Shopify results for last quarter that were released this morning. Even worse than expected, cash position has dropped over a billion from the previous quarter. Pay attention to the unrealised gain in 2021, followed by the unrealised loss in 2022. Means they lost money both quarters, not just this one, and the 2 immediately preceding quarters. Total loss to date in three quarters over 3 Billion and they are closing a deal for 2.1 billion that means further share dilution.
The "analysts" and "strategic experts" continue to talk about Shopify in glowing terms, remember, they were doing that with Nortel and a raft of others right up to the day they filed for Bankruptcy.
Internet, Everywhere - July 27, 2022 - Shopify Inc. (NYSE, TSX: SHOP), a provider of essential internet infrastructure for commerce, announced today financial results for the quarter ended June 30, 2022.
Second-Quarter Financial Highlights
Total revenue in the second quarter grew 16% year over year to $1.3 billion, which represents a three-year compound annual growth rate of 53%. Total reported revenue growth year-over-year was negatively impacted by approximately 1.5 percentage points given the significant strengthening of the U.S. dollar relative to foreign currencies in the second quarter.
Monthly Recurring Revenue1 ("MRR") as of June 30, 2022 was $107.2 million. MRR increased 13% year over year, up from $95.1 million as of June 30, 2021 as more merchants joined the platform and the number of retail locations using POS Pro increased. Shopify Plus contributed $33.7 million, or 31%, of MRR compared with 26% of MRR as of June 30, 2021, as larger merchants seek out greater value from their digital platforms.
Subscription Solutions revenue was $366.4 million, up 10% year over year, primarily due to more merchants joining the platform, and reflecting our change in terms to make selling in our app and theme stores free for partners up to their first million dollars annually, terms that were not in place until the third quarter of 2021.
Gross Merchandise Volume2 ("GMV") for the second quarter was $46.9 billion, which represents a three- year compound annual growth rate of 50% and an increase of $4.7 billion, or 11% over the second quarter of 2021. Gross Payments Volume3 ("GPV") grew to $24.9 billion, which accounted for 53% of GMV processed in the quarter, versus $20.3 billion, or 48%, for the second quarter of 2021. GPV continued to benefit in the quarter from strong performance by merchants on Shopify Payments, growing adoption by new merchants and merchants on Shopify Plus, Shop Pay and Shopify Markets penetration gains, and continued adoption of our POS Pro hardware with integrated payments.
Merchant Solutions revenue was $928.6 million, up 18% year over year, driven primarily by the growth of GMV and the continued solid uptake of merchant solutions such as Shopify Payments, Shopify Capital, and Shopify Markets. Merchant Solutions revenue growth year-over-year was negatively impacted by approximately two percentage points due to the strengthening U.S. dollar.
Gross profit dollars grew 6% to $655.6 million in the second quarter of 2022, compared with $620.9 million for the second quarter of 2021, reflecting primarily a greater mix of lower-margin Merchant Solutions revenue, lower margins in Shopify Payments due to merchant and card mix, and increased investments in our cloud infrastructure.
Adjusted gross profit4 dollars grew 6% to $665.0 million in the second quarter of 2022, compared with $627.0 million for the second quarter of 2021.
Operating loss for the second quarter of 2022 was $190.2 million, or 15% of revenue, versus income of $139.4 million, or 12% of revenue, for the comparable period a year ago.
Adjusted operating loss4 for the second quarter of 2022 was $41.8 million, or 3% of revenue, compared with adjusted operating income of $236.8 million or 21% of revenue in the second quarter of 2021. The difference primarily reflects the expansion of our R&D and sales and marketing teams, and the step up in our international marketing efforts and offline performance marketing initiatives.
Net loss for the second quarter of 2022 was $1.2 billion, or $0.95 per basic and diluted share, compared with net income of $0.9 billion, or $0.695 per diluted share, for the second quarter of 2021. Second-quarter 2022 net loss includes a $1.0 billion net unrealized loss on our equity and other investments, while our net income in the second quarter of 2021 included a $0.8 billion net unrealized gain from equity and other investments.
Adjusted net loss4 for the second quarter of 2022 was $38.5 million, or $0.03 per basic and diluted share, compared with adjusted net income of $284.6 million, or $0.225 per diluted share, for the second quarter of 2021.
At June 30, 2022, Shopify had $6.95 billion in cash, cash equivalents and marketable securities, compared with $7.77 billion at December 31, 2021.
Second-Quarter Business Highlights
Shopify launched Shopify Editions, our new semi-annual product showcase that features new launches and improvements across the entire platform that is powering the Connect-to-Consumer era of commerce. Over 100 updates were featured in our Summer ‘22 Edition, including the following:
B2B functionality integrated directly into the Shopify platform, making it easier for Shopify Plus brands to sell to other businesses via the same store they use for direct-to-consumer commerce.
Twitter Shopping channel, which enables merchants to reach consumers directly from their Twitter profiles, with buyers seeing products and pricing without having to leave the app.
Shopify Functions, which enables brands to customize out-of-the-box Shopify features to meet their unique needs without ever touching code.
Tap to Pay on iPhone (in early access), allowing merchants to easily expand into offline retail with their iPhone, meaning no extra hardware or upfront investment required.
Google local inventory sync, so merchants can sync location and inventory levels directly from within the Shopify Google Channel account and automatically let nearby customers know when a product is available in store across Google surfaces, making it easier to shop and support local brands.
Tokengated commerce, enabling merchants to deepen connections with new fans and VIPs by giving NFT holders exclusive access to products, perks, and experiences across online, mobile, and offline surfaces.
Shopify launched Shopify Audiences, a marketing tool powered by an audience network and machine learning that helps merchants find high-intent buyers for their products. At launch, merchants can sync Shopify Audiences with Facebook and Instagram and are working to extend to platforms such as TikTok, Snap, Pinterest, Microsoft, Criteo, and others.
Shopify continued to build Shopify Fulfillment Network to offer our merchants and their buyers simple, fast, and affordable fulfillment. We completed the rollout of Shopify’s warehouse management system to our fulfillment network and introduced our delivery badge, Shop Promise, into early access which will enable merchants to offer buyers visibility into when they will receive their orders.
Shopify launched our integrated hardware with payments to retail merchants in Italy in June and Singapore in July, bringing the total number of countries in which Shopify POS hardware is available to 13.
Shopify launched Shopify Payments in France expanding the availability of Shopify Payments to 18 countries.
Merchants in the U.S., Canada, and the U.K. received $416.4 million in merchant cash advances and loans from Shopify Capital in the second quarter of 2022, an increase of 15% versus the $363.0 million funded in the second quarter of last year. Shopify Capital has grown to $3.8 billion in cumulative capital funded since its launch in April 2016, approximately $537.8 million of which was outstanding on June 30, 2022.
Shopify completed its ten-to-one share split and creation of the Founder share following approval by the company’s shareholders at its Annual General and Special Meeting held on June 7, 2022.
Subsequent to Second Quarter 2022
Shopify closed its acquisition of ecommerce fulfillment technology company, Deliverr, on July 8, 2022. With the addition of Deliverr's world-class software, talent, data, and scale, Shopify Fulfillment Network will offer merchants a one-stop shop for their logistics needs, from initial receipt of inventory to smart distribution, through to fast delivery and easy returns.
Shopify partnered with YouTube to launch YouTube Shopping, enabling Shopify’s millions of merchants around the world to reach YouTube’s over two billion monthly logged-in users. With the launch of YouTube Shopping on Shopify, merchants can easily integrate products from their online store into live streams, videos and into a new store tab on their YouTube channel to feature their entire selection of products.
As ecommerce has reverted to a level slightly higher than its pre-COVID trend, in an effort to recalibrate our operations, Shopify took steps to streamline its workforce in July, reducing its total headcount by approximately 10%. After expanding the company in anticipation of rapid and sustained structural ecommerce market expansion, which has not materialized, we are recalibrating to meet the new reality.
2022 Outlook
The following outlook supersedes all prior statements made by Shopify and are based on current expectations. These statements constitute forward-looking information within the meaning of applicable securities laws and are based on a number of assumptions and risks, many of which are beyond our control. As these statements are forward-looking, actual results could vary materially from our expectations. Please see "Forward-looking Statements" below for more information.
We have grown our adjusted operating income over the past five years through 2021. We now expect 2022 will end up being different, more of a transition year, in which ecommerce has largely reset to the pre-COVID trend line and is now pressured by persistent high inflation. We expect our multi-channel superpowers and strong value proposition will continue to help our merchants in this environment, and we are excited about our critical investments, like Deliverr, that we believe will position us well for the future of commerce.
Our financial outlook for the rest of 2022, which includes the impact of Deliverr and our new compensation system that we expect to implement in our third quarter, assumes that higher inflation will persist for the foreseeable future and, combined with rising interest rates, will pressure consumers’ wallets for purchases of goods.
For 2022, we expect:
GMV growth, though impacted by persistent inflation, will continue to outperform the broader retail market in the second half of 2022;
Merchant Solutions revenue will continue to grow as a percentage of GMV, driven by Shopify Payments, Shopify Capital, Shopify Markets, Shop Pay Installments, and Shopify Fulfillment (including Deliverr), and continue to benefit from the growth of partner revenue;
The number of new merchants joining the platform in the second half of 2022 will be higher than in the first half of 2022 as our localized subscription pricing and other commercial initiatives gain traction;
Merchant Solutions revenue growth year-over-year will be more than double that of Subscription Solutions growth for full year 2022;
Both GMV and total revenue in 2022 to be more evenly distributed across the four quarters, similar to 2021, given the increasing pressure on consumer spending on goods and currency headwinds from the stronger U.S. dollar we are expecting in the back half of this year;
Because of this larger mix of Merchant Solutions contributing to overall revenue and Deliverr, which we expect to be dilutive, gross profit dollar growth will trail revenue growth; and
Operating expense growth, excluding one-time items, to meaningfully decelerate year over year in the third quarter, and again in the fourth quarter.
Factoring in these expectations, we expect to generate an adjusted operating loss for the second half of 2022, with our third-quarter adjusted operating loss, excluding severance costs, expected to materially increase over the second quarter, reflecting time needed for the streamlining of our operations to take effect, the implementation of our new compensation framework, the first quarter of Deliverr operations, including approximately 450 team members, and related integration costs, and up to an estimated 50 million dollars for certain other operating items associated with these and other areas. As we decelerate operating expense growth into the fourth quarter, and with its higher seasonal GMV and revenue, we expect an adjusted operating loss in the fourth quarter that is significantly smaller than in the third quarter, but larger than in the second quarter.
Finally, the estimates of stock-based compensation and related payroll taxes, capex and amortization of acquired intangibles are now 750 million dollars, 200 million dollars and 62 million dollars, respectively.
Quarterly Conference Call
Shopify’s management team will hold a conference call to discuss our second-quarter results today, July 27, 2022, at 8:30 a.m. ET. The conference call will be webcast on the investor relations section of Shopify’s website at
https://investors.shopify.com/news-and-events/. An archived replay of the webcast will be available following the conclusion of the call.
Shopify’s Second Quarter 2022 Interim Unaudited Condensed Consolidated Financial Statements and Notes and its Second Quarter 2022 Management's Discussion and Analysis are available on Shopify’s website at
https://investors.shopify.com and will be filed on SEDAR at
www.sedar.com and on EDGAR at
www.sec.gov.
About Shopify
Shopify is a leading provider of essential internet infrastructure for commerce, offering trusted tools to start, grow, market, and manage a retail business of any size. Shopify makes commerce better for everyone with a platform and services that are engineered for reliability, while delivering a better shopping experience for consumers everywhere. Proudly founded in Ottawa, Shopify powers millions of businesses in more than 175 countries and is trusted by brands such as Allbirds, Gymshark, Heinz, Tupperware, FTD, Netflix, FIGS, and many more. For more information, visit
www.shopify.com.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and pres
Financial advice by some of our fellows
Linear Mode
