 to 58%. International growth, payments and shipping growth couldn’t redeem the numbers. MMR growth dropped the least but is too small to cushion the total number.

  3. Operating losses or adjusted inc would have been worse but for some delayed marketing spend - which won’t be the case in Q2.

Still - for a company at a $1.5bn run rate, growing at ~50% is outstanding and I think a lot of folks lose sight of that.

I do however feel Shopify needs to start giving an indication where the mature business mix with all the new solutions and expanded revenue streams are going to leave them on a glide path to a stabilised growth rate. They can’t keep dropping 5% every quarter. They also need to get SBC under control even if they continue the Amazon game of recycling income into investment.



I continue to be impressed with Spotify, and have continued to hold it as it is one of the few stocks like this which I can hold in Canadian Dollars. It was the first stock I grabbed onto after finding this board, I have only sold enough to cover my initial investment, the rest is gravy and I plan to hold it until their story changes.

It’s now at 8x my buy in price, and I like this one for the long term, so can weather some bumps in the road.