Subscription Revenue in $000
2012 2013 2014 2015 2016 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
Revenue 19200 38339 66668 111979 188606 310031 62080 71598 82435 93918 100198
CostRev 4291 8504 16790 24531 39478 61267 12254 13688 15458 19867 23160
Gr Prof 14909 29835 49878 87448 149128 248764 49826 57910 66977 74051 77038
GM 78% 78% 75% 78% 79% 80% 80% 81% 81% 79% 77%
Merchant Revenue in $000
2012 2013 2014 2015 2016 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
Revenue 4513 11913 38350 93254 200724 363273 65299 80057 89021 128896 114142
CostRev 485 5009 26433 69631 140357 231784 42884 51127 55971 81802 67338
Gr Prof 4028 6904 11917 23623 60367 131489 22415 28930 33050 47094 46804
GM 89% 58% 31% 25% 30% 36% 34% 36% 37% 37% 41%
Gr Prof 18937 36739 61795 111071 209495 380253 72241 86840 100027 121145 123842
OpEx
S&M 12262 23351 45929 70374 129214 225694 45334 54872 58314 67174 75784
% 52% 46% 44% 34% 33% 34% 36% 36% 34% 30% 35%
R&D 6452 13682 25915 39722 74336 135997 26594 32714 36350 40339 47716
% 27% 27% 25% 19% 19% 20% 21% 22% 21% 18% 22%
G&A 1737 3975 11566 20915 43110 67719 14774 15161 18039 19745 20675
% 7% 8% 11% 10% 11% 10% 12% 10% 11% 9% 10%
Gross margins are fine. The operating expenses ticked (more than ticked) up by 10% last quarter. Sales & Marketing +5% of revenue, R&D +4% of revenue, and G&A +1% of revenue.
Guidance looks ok with growth slowing but this is guidance and there’s a good chance that they will beat guidance.
Stock is probably down due to the increase in operating expenses as a percentage of revenue. We will see next quarter if operating expenses drop back down.
Chris
33 Likes
Thanks Chris.
Keep in mind Q4 seasonality in the Opex as % of revenue numbers. Shopify always blows out the Q4 shopping season (their Q4 revenue historically is higher than the following Q1), but Opex $ growth remains relatively linear over the course of the year (they don’t have the S&M spike in Q4 like some traditional companies).
Because of this anomaly the Y/Y Opex % of revenue is a better compare in Q4/Q1.
Q4’16: 59.4%
Q4’17: 57.1%
Q1’17: 68.1%
Q1’18: 67.3%
Basically, the 10% “bump” in Q1 is normal for them historically.
In a perfect world this % would be coming down faster Y/Y while still maintaining their growth… but I don’t think any other company on the planet is maintaining this level of growth while still slightly reducing opex as % of revenue (even if just marginally)!
For my modeling purposes I have Opex as % of revenue declining ~2pts Y/Y this year and possibly accelerating to ~3pts Y/Y in FY19 as at some point it becomes a challenge to continue to expand the employee base by the raw $'s/headcount needed for the Opex growth to keep up with revenue growth.
Erik
38 Likes
My take on the negative action is the same thing that happened to so many other companies in the last quarter. Revenue grew what, 68%, but if $1 billion is projected for the year, that is (apologies still recovering from horrific plague like condition so fuzzy brain) but I believe that would be 46-48% growth YoY.
So if that is the case, with growth at 68% this quarter, growth through the remainder of the year mathematically needs to be less than 46-48% in order to reach the $1 billion guidance.
Be interesting to read the earnings call transcript. They projected $1.0 to 1.01 billion in revenues. Which is basically an inside joke I think celebrating the $1 billion mark. They probably will exceed the number. But the guidance they gave, with the blow out numbers this quarter does indicate a substantial slowdown for the remainder of the year.
Do I believe it? No.
Tinker
20 Likes
They probably will exceed the number. But the guidance they gave, with the blow out numbers this quarter does indicate a substantial slowdown for the remainder of the year.
Tinker I agree with your statement - in listening to the conference call I also wonder if part of the hesitancy to raise full year revenue guidance may be due to the introduction of a new CFO to the mix, Amy Shapero.
https://www.theglobeandmail.com/report-on-business/amy-shape…
This is her first call and she has only been with the company for four weeks - it is possible that the management team did not want to force her hand to accept a higher revenue number so early in her tenure with the company.
Frank - long SHOP, see profile for all holdings
2 Likes
Could be many reasons for the guidance. We know that guiding to $1 billion to $1.01 billion is not a real expected range. No company with a billion dollar run rate can predict the entire year within $10k of variability. Quite the strange thing.
I have read through 1/2 of the earnings call. Much of it bored me, as I guess I am not into a lot of eCommerce minutia. Shopify Plus at 22% of revenues was positive, as long as this number continues to rise. Moving to the public cloud may be positive for SHOP (they can best choose), but this may be an example for many of our other companies in regard to how many businesses are moving away from their own data center and into the public cloud.
I will finish reading it tonight and see if anything else of interest comes up.
This will take more digging, but from Darthtaco’s numbers, SHOP has gained ~1,000 new Shopify Plus customers in just the last 2 quarters. If that is true, then that is an undercooked gem showing that Shopify Plus is growing like a weed. TBD. But that is the working hypothesis to test.
Tinker
6 Likes
We know that guiding to $1 billion to $1.01 billion is not a real expected range. No company with a billion dollar run rate can predict the entire year within $10k of variability
Splitting hairs because I agree with you, but that is $10M and not $10k.
Either way, an ignorantly tight range that must have been some kind of inside joke.
A.J.
We know that guiding to $1 billion to $1.01 billion is not a real expected range
Maybe it’s just them saying “yup we will break the magic $1B number this year folks, too early to tell by how much”.
That is of course a huge milestone for any company especially one this young.