IPO Report: Shopify (SHOP)

Francis Gaskins  |

Shopify (SHOP) provides a leading cloud-based commerce platform designed for small and medium-sized businesses. It is based in Ottawa, Canada,

Five other companies are scheduled for the week of May 18. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Morgan Stanley, Credit Suisse and RBC Capital
Co-managers: Pacific Crest Securities, Raymond James, Canaccord Genuity

End of lockup (180 days): Tuesday, November 17, 2015
End of 25-day quiet period: Monday, June 15, 2015

SHOP scheduled a $100 million IPO with a market capitalization of $968 million at a price range midpoint of $13 for Thursday, May 21, 2015 on NYSE.  Priced range raised to $15, same conclusion.

Shopify Summary

Shopify provides a leading cloud-based commerce platform designed for small and medium-sized businesses.

Merchants use SHOP’s software to run their business across all of their sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops.

Shopify Valuation


Accumulated deficit (mm)





Per share dilution







Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Shopify (SHOP)







annualizing Q1, although Q4 is seasonally higher, using adj loss figures


Shopify IPO Conclusion


Rev +99%

Gross profit +85%

58% gross margin

+108% in GMV (gross merchandise value)

-5.4% adjusted loss rate

Price to book of 6.5

P/E of -121 indicating low cash burn rate relative to market cap

Shopify's Business

Shopify provides a leading cloud-based commerce platform designed for small and medium-sized businesses.

Merchants use SHOP’s software to run their business across all of their sales channels, including web, tablet and mobile storefronts, social media storefronts, and brick-and-mortar and pop-up shops.

While SHOP started Shopify to help merchants design, set up and manage their online stores, SHOP has expanded far beyond that.

Whether a merchant is starting their business online or offline, SHOP provides a platform for merchants to create an omni-channel experience that helps showcase the merchant’s brand and grow its business.

Merchants & GMV

As of March 31, 2015, SHOP had 162,261 merchants from approximately 150 countries using the  platform, representing growth of 68.2% in the number of merchants using the platform relative to March 31, 2014.

In 2014, the platform processed Gross Merchandise Volume, or GMV, of $3.8 billion, representing an increase of 132.9% from the year ended December 31, 2013.

In the three months ended March 31, 2015, the platform processed GMV of $1.3 billion, representing an increase of 107.8% from the three months ended March 31, 2014.

Gross Merchandise Volume, or GMV, is the total dollar value of orders processed through the platform in the period, net of refunds, inclusive of shipping and handling, duty and value-added taxes.

GMV does not represent revenue earned by SHOP. However, the volume of GMV processed through the platform is an indicator of the success of merchants and the strength of the platform.


SHOPs  merchant solutions revenues are directionally correlated with the level of GMV (gross merchant volumes) that merchants process through the platform.

Merchants historically have processed additional GMV during the holiday season. As a result, SHOP  has historically generated higher merchant solutions revenues in the fourth quarter than in other quarters.

Single view

The Shopify platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, build customer relationships and leverage analytics and reporting.

Merchants can also use Shopify Mobile, SHOP’s iPhone and Android application, to manage their business on the go.

Technology and the internet are transforming commerce

Consumers now expect to be able to transact anywhere, anytime on any device and the experience needs to be simple, seamless and secure. Consumers quickly become accustomed to the standards set by the largest and most innovative merchants and expect a comparable experience with all merchants, even those that have only been in business for one day.

Without the latest technology, it is difficult for merchants to meet the rising demands of consumers.

Shopify's Platform

SHOP built its platform from the ground up to address the growing challenges facing merchants with the aim of making previously complex tasks simple.

The Shopify platform has been engineered to enterprise-level standards and functionality while being designed for simplicity and ease-of-use. SHOP’s platform provides merchants with an intuitive user experience that requires no up-front training to implement and use, enabling merchants to set up their shops in less than 15 minutes.

SHOP helps its merchants own their brand and make the consumer experience memorable.

SHOP believes the Shopify platform is mission critical for all of its merchants and they depend on SHOP for the latest technology.

Manages large spikes in traffic

SHOP’s platform is able to manage large spikes in traffic that accompany events such as new product releases, holiday shopping seasons and flash sales, and has been benchmarked to process at least 10,000 requests per second based on results from platform load testing.

SHOP is constantly innovating and enhancing its platform. SHOP’s continuously deployed, multi-tenant architecture ensures that all of its merchants are always using the latest technology.


A rich ecosystem of app developers, theme designers and other partners has evolved around the Shopify platform.

The platform’s functionality is highly extensible and can be expanded through SHOP’s application program interface, or API, and the over 900 apps available in the Shopify App Store.

This ecosystem helps drive the growth of SHOP’s merchant base, which in turn further accelerates growth of the ecosystem.

Intellectual property

SHOP has been issued trademark registrations in the United States and Canada covering the trademarks “A shop in minutes, a business for life,” “S & Design” “S Shopify & Design,” and “Shopify.”

SHOP has been issued trademark registrations in the European Union covering the trademark “S & Design” and in Australia covering the trademark “Shopify”. SHOP has been issued trademark registration in Canada, covering the trademark, “Do what you do best”.

Competition (No specific competitors named)

SHOP believes that it compares favorably to its competitors.

SHOP believes no competitor offers an integrated, cloud-based commerce platform with comparable functionality to SHOPs.

However, some merchants may elect to piece together technology from other companies that overlaps with certain functions and features that SHOP provides.

5% shareholders pre-IPO

Entities affiliated with Bessemer Venture Partners           30.28%

FirstMark Capital I, L.P 11.87%

Klister Credit Corp.        7.49%

OMERS Ventures II, L.P             6.05%

Bruce McKean  5.72%

James Lake      5.65%

Entities affiliated with Georgian Partners             5.48%  

Tobias Lütke     14.62%

Jeremy Levine  30.28%            


Use of proceeds

SHOP expects to receive $89 million from its IPO and use it for the following:

to strengthen its balance sheet, providing SHOP flexibility to fund its growth strategies that may include: increasing its investment in sales and marketing, research and development and general and administrative functions; investing in maintaining its high level of merchant service and support; continuing to invest in its data centers and network infrastructure; and future acquisitions.

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Symbol Name Price Change % Volume
SHOP Shopify Inc. Class A Subordinate 154.67 3.17 2.09 1,530,756 Trade


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