Shopify Inc

Shopify Inc. (TSX: SHOP) is a global commerce company, which provides inbuilt-platform and services. The Group is delivering trusted tools for managing retail businesses of any size. It derives its revenue through merchant solutions and subscription solutions segments.

Recent News

20^th May 2020: New product launches and updates were unveiled by the Shopify Inc (TSX:SHOP) group at the virtual event Reunite, which includes - Shopify Balance and Shop Pay Installments. From these launches and updates, it is helping merchants future-proof their businesses amid elevated global volatility created by COVID-19. Shopify Balance will include Shopify Balance Account, Shopify Balance Card, and Rewards. Shopify Balance will also be launched in the United States. Working with a partner, the Company will be introducing Shop Pay Installments (Shopify’s new “Buy Now, Pay Later” option) later this current year. It will be available to the United States merchants, which are eligible for Shopify Payments. The Group is partnering with Facebook, which will enable consumers to browse and purchase without ever leaving the apps and help to deliver unique shopping experiences.

12^th May 2020: The Company announced that it had completed its offering of Class A subordinate voting shares at a price of USD 700 per share, which includes the full exercise of the over-allotment option of 277,500 Class A subordinate voting shares.

First Quarter Highlights (for the three months ended 31^st March 2020, as on 6^th May 2020)

Overall results reflected an impressive set of numbers. Led by exemplary growth from both of its segments, the Group’s reported revenue increased by 47 per cent to USD 470 million as compared with the corresponding period of the last year. Merchant revenue growth, driven by GMV (Gross Merchandise Volume) growth and expanded wallet share, has offset the revenue loss from merchants leaving the platform. For the first quarter of 2020, the net loss stood at USD 31.4 million versus USD 24.2 million in Q1 FY19. In the current quarter, the Company has a strong balance sheet with a cash balance of USD 969.36 million.

Share Price Performance

1-Year Chart as at May-25-2020, (Source: Refinitiv, Thomson Reuters)

On 25 May 2020, Shopify Inc shares is trading at CAD 1,195.3. Stock 52 weeks High and Low are CAD 1,195.3/CAD 352.63.

Conclusion

The Group has a success-based business model that puts merchant first and growing opportunity through multichannel commerce platforms. Led by an increased number of merchants into the Shopify’s platform, SHOP reported a tremendous growth in its Monthly Recurring Revenue (MRR). The company’s MRR accelerated from USD 44.2 million in Q1 FY19 to USD 55.4 million in Q1 FY20 (surge of 25%). During the economic downturn, most of the businesses are leaning towards e-commerce segment in order to continue their operations, due to the temporary closure of retail outlets. Shopify is investing to help businesses adapt to a fast-changing commerce landscape, while advancing certain investments that will serve merchants now and in the long-term. Recently, the Company introduced Shopify Balance and Shop Pay Installments to enhance customer accessibility and to cater to the growing customer base dependent on mobile applications. However, it needs to be seen that how the traffic behaves once the government eases the lockdown.

Based on the decent growth prospects, we have given a “Hold” recommendation at the current price of CAD 1,195.3 (as on 25 May 2020).

Disclaimer

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