Shopify Announces First-Quarter 2023 Financial Results; Agrees to Sell Shopify

Shopify sharpens its focus on building and scaling the future of commerce

Internet, Everywhere – May 4, 2023 – Shopify Inc. (NYSE, TSX: SHOP), a provider of essential internet infrastructure for commerce, announced today financial results for the quarter ended March 31, 2023.

“Shopify’s strong first quarter results demonstrate once again that we’re the go-to solution powering businesses of all sizes, on every surface where they sell. The changes we’re announcing today will ensure we keep pace with the high velocity of change before us, delivering the cutting-edge solutions our customers have come to expect from Shopify,” said Shopify’s President, Harley Finkelstein.

Please see a letter from our Founder and CEO, Tobias Lütke addressing the team changes we announced today at https://news.shopify.com/important-team-and-business-changes.

First Quarter 2023 Business Highlights

Shopify welcomed more brands on our platform in our first quarter of 2023, including consumer favorites like Keen, 7 for All Mankind, Seiko, and Herschel Supply. The following are notable highlights from our first quarter across our three key merchant investment themes, which are helping merchants expand from first sale to full scale, go global and attract more consumers through more channels.

• Launched Commerce Components by Shopify (“CCS”), the modern, composable stack for enterprise retail. CCS combines access to Shopify’s foundational, high-performing components along with flexible APIs to build dynamic customer experiences that integrate seamlessly with a retailer’s preferred back office services.
• Announced updated pricing for Basic, Shopify, and Advanced plans on January 23, 2023. New pricing went into effect for new merchants on January 24, 2023 and for existing merchants prior to January 24, 2023 on April 23, 2023.
• Powered by OpenAI’s ChatGPT API, Shopify launched a new AI shopping assistant on our Shop app, creating a fast and more personalized shopping experience for consumers that serves up more relevant product recommendations across Shop’s millions of products.
• Partnered with Intuit to become their preferred partner to migrate new retailers in need of a Point-of-Sale solution after Intuit made the decision to sunset its QuickBooks Desktop Point-Of-Sale product.
• Launched Pinterest as an advertising channel for Shopify Audiences. Shopify Audiences is now driving performance-paid advertising on Meta, Google, and Pinterest.
• Signed partnership agreements with systems integrators IBM Consulting and Cognizant to accelerate the adoption of CCS and Shopify Plus with larger brands and in more geographies.

First-Quarter Financial Highlights

• Gross Merchandise Volume¹ (“GMV”) increased 15% to $49.6 billion, an increase of $6.4 billion over the first quarter of 2022, up 18% on a constant currency basis.
• Total revenue increased 25% to $1.5 billion compared to the prior year, up 27% on a constant currency basis.
• Merchant Solutions revenue increased 31% to $1.1 billion compared to the prior year, up 33% on a constant currency basis, driven primarily by the growth of GMV and continued penetration of Shopify Payments.
• Gross Payments Volume² (“GPV”) grew to $27.5 billion, representing 56% of GMV processed in the quarter, versus $22.0 billion, or 51%, for the first quarter of 2022.
• Subscription Solutions revenue increased 11% to $382 million compared to the prior year, up 11% on a constant currency basis, primarily due to more merchants joining the platform as well as higher variable platform fees and apps.
• Monthly Recurring Revenue³ (“MRR”) as of March 31, 2023 increased 10% to $116 million compared to the prior year. MRR gains were driven by more merchants converting to full-priced Standard subscription plans from our trial experiments as well as continued growth in the number of Shopify Plus merchants and retail locations utilizing our Point-of-Sale Pro solution. Shopify Plus contributed $39 million, or 34%, of MRR compared with 30% of MRR as of March 31, 2022.
• Gross profit dollars grew 12% to $717 million, compared to the prior year. Gross margin for the quarter was 47.5% compared to 53.0% in the first quarter of 2022, driven primarily by a higher mix of revenue from our lower margin Merchant Solutions segment, primarily from the lower margin revenue contributions from Deliverr and Shopify Payments.
• Operating loss was $193 million, or 13% of revenue, versus $98 million, or 8% of revenue, for the comparable period a year ago.
• Adjusted operating loss⁴ was $31 million, or 2% of revenue, compared with adjusted operating income of $32 million or 3% of revenue in the first quarter of 2022. The difference primarily reflects lower gross margin percentage compared to the same period last year and increases in…