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15 Expert Financial Strategies For Seasonal Businesses

Some businesses are seasonal by nature. For instance, pool maintenance and landscaping businesses thrive in the summer, while snow removal companies and holiday gift shops see sales during the winter season.

When the majority of your sales occur in a small window of time, you need a strong budget and operational strategy to keep yourself afloat during the off-season. To help, we asked a panel of Forbes Finance Council members how they recommend managing seasonal sales cycles.

1. Regularly review plans and forecasts against actual sales.

The best tip for a business to manage a seasonal sales cycle is to review sales, inventory plans and gross margin forecasts against actual sales results every month to ensure that the business owner understands the sales trends, product mix, inventory levels and, ultimately, profitability. – William Fink, TD Bank

2. Ensure access to working capital.

Budgeting and operations in a seasonal business are important, but it is also critical to manage working capital. Having adequate cash to purchase and deliver inventory is foundational, as is repeating the cycle even if customers are on 60- or 90-day payment terms. Thus, going into the seasonal period with a solid plan for cash is key to consistently delivering through the seasonal period. – Kerri Thurston, C2F0

3. Focus on cash flow forecasting.

Managing a seasonal business comes down to good cash management. Forecast cash flow, taking into account the time from purchasing to receiving, selling and finally being paid for inventory (it can take a while). If you use a line of credit to cover the seasonal sales cycle, it is important to have a plan to repay that once the sales come in. Understand your margins to ensure profitability too. – Brian Hayes, NOW CFO

4. Use your downtime for professional and business development.

I experience this problem just as deeply as any holiday retailer but in reverse. I run a debt-solutions company, and no one wants to think about their student loans or credit cards from Halloween through New Year’s Eve. I look at these slow times as project time. You have time to improve your skills through training, and you can work ahead on next year’s calendar. – Howard Dvorkin, Debt.com

5. Plan ahead and be ready to innovate.

Plan as far in advance as possible and carefully eye adjustments. Set monthly or even bi-weekly reviews to understand necessary adjustments. Never forget that cash is king, and constantly innovate on the product set to maintain competitiveness. Market research is also important—do not find yourself surprised by a market entrant that did not exist last season looking to take share. – Cutler Knupp, The Haskell Company – Dysruptek

6. Get creative with your sales and marketing.

Prepare for the important times and get creative in the less busy times. Some companies derive over 50% of their full-year revenue on Black Friday and Cyber Monday. Even if your business is seasonal, a creative sale or incentive and light push can de-risk your most important periods and help increase overall revenue. – Carlo Cisco, SELECT

7. Control your supply chain.

Have cash on hand, and keep inventory turning at a high rate. Because the business is seasonal, it’s all about selling as many hot products as you can, so control the supply chain to ensure you can buy and stock items quickly and sell them. The key point is to manage cash flow, as cash is king. – Khurram Chohan, Together CFO

8. Keep your operations lean and outsource if needed.

Although Covid-19 is an outlier and most entrepreneurs do not have gratuitous amounts of time to ponder the future, the lesson of preparing for the unexpected is critical. Ensure your operations are accountable and lean. If an entrepreneur is not capable of tracking payments, posting invoices or handling accounting, it may make sense to outsource. Even tax lawyers frequently hire personal accountants. – Andrew King, Bastille Group

9. Master the art of cash flow analysis.

A very important tool for any small business is cash flow analysis. By creating a profit and loss statement and tracking cash flow in real-time, you can be prepared for seasonal ebbs and flows. This can help you decide if you need to cut back on spending or investments during slow seasons or save more during the offseason. – Luz Urrutia, Opportunity Fund

10. Introduce multiple lines of revenue.

It is always important to have multiple lines of revenue to address seasonality in a business. This helps offset any downtime from a line of revenue that may occur due to the seasonality of the business. The additional lines of revenue should be strategically created—one could be recurring revenue, while another could have an opposite seasonality. – Breana Patel, Bonova Advisory Inc.

11. Know your base expense burn.

A long cash conversion cycle (the number of days between paying costs and receiving payment from sales) can cause major cash flow issues—even for profitable businesses. This dynamic is compounded in the case of seasonal businesses. Knowing your base expense burn and reserving adequate cash for inventory purchases or slower-than-expected sales is critical to long-term seasonal business stability. – George Souri, LQD Business Finance

12. Explore an ancillary business.

This is all about discipline. If you have a viable business, this shouldn’t be an issue, because you’ll be on top of your numbers, living within your means and studying your P&Ls. Depending on your capabilities, you might also have an ancillary business that makes money during the offseason, assuming it doesn’t take too much of the focus away from your primary business. – Bill Keen, Keen Wealth Advisors

13. Keep adding new products, and re-define ‘seasonal.’

Always innovate and add new products. Customers want to see exciting new things—we are trained to always look for “the next thing.” Focus on marketing these new products, and make sure you are selling them during the off-season as well. Incentivize clients to spend during all seasons through promotions and deals. Also, “seasonal” is what you say it is. Make it start early, and extend it a lot. – Gabriela Berrospi, Latino Wall Street

14. Don’t overestimate your peak season sales.

The best tip is to be aware of the seasonal sales cycles and adjust the operating strategy to each seasonal trend. For instance, try to forecast the seasonal quarter sales and develop business strategies before the seasonal sales trend begins. Another thing to remember is to not overestimate a peak season’s sales—you need to prepare for unexpected events that may disrupt your business plans. – Lijie Zhu, Dragon Gate Investment Partners

15. Don’t spend money you don’t have.

No matter how predictable your business is, if you are depending on a few months to make up the majority of your revenue, don’t spend that money before it is earned. You never know what could happen, and if you spend it before it is earned and have a bad year, you may not have the money to survive another year. – Aaron Spool, Eventus Advisory Group, LLC


Stock market news live updates: Stock futures drift lower as earnings roll on

Stock futures were slightly lower Tuesday morning after a tech-led rally during the regular session onday, with investor attention still centered on fresh signs of corporate and economic stress from the coronavirus pandemic.

Quarterly earnings results set for release Tuesday are set to give further indications of the company-level impacts of the pandemic, with blue-chip company Disney (DIS), along with newly public firms Nikola (NKLA), Beyond Meat (BYND) poised to report after market close.

During the regular session Monday, the Nasdaq Composite jumped 1.5% to end at a record, as each of Microsoft and Apple set fresh highs. Both stocks steadied in late trading, with the Redmond, Washington-based company still deliberating a potential acquisition of TikTok’s operations in the US and some other countries, in a move that would expand its consumer-facing business operations. President Donald Trump suggested on Monday that the US government receive a portion of the payment from any sale – from Microsoft or any other firm taking up the Beijing-based social media company.

Elsewhere in Washington, talks between Democratic and Republican lawmakers over the next round of stimulus aid are set to continue on Tuesday, after House Speaker Nancy Pelosi (D-Calif.), Senate Minority Leader Chuck Schumer (D-N.Y.), Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows met for over two hours on Monday to discuss the package. The level of enhanced unemployment insurance benefits remains a sticking point, along with the total funds for other aid for individuals and state and local government programs.

With lawmakers still at an apparent impasse on key issues, Trump told reporters at the White House on Monday he was considering using executive action to impose a moratorium on evictions – a measure which had been included in the previous Covid-19 relief legislation passed in March.

Later on Tuesday, earnings season will roll on, with Disney set to report quarterly results after market close. The company is expected to have swung to a net loss of more than $1 billion during the third quarter, with drastically reduced theme parks attendance due to closures and partial reopenings weighing heavily on the company. Its nascent streaming business, however, is set to be a bright spot, with the Disney+ subscriber base already having grown to 54.5 million subscribers as of early May, within six months of launch.

7:40 a.m. ET: UK oil major BP slashes dividend; Bayer swings to a loss

European companies BP PLC and Bayer each reported tough quarterly results Tuesday morning as the coronavirus pandemic weighed on each of their respective business operations.

BP (BPslashed its dividend for the first time in a decade, and said it intends to shift its business more heavily toward greener low-carbon energy after the pandemic crushed demand across oil majors. The new dividend payment will be 5.25 cents per share quarterly, from 10.5 cents.

Bayer (BAYN.DEposted a net loss of 9.5 billion euros, or about $11.2 billion, in the second quarter, with some of this coming from legal provisions relating to a settlement with plaintiffs that said Bayer’s Roundup herbicides caused cancer.

The company slashed its outlook to see sales growth of between 0% and 1% this year, down from a 3% to 4% rise seen previously, due in part to disruptions from the pandemic. Second-quarter sales fell 6.2% to just over 10 billion euros, with pharmaceutical and consumer care segment declining as consumers veered away from nonessential doctors’ visits and held off on purchases of new products they’d stocked up on earlier on during the pandemic.

7:15 a.m. ET: Tuesday: Stock futures edge lower

Here were the main moves in markets, as of 7:16 a.m. ET:

  • S&P 500 futures (ES=F): 3,280.5, down 8 points, or 0.24%
  • Dow futures (YM=F): 26,531.00, down 27 points, or 0.1%
  • Nasdaq futures (NQ=F): 11,018.25, down 26 points, or 0.24%
  • Crude (CL=F): -$0.69 (-1.68%) to $40.32 a barrel
  • Gold (GC=F): +$6.50 (+0.33%) to $1,972.50 per ounce
  • 10-year Treasury (^TNX): -2.7 bps to yield 0.536%

6:01 p.m. ET Monday: Stock futures open little changed to slightly lower

Here were the main moves in equity markets, as of 6:01 p.m. ET:

  • S&P 500 futures (ES=F): 3,287.00, down 1.5 points, or 0.05%
  • Dow futures (YM=F): 26,548.00, down 10 points, or 0.04%
  • Nasdaq futures (NQ=F): 11,043.5, down 0.75 points, or 0.01%
A trader walks in front of the New York Stock Exchange (NYSE) on May 26, 2020 at Wall Street in New York City. – Wall Street stocks surged early May 26, 2020 on optimism about coronavirus vaccines as the New York Stock Exchange resumed physical floor trading for the first time since late March. About five minutes into trading, the Dow Jones Industrial Average was up 2.3 percent at 25,023.76. The broad-based S&P 500 gained 2.0 percent to 3,013.04, while the tech-rich Nasdaq Composite Index advanced 1.6 percent to 9,468.96.The gains came after a ceremony presided over by New York Governor Andrew Cuomo, who wore a mask as he rung the opening bell to signal the start of the day for traders, also clad in masks and separated by plexiglas. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)



By Emily McCormick




Shopify Announces Second-Quarter 2020 Financial Results

Shopify Announces Second-Quarter 2020 Financial Results

Second-Quarter Revenue Grows 97% on GMV Growth of 119% Year on Year

Shopify reports in U.S. dollars and in accordance with U.S. GAAP

Shopify Inc. (NYSE:SHOP)(TSX:SHOP), a leading global commerce company, announced today strong financial results for the second quarter ended June 30, 2020.

“The world is changing fast,” said Tobi Lütke, Shopify’s CEO. “With the rapid shift to online commerce, massive disruption to conventional employment, and growing conviction that opportunity needs to be more evenly distributed, entrepreneurship has never been more important. With all of these changes, our core principles remain the same: everything we ship is designed to lower barriers to entrepreneurship and reduce friction wherever we can.”

“The strength of Shopify’s value proposition was on full display in our second quarter,” said Amy Shapero, Shopify’s CFO. “We are committed to transferring the benefits of scale to our merchants, helping them sell more and sell more efficiently, which is especially critical in this rapidly changing environment. With our strong balance sheet and through prudent capital allocation, we remain well positioned to continue solving critical pain points for our merchants and contribute to their success for years to come.”

Impact of COVID-19
The ongoing effect of the COVID-19 pandemic has been to accelerate the shift of purchase habits to ecommerce. Based on data patterns monitored on Shopify’s platform, the following includes some key changes we have observed and potential implications for Shopify’s business:

  • New stores created on the Shopify platform grew 71% in Q2 2020 compared with Q1 2020, driven by the shift of commerce to online as well as by the extension of the free trial period on standard plans from 14 days to 90 days. The 90-day free trial offer ended on May 31, 2020, with users that created stores in April and May expected to continue converting into paid merchants through the end of August 2020. New store creations are those that have provided their billing information so they can start selling, but for which we do not collect a subscription fee while on a free trial.
  • While data from June 15 to July 19 indicates that new stores created during the extended 90-day free trial are converting into paid subscribers at a slightly lower rate than merchant cohorts that joined Shopify prior to the pandemic, we expect stronger retention rates for these early 90-day trial cohorts as they tend to be longer-tenured at the time of conversion and bring higher Gross Merchandise Volume1 (“GMV”). This may not be indicative of go-forward cohorts, however, as a greater-than-typical proportion of new stores created early on in this free trial period represent established businesses that were urgently transitioning to online commerce during the initial weeks of the COVID-19 pandemic.
  • Q2 2020 GMV grew 119% compared to Q2 2019 with year-on-year GMV growth accelerating in April and May and decelerating in June and thus far in July.
  • While GMV through the point-of-sale (POS) channel declined by 29% in Q2 2020 compared to Q1 2020, as many of Shopify’s Retail merchants suspended their in-store operations in April and May, POS GMV started to recover in June as COVID-19 restrictions eased and stores began to reopen, approaching February levels by the end of the month and continuing to grow into July. Whether this trend will continue is unknown given the reintroduction of lockdown measures in certain geographies as well as the uncertain macroeconomic environment. Retail merchants continued to adapt to socially distanced selling through Q2 2020, as 39% of our brick-and-mortar merchants in English-speaking geographies are now using some form of local in-store/curbside pickup and delivery solution, up from 26% in early May 2020 and 2% at the end of February 2020. Additionally, Retail merchants grew online store GMV by 73% in Q2 2020 over Q1 2020.
  • The migration to Shopify Plus of larger sellers continued in Q2 2020, resulting in a record quarter for new merchant adds to Shopify Plus. A large number of merchant upgrades to Shopify Plus in Q2 2020 outpaced the number of downgrades, which peaked in April before returning to pre-COVID levels by quarter end.
  • Certain categories of GMV grew faster in Q2 2020, including Food, Beverages, and Tobacco, which doubled during this period relative to Q1 2020.
  • Shops continue to see more local customers: in English-speaking geographies, the percentage of customers per shop coming from within 25 kilometres of the shop’s registered address increased in Q2 2020 over Q1 2020, as did the number of shops with at least one local customer, while GMV associated with ‘buy online, pickup in store’ in these geographies more than doubled in Q2 2020 compared to the previous quarter.

Second-Quarter Financial Highlights

  • Total revenue in the second quarter was $714.3 million, a 97% increase from the comparable quarter in 2019.
  • Subscription Solutions revenue was $196.4 million, up 28% year over year, primarily due to more merchants joining the platform.
  • Merchant Solutions revenue growth accelerated for the third consecutive quarter, up 148%, to $517.9 million, driven primarily by the growth of GMV.
  • Monthly Recurring Revenue2 (“MRR”) as of June 30, 2020 was $57.0 million, up 21% compared with $47.1 million as of June 30, 2019. Shopify Plus contributed $16.6 million, or 29%, of MRR compared with 26% of MRR as of June 30, 2019. While growth in the quarter was impacted by the 90-day free trial on standard plans offered from March 21 through May 31, MRR ended the quarter higher than on March 31, benefiting from strong merchant adds in June, driven by the highest-ever number of merchants joining Shopify Plus in a single month, and standard merchants converting in the latter half of June from the 90-day extended free trial March cohorts and regular 14-day free trial June cohorts.
  • GMV for the second quarter was $30.1 billion, an increase of $16.3 billion, or 119%, over the second quarter of 2019. Gross Payments Volume3 (“GPV”) grew to $13.4 billion, which accounted for 45% of GMV processed in the quarter, versus $5.8 billion, or 42%, for the second quarter of 2019.
  • Gross profit dollars grew 83% to $375.0 million in the second quarter of 2020, compared with $204.8 million for the second quarter of 2019.
  • Adjusted gross profit4 grew 84% to $381.4 million in the second quarter of 2020, compared with $207.3 million for the second quarter of 2019.
  • Operating income for the second quarter of 2020 was $0.3 million, or 0% of revenue, versus a loss of $39.6 million, or 11% of revenue, for the comparable period a year ago.
  • Adjusted operating income4 for the second quarter of 2020 was $113.7 million, or 16% of revenue, compared with adjusted operating income of $6.4 million or 2% of revenue in the second quarter of 2019. Adjusted operating income excludes an impairment charge of $31.6 million dollars resulting from our decision, announced in May 2020, to work remotely permanently. We believe the near-term costs of reducing our leased footprint and transitioning remaining space from offices to workspace for office hoteling and events will yield longer-term benefits, including leveling the playing field for employees who already work from home, helping our employees stay healthy and safe, opening a diverse global talent pool, eliminating unnecessary commutes and fast-tracking new and better ways to work together that are more productive and rewarding.
  • Net income for the second quarter of 2020 was $36.0 million, or $0.29 per diluted share, compared with a net loss of $28.7 million, or $0.26 per basic and diluted share, for the second quarter of 2019.
  • Adjusted net income4 for the second quarter of 2020 was $129.4 million, or $1.05 per diluted share, compared with adjusted net income of $10.7 million, or $0.10 per basic and diluted share, for the second quarter of 2019.
  • At June 30, 2020, Shopify had $4.00 billion in cash, cash equivalents and marketable securities, compared with $2.46 billion on December 31, 2019. The increase reflects $1.46 billion of net proceeds from Shopify’s offering of Class A subordinate voting shares in the second quarter of 2020.

Second-Quarter Business Highlights

  • Shopify held its first virtual company event, Shopify Reunite, where we announced new products and features to help our merchants adapt to the future of commerce, including:
    • Shopify Balance, which will give merchants access to critical financial products to start, run, and grow their business, including the Shopify Balance Account, Shopify Balance Card, and rewards such as cashback and discounts on everyday business spending like shipping and marketing. Shopify Balance is expected to be available for early access later this year in the U.S.
    • Shop Pay Installments, a ‘buy now, pay later’ product that will let merchants offer their customers more payment choice and flexibility at checkout, helping merchants boost sales through increased cart size and higher conversion. Shopify has partnered with fintech company, Affirm, to offer Shop Pay Installments, which is expected to be available to eligible U.S. merchants starting later this year.
    • Enhanced local delivery capabilities in the Shopify Admin to allow merchants to define a local delivery area, set local delivery fees and minimum order prices, and fulfill orders through Shopify, Shopify POS, and mobile, and a local delivery app to create optimized delivery routes and send customer notifications.
  • Shopify continued to develop the product-market fit of Shopify Fulfillment Network, our solution to provide merchants and their buyers with fast and affordable fulfillment. Shopify automated aspects of merchant onboarding and order management, and continued to grow fulfillment volumes and the number of merchants enrolled in the program relative to the first quarter of 2020.
  • Shopify made the new Shopify Plus Admin generally available to all Shopify Plus merchants, enabling them to operate their business as an organization by managing multiple stores, analytics, staff accounts, user permissions, and automation tools like Shopify Flow in one place.
  • Shopify introduced the Facebook Shops channel, enabling Shopify merchants to customize and merchandise their storefronts within Facebook and Instagram through Facebook Shops, while managing their products, inventory orders, and fulfillment directly within Shopify.
  • Shopify launched the Walmart channel, enabling Shopify merchants to sell their products on Walmart.com. Qualifying merchants are now able to connect their Shopify store to their Walmart Seller Account, enabling them to quickly and easily sync their product catalog and create product listings on Walmart.com.
  • Shopify launched the Shopify Tap & Chip Card Reader in Canada, bringing contactless payments hardware to Canadian retailers using Shopify POS. The Tap & Chip Card Reader hardware device allows businesses to offer “tap” payment options like credit and debit cards, Apple Pay, and Google Pay. Connecting with the all-new Shopify POS software introduced in April, Shopify POS offers Canadian retailers a unified commerce experience bridging online and offline.
  • Shopify launched Shopify Shipping in Australia partnering with courier services company, Sendle. Australian merchants can save time and money by printing Sendle labels and booking free parcel pick up within the Shopify admin, with the benefits of affordable shipping rates, package tracking, and 100% carbon-neutral shipping.
  • Shopify Shipping adoption continued to rise, with 49% of eligible merchants in the United States and Canada utilizing Shopify Shipping in the second quarter of 2020, versus more than 42% in the second quarter of 2019. Shopify Shipping label adoption continued to grow in Q2 2020 as more merchants fulfilled a greater volume of orders, as commerce shifted online.
  • Merchants in the U.S., Canada, and the U.K. received $153 million in merchant cash advances and loans from Shopify Capital in the second quarter of 2020, an increase of 65% versus the $93 million received by U.S. merchants in the second quarter of last year. Shopify Capital has grown to approximately $1.2 billion in cumulative capital advanced since its launch in April 2016, with approximately $166 million of which was outstanding on June 30, 2020.
  • Approximately 30,300 partners referred a merchant to Shopify over the past 12 months.
  • Shopify published our 2019 Sustainability Report and the 2019 Economic Impact Report, which together showcase the economic, environmental, and social impact of Shopify and our global ecosystem. Between 2016 and 2019, businesses built on Shopify generated $319 billion in global economic activity, with $136 billion in 2019 alone compared to $91 billion 2018. To help address the environmental costs associated with this economic activity, in 2019, Shopify became carbon-neutral by offsetting our own CO2 emissions generated since we started operations. Starting in 2020, Shopify also began mitigating emissions from ecommerce shipments through Shop Pay and our Offset app.

Subsequent to Second-Quarter 2020

  • Shopify announced a partnership with the Government of Canada through the ‘Go Digital Canada’ program to bring thousands of small Canadian businesses online and help them adapt to a digital economy. Launched July 15, the program includes equipping businesses with the guidance, tools and resources they need to bring their business online, and initially offering eligible Canadian small businesses free email marketing, a free Tap and Chip reader and access to POS Pro, and a 90-day extended free trial.
  • Shopify announced that Shopify Payments will be available to Shopify’s U.S. merchants through Buy on Google, the search engine’s native checkout option. Combining the best in search with the best in commerce enables Shopify merchants to benefit from the speed, transparency, and reliability of Shopify Payments when their shoppers Buy on Google, while retaining the ability to view, manage, and track orders and payments all in one place.
  • Shopify Studios is expected to debut its first series with a major television network. Premiering in August on Discovery and streaming on DiscoveryGO is I Quit, a premium docuseries featuring real-life entrepreneurs who give up their “9-5” jobs to focus 100% on launching their own businesses. With mentors who will advise them along the way – including Shopify’s Harley Finkelstein – these risk-takers will engage in a year-long inspirational journey, living out the thrills, hurdles and hard work of authentic business ownership.

Financial Outlook
The COVID-19 pandemic has accelerated the growth of ecommerce, shifting a larger share of retail spending to online commerce, a trend we believe will persist. While COVID-19 has significantly influenced online store creation and consumer spending behaviour, the magnitude and duration of its future impact remain uncertain in view of the greater likelihood of an extended global recession. As a result, Shopify is not providing a financial outlook for Q3 2020 or for full year 2020.

Shopify expects entrepreneurs to continue to recognize the importance of multi-channel selling and direct-to-consumer fulfillment, and for consumer concerns about COVID-19 to drive further adoption of digital commerce while reinforcing the behaviour of buyers already shopping online. We are therefore closely monitoring the following external factors:

  • The impact rising unemployment has on new shop creation on our platform and consumer spending.
  • Consumer spending habits and trends for both discretionary and non-discretionary goods as shelter-in-place directives remain in a state of flux.
  • The rate at which brick-and-mortar merchants adopt and retain a multichannel sales approach.

Shopify remains uniquely positioned to level the playing field for entrepreneurs during this period of rapid change in the retail landscape. Our merchant-first business model and strong balance sheet enable us to continue building a leading global commerce operating system that allows merchants to act nimbly and adapt their businesses to this new reality.

Quarterly Conference Call
Shopify’s management team will hold a conference call to discuss our second-quarter results today, July 29, 2020, 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/default.aspx#upcoming-events. An archived replay of the webcast will be available following the conclusion of the call.

Shopify’s Second-Quarter 2020 Interim Unaudited Condensed Consolidated Financial Statements and Notes and its Second Quarter 2020 Management’s Discussion and Analysis are available on Shopify’s website at www.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 global commerce company, providing 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. Headquartered in Ottawa, Canada, Shopify powers over one million businesses in more than 175 countries and is trusted by brands such as Allbirds, Gymshark, PepsiCo, Staples and many more. For more information, visit www.shopify.com.

Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with United States generally accepted accounting principles (“GAAP”), Shopify uses certain non-GAAP financial measures to provide additional information in order to assist investors in understanding our financial and operating performance.

Adjusted gross profit, adjusted operating income, non-GAAP operating expenses, adjusted net income and adjusted net income per share are non-GAAP financial measures that exclude the effect of stock-based compensation expenses and related payroll taxes, amortization of acquired intangibles and a real estate-related impairment charge. Adjusted net income and adjusted net income per share also exclude tax effects related to non-GAAP adjustments.

Management uses non-GAAP financial measures internally for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Shopify believes that these non-GAAP measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. Non-GAAP financial measures are not recognized measures for financial statement presentation under U.S. GAAP and do not have standardized meanings, and may not be comparable to similar measures presented by other public companies. Such non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. See the financial tables below for a reconciliation of the non-GAAP measures.

Forward-looking Statements
This press release contains certain forward-looking statements within the meaning of applicable securities laws, including statements regarding Shopify’s planned business initiatives and operations and financial outlook, the performance of Shopify’s merchants, the impact of Shopify’s business on its merchants and other entrepreneurs, and economic activity and consumer spending. Words such as “believe”, “continue”, “will”, “enable”, “support”, “allow”, and “expect” or similar expressions are intended to identify forward-looking statements.

These forward-looking statements are based on Shopify’s current projections and expectations about future events and financial trends that management believes might affect its financial condition, results of operations, business strategy and financial needs, and on certain assumptions and analysis made by Shopify in light of the experience and perception of historical trends, current conditions and expected future developments and other factors management believes are appropriate. These projections, expectations, assumptions and analyses are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause actual results, performance, events and achievements to differ materially from those anticipated in these forward-looking statements. Although Shopify believes that the assumptions underlying these forward-looking statements are reasonable, they may prove to be incorrect, and readers cannot be assured that actual results will be consistent with these forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements as a result of numerous factors, including certain risk factors, many of which are beyond Shopify’s control, including but not limited to: (i) uncertainty around the duration and scope of the COVID-19 pandemic and the impact of the pandemic and actions taken in response on global and regional economies and economic activity; (ii) shifting our operations to be “digital-by-default”; (iii) merchant acquisition and retention; (iv) managing our growth; (v) our history of losses; (vi) our limited operating history; (vii) our ability to innovate; (viii) the security of personal information we store relating to merchants and their customers and consumers with whom we have a direct relationship; (ix) a disruption of service or security breach; (x) our potential inability to compete successfully against current and future competitors; (xi) international sales and the use of our platform in various countries; (xii) the reliance of our growth in part on the success of our strategic relationships with third parties; (xiii) our potential failure to effectively maintain, promote and enhance our brand; (xiv) our use of a single cloud-based platform to deliver our services; (xv) our potential inability to achieve or maintain data transmission capacity; (xvi) our reliance on a single supplier to provide the technology we offer through Shopify Payments; (xvii) payments processed through Shopify Payments; (xviii) our potential inability to hire, retain and motivate qualified personnel; (xix) serious errors or defects in our software or hardware or issues with our hardware supply chain; (xx) evolving privacy laws and regulations, cross-border data transfer restrictions, data localization requirements and other domestic or foreign regulations may limit the use and adoption of our services; and (xxi) other one-time events and other important factors disclosed previously and from time to time in Shopify’s filings with the U.S. Securities and Exchange Commission and the securities commissions or similar securities regulatory authorities in each of the provinces or territories of Canada. The forward-looking statements contained in this news release represent Shopify’s expectations as of the date of this news release, or as of the date they are otherwise stated to be made, and subsequent events may cause these expectations to change. Shopify undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

Shopify Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Expressed in US $000’s, except share and per share amounts, unaudited)
  Three months ended   Six months ended
  June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
  $   $   $   $
Subscription solutions 196,434   153,047     384,043     293,498  
Merchant solutions 517,907   208,932     800,299     388,963  
  714,341   361,979     1,184,342     682,461  
Cost of revenues              
Subscription solutions 44,400   29,538     82,112     57,523  
Merchant solutions 294,907   127,676     470,246     239,882  
  339,307   157,214     552,358     297,405  
Gross profit 375,034   204,765     631,984     385,056  
Operating expenses              
Sales and marketing 144,850   119,210     299,712     224,232  
Research and development 133,227   85,520     249,623     161,875  
General and administrative 83,307   34,922     128,149     65,225  
Transaction and loan losses 13,366   4,733     27,449     9,134  
Total operating expenses 374,750   244,385     704,933     460,466  
Income (loss) from operations 284   (39,620 )   (72,949 )   (75,410 )
Other income 4,084   10,942     17,193     22,581  
Income (loss) before income taxes 4,368   (28,678 )   (55,756 )   (52,829 )
Recovery of income taxes 31,630       60,325      
Net income (loss) 35,998   (28,678 )   4,569     (52,829 )
Other comprehensive income (loss) 10,653   6,746     (5,980 )   16,020  
Comprehensive income (loss) 46,651   (21,932 )   (1,411 )   (36,809 )
Net income (loss) per share attributable to shareholders:              
Basic 0.30   (0.26 )   0.04     (0.47 )
Diluted 0.29   (0.26 )   0.04     (0.47 )
Shares used to compute net income (loss) per share attributable to shareholders:              
Basic 118,740,645   112,013,409     117,773,612     111,470,359  
Diluted 122,749,980   112,013,409     121,919,207     111,470,359  
Shopify Inc.
Condensed Consolidated Balance Sheets
(Expressed in US $000’s except share amounts, unaudited)
  As at
  June 30, 2020   December 31, 2019
  $   $
Current assets      
Cash and cash equivalents 1,882,362     649,916  
Marketable securities 2,118,593     1,805,278  
Trade and other receivables, net 106,409     90,529  
Merchant cash advances, loans and related receivables, net 166,495     150,172  
Income taxes receivable 49,173      
Other current assets 66,162     48,833  
  4,389,194     2,744,728  
Long-term assets      
Property and equipment, net 95,506     111,398  
Intangible assets, net 151,254     167,282  
Right-of-use assets 126,213     134,774  
Deferred tax assets 24,407     19,432  
Goodwill 311,865     311,865  
  709,245     744,751  
Total assets 5,098,439     3,489,479  
Liabilities and shareholders’ equity      
Current liabilities      
Accounts payable and accrued liabilities 240,996     181,193  
Income taxes payable 1,062     69,432  
Deferred revenue 67,455     56,691  
Lease liabilities 10,993     9,066  
  320,506     316,382  
Long-term liabilities      
Deferred revenue 6,866     5,969  
Lease liabilities 142,128     142,641  
Deferred tax liabilities     8,753  
  148,994     157,363  
Commitments and contingencies      
Shareholders’ equity      
Common stock, unlimited Class A subordinate voting shares authorized, 108,221,159 and 104,518,173 issued and outstanding; unlimited Class B multiple voting shares authorized, 11,874,317 and 11,910,802 issued and outstanding 4,859,950     3,256,284  
Additional paid-in capital 73,578     62,628  
Accumulated other comprehensive income (loss) (4,934 )   1,046  
Accumulated deficit (299,655 )   (304,224 )
Total shareholders’ equity 4,628,939     3,015,734  
Total liabilities and shareholders’ equity 5,098,439     3,489,479  
Shopify Inc.
Condensed Consolidated Statements of Cash Flows
(Expressed in US $000’s, unaudited)
  Six months ended
  June 30, 2020   June 30, 2019
  $   $
Cash flows from operating activities      
Net income (loss) for the period 4,569     (52,829 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Amortization and depreciation 34,297     14,207  
Stock-based compensation 116,076     70,432  
Impairment of right-of-use assets and leasehold improvements 31,623      
Provision for transaction and loan losses 12,040     7,398  
Deferred income taxes (13,728 )    
Unrealized foreign exchange (gain) loss (1,231 )   1,917  
Changes in operating assets and liabilities:      
Trade and other receivables (18,980 )   (20,540 )
Merchant cash advances, loans and related receivables (22,349 )   (31,222 )
Other current assets (20,815 )   (5,910 )
Accounts payable and accrued liabilities 61,659     56,049  
Income tax assets and liabilities (115,387 )    
Deferred revenue 11,661     6,345  
Lease assets and liabilities 800     1,555  
Net cash provided by operating activities 80,235     47,402  
Cash flows from investing activities      
Purchase of marketable securities (1,970,693 )   (1,022,814 )
Maturity of marketable securities 1,659,159     1,249,319  
Acquisitions of property and equipment (25,329 )   (30,437 )
Acquisitions of intangible assets (262 )   (1,935 )
Acquisition of businesses, net of cash acquired     (12,476 )
Net cash (used in) provided by investing activities (337,125 )   181,657  
Cash flows from financing activities      
Proceeds from public offering, net of issuance costs 1,460,945      
Proceeds from the exercise of stock options 37,595     27,624  
Net cash provided by financing activities 1,498,540     27,624  
Effect of foreign exchange on cash and cash equivalents (9,204 )   1,624  
Net increase in cash and cash equivalents 1,232,446     258,307  
Cash and cash equivalents – Beginning of Period 649,916     410,683  
Cash and cash equivalents – End of Period 1,882,362     668,990  
Shopify Inc.
Reconciliation from GAAP to Non-GAAP Results
(Expressed in US $000’s, except share and per share amounts, unaudited)
  Three months ended   Six months ended
  June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
  $   $   $   $
GAAP Gross profit 375,034     204,765     631,984     385,056  
% of Revenue 53 %   57 %   53 %   56 %
add: stock-based compensation 1,188     894     2,336     1,608  
add: payroll taxes related to stock-based compensation 341     132     517     232  
add: amortization of acquired intangibles 4,856     1,530     10,425     3,155  
Non-GAAP Gross profit 381,419     207,321     645,262     390,051  
% of Revenue 53 %   57 %   54 %   57 %
GAAP Sales and marketing 144,850     119,210     299,712     224,232  
% of Revenue 20 %   33 %   25 %   33 %
less: stock-based compensation 10,613     8,409     21,820     15,244  
less: payroll taxes related to stock-based compensation 1,818     1,102     3,045     1,912  
less: amortization of acquired intangibles 388         776      
Non-GAAP Sales and marketing 132,031     109,699     274,071     207,076  
% of Revenue 18 %   30 %   23 %   30 %
GAAP Research and development 133,227     85,520     249,623     161,875  
% of Revenue 19 %   24 %   21 %   24 %
less: stock-based compensation 39,361     22,983     71,965     41,098  
less: payroll taxes related to stock-based compensation 10,464     3,465     14,281     5,273  
less: amortization of acquired intangibles 58     58     116     116  
Non-GAAP Research and development 83,344     59,014     163,261     115,388  
% of Revenue 12 %   16 %   14 %   17 %
GAAP General and administrative 83,307     34,922     128,149     65,225  
% of Revenue 12 %   10 %   11 %   10 %
less: stock-based compensation 11,162     6,982     19,955     12,482  
less: payroll taxes related to stock-based compensation 1,520     462     2,494     993  
less: impairment of right-of-use assets and leasehold improvements 31,623         31,623      
Non-GAAP General and administrative 39,002     27,478     74,077     51,750  
% of Revenue 5 %   8 %   6 %   8 %
Shopify Inc.
Reconciliation from GAAP to Non-GAAP Results (continued)
(Expressed in US $000’s, except share and per share amounts, unaudited)
  Three months ended   Six months ended
  June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
  $   $   $   $
GAAP Transaction and loan losses 13,366     4,733     27,449     9,134  
% of Revenue 2 %   1 %   2 %   1 %
GAAP Operating expenses 374,750     244,385     704,933     460,466  
% of Revenue 52 %   68 %   60 %   67 %
less: stock-based compensation 61,136     38,374     113,740     68,824  
less: payroll taxes related to stock-based compensation 13,802     5,029     19,820     8,178  
less: amortization of acquired intangibles 446     58     892     116  
less: impairment of right-of-use assets and leasehold improvements 31,623         31,623      
Non-GAAP Operating expenses 267,743     200,924     538,858     383,348  
% of Revenue 37 %   56 %   45 %   56 %
GAAP Operating income (loss) 284     (39,620 )   (72,949 )   (75,410 )
% of Revenue %   (11 )%   (6 )%   (11 )%
add: stock-based compensation 62,324     39,268     116,076     70,432  
add: payroll taxes related to stock-based compensation 14,143     5,161     20,337     8,410  
add: amortization of acquired intangibles 5,302     1,588     11,317     3,271  
add: impairment of right-of-use assets and leasehold improvements 31,623         31,623      
Adjusted Operating income 113,676     6,397     106,404     6,703  
% of Revenue 16 %   2 %   9 %   1 %
GAAP Net income (loss) 35,998     (28,678 )   4,569     (52,829 )
% of Revenue 5 %   (8 )%   %   (8 )%
add: stock-based compensation 62,324     39,268     116,076     70,432  
add: payroll taxes related to stock-based compensation 14,143     5,161     20,337     8,410  
add: amortization of acquired intangibles 5,302     1,588     11,317     3,271  
add: impairment of right-of-use assets and leasehold improvements 31,623         31,623      
add: provision for income tax effects related to non-GAAP adjustments (20,024 )   (6,609 )   (32,224 )   (11,453 )
Adjusted Net income 129,366     10,730     151,698     17,831  
% of Revenue 18 %   3 %   13 %   3 %
Shopify Inc.
Reconciliation from GAAP to Non-GAAP Results (continued)
(Expressed in US $000’s, except share and per share amounts, unaudited)
  Three months ended   Six months ended
  June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
  $   $   $   $
Basic GAAP Net income (loss) per share attributable to shareholders 0.30     (0.26 )   0.04     (0.47 )
add: stock-based compensation 0.52     0.35     0.99     0.63  
add: payroll taxes related to stock-based compensation 0.12     0.05     0.17     0.08  
add: amortization of acquired intangibles 0.04     0.01     0.10     0.03  
add: impairment of right-of-use assets and leasehold improvements 0.27     0.00     0.27     0.00  
add: provision for income tax effects related to non-GAAP adjustments (0.17 )   (0.06 )   (0.27 )   (0.10 )
Basic Adjusted Net income per share attributable to shareholders 1.09     0.10     1.29     0.16  
Weighted average shares used to compute GAAP and non-GAAP basic net income (loss) per share attributable to shareholders 118,740,645     112,013,409     117,773,612     111,470,359  
Diluted GAAP Net income (loss) per share attributable to shareholders 0.29     (0.26 )   0.04     (0.47 )
add: stock-based compensation 0.51     0.35     0.95     0.63  
add: payroll taxes related to stock-based compensation 0.12     0.05     0.17     0.08  
add: amortization of acquired intangibles 0.04     0.01     0.09     0.03  
add: impairment of right-of-use assets and leasehold improvements 0.26     0.00     0.26     0.00  
add: provision for income tax effects related to non-GAAP adjustments (0.16 )   (0.06 )   (0.26 )   (0.10 )
Diluted Adjusted Net income per share attributable to shareholders 1.05     0.10     1.24     0.16  
Weighted average shares used to compute GAAP and non-GAAP diluted net income (loss) per share attributable to shareholders 122,749,980     112,013,409     121,919,207     111,470,359  

1. Gross Merchandise Volume, or GMV, represents the total dollar value of orders facilitated through the Shopify platform including certain apps and channels for which a revenue-sharing arrangement is in place in the period, net of refunds, and inclusive of shipping and handling, duty and value-added taxes.
2. Monthly Recurring Revenue, or MRR, is calculated by multiplying the number of merchants by the average monthly subscription plan fee in effect on the last day of that period and is used by management as a directional indicator of subscription solutions revenue going forward assuming merchants maintain their subscription plan the following month.
3. Gross Payments Volume, or GPV, is the amount of GMV processed through Shopify Payments.
4. Non-GAAP financial measures exclude the effect of stock-based compensation expenses and related payroll taxes, amortization of acquired intangibles and related taxes, and a real estate-related impairment charge. Please refer to “Non-GAAP Financial Measures” in this press release for more information.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200729005239/en/


Katie Keita
Senior Director, Investor Relations
613-241-2828 x 1024

Rebecca Feigelsohn
Communications Manager
416-238-6705 x 302


Stock market news live updates: Stock futures fall as stimulus talks, earnings roll on

Stock futures pointed to a lower open Tuesday morning, with stimulus talks in Washington, updates on the Covid-19 vaccine front and corporate earnings results front and center.

After market close Monday, Senate Republicans led by Majority Leader Mitch McConnell announced the HEALS Act, or proposal for a new stimulus bill to help individuals impacted by the economic fallout from the coronavirus pandemic.

The Health, Economic Assistance, Liability Protection, and Schools Act includes a second stimulus check worth up to $1,200 for the same group of Americans as the last round. Also, it will extend enhanced unemployment assistance at a lowered rate of $200 per week, down from $600 per week previously, until states could deliver a replacement worth about 70% of lost wages.

The Senate’s $1 trillion stimulus plan diverges considerably from that floated by the House Democrats earlier, which calls for more than $3 trillion in relief and includes an extension of the flat $600 per week in unemployment benefits until January next year.

“We don’t know for sure how things will now play out. Either side could blink, though we think substantial movement is much more likely to come from Republicans,” Ian Shepherdson, chief economist for Pantheon Macroeconomics said in a note Monday evening. “The most likely outcome probably is that the idea of a narrow bill is abandoned and a long slog of negotiations then follows, with the Congressional recess delayed.”

“In the meantime, we’d expect to see the near-real-time economic indicators deteriorate further as household incomes drop after the expiration of the initial enhanced unemployment benefits,” he added.

Meanwhile, developments in the race to create a Covid-19 vaccine picked up again at the start of the week. Shares of Pfizer (PFE) and BioNTech (BNTX) rose in late trading, after the two companies announced they would be beginning a Phase 2/3 study of their Covid-19 vaccine candidate. The announcement after market close came following Moderna’s (MRNA) Monday morning announcement that it had begun a late-stage clinical trial for its own Covid-19 vaccine candidate, sending shares 9% higher during the regular session.

In addition to monitoring stimulus discussions, market participants on Tuesday also eyed a flood of corporate earnings results before and after the bell. McDonalds (MCD), JetBlue (JBLU) and Pfizer (PFE) reported early Monday, and Visa (V), Starbucks (SBUX), eBay (EBAY) and Advanced Micro Devices (AMD) are set to report after market close.

7:41 a.m. ET: 3M results miss expectations, but says it is seeking ‘broad-based sales improvements’ to start Q3

3M (MMMdelivered second-quarter adjusted earnings of $1.78 per share on net sales of $7.2 billion, missing consensus estimates for $1.79 per share on net sales of $7.3 billion, according to Bloomberg-compiled data.

Sales dropped in each of 3M’s major business categories, including safety and industrial, transportation and electronics, health-care and consumer products. Safety and industrial – the business unit housing N-95 masks – posted an overall sales drop of 9.2% over last year, though 3M said personal safety sales increased during the quarter. The company also produced nearly 800 million respirators in the first half of 2020 globally, with about 50% distributed in the US, and remains on track to deliver about 2 billion globally for the full year.

In the current quarter, 3M said, “The company is seeing broad-based sales improvements across businesses and geographies to start the third quarter. With one week left in July, total company sales are currently up low-single digits year-on-year.”

“3M will maintain its monthly reporting of sales information during the third-quarter to provide transparency on its ongoing business performance,” it added.

7:35 a.m. ET: Pfizer Q2 results top expectations, company raises FY sales guidance

Pfizer (PFE), fresh off the heels of announcing the next stage in its clinical trial for its Covid-19 vaccine candidate, announced second-quarter results that topped consensus estimates and raised its revenue guidance for the full year.

Second-quarter adjusted earnings of revenue of $11.8 billion were each better than the 69 cents expected on sales of $11.73 billion. Still, that actual revenue result represented an 11% drop year over year.

“As a result of the lower number of in-person meetings with prescribers and restrictions on patient movements due to government-mandated work-from-home or shelter-in-place policies, the rate of new prescriptions for certain products and of vaccination rates for most vaccines slowed in certain markets, including the U.S., which negatively impacted second-quarter 2020 financial results,” Pfizer said in a statement Tuesday.

However, Pfizer added that these declines were partially offset by some medicines and vaccines that saw increased demand over last year, including “certain sterile injectable products utilized in the intubation and ongoing treatment of mechanically-ventilated COVID-19 patients.”

Pfizer now sees full-year revenue between $48.6 billion to $50.6 billion, up from the $48.5 billion to $50.5 billion range provided previously.

7:30 a.m. ET: McDonald’s reports Q2 profit miss as store closures hit sales

McDonald’s (MCD) reported second-quarter profit that missed consensus estimates and posted a bigger than expected decline in comparable same-store sales, as store closures during the period dented results at the company.

Adjusted earnings per share of 66 cents were 8 cents below expectations. Overall comparable sales dropped 23.9%, versus a 22.3% decline expected, and closely watched domestic sales were down a worse than expected 8.7%. Overall revenue of $3.76 billion represented a decline of 30% over last year.

McDonald’s said global comparable sales results improved throughout the second quarter as markets reopened restaurants and government restrictions eased. In the US, comparable sales also improved sequentially, but both comps and guest counts remained negative “particularly at the breakfast daypart,” with many Americans now working from home and skipping morning commutes.

7:26 a.m. ET Tuesday: Stock futures point to a lower open

Here were the main moves in markets, as of 7:26 a.m. ET:

  • S&P 500 futures (ES=F): 3,222.00, down 10.25 points or 0.32%
  • Dow futures (YM=F): 26,370.00, down 114 points, or 0.43%
  • Nasdaq futures (NQ=F): 10,637.00, down 38.25 points, or 0.36%
  • Crude (CL=F): -$0.10 (-0.24%) to $41.50 a barrel
  • Gold (GC=F): -$8.90 (-0.46%) to $1,922.10 per ounce
  • 10-year Treasury (^TNX): +0.1 bps to yield 0.61%

6:10 p.m. ET Monday: Stock futures open higher

Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:10 p.m. ET:

  • S&P 500 futures (ES=F): 3,236.25, up 4 points or 0.12%
  • Dow futures (YM=F): 26,524.00, up 40 points, or 0.15%
  • Nasdaq futures (NQ=F): 10,691.5, up 16.25 points, or 0.15%
NEW YORK, NEW YORK – JULY 23: People walk along Wall Street near the New York Stock Exchange (NYSE) on July 23, 2020 in New York City. On Wednesday July 22, the market had its best day in 6 weeks. (Photo by Michael M. Santiago/Getty Images)