05/05/2022 - Shopify Inc.: Earnings document

EXHIBIT 99.1

Shopify Reports First-Quarter 2022 Financial Results,

Plans to Acquire Ecommerce Fulfillment Technology Provider Deliverr

Addition of Deliverr seeks to expand fast and easy fulfillment for independent brands across channels

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

Internet, Everywhere - May 5, 2022 - Shopify Inc. (NYSE, TSX: SHOP), a provider of essential internet infrastructure for commerce, announced today financial results for the quarter ended March 31, 2022.

"While we've experienced massive macro shifts since the start of the pandemic, the one mainstay has been that

Shopify is the commerce platform of choice for merchants in any environment, with the ability to support commerce on any surface," said Harley Finkelstein, Shopify's President. "This has earned Shopify significant merchant trust and the ability to help them with more parts of their business, which is why we are eager to bring Deliverr's team and technology to our merchants."

"The agility of the Shopify platform was evident in our first quarter," said Amy Shapero, Shopify's CFO. "Our omnichannel capabilities helped merchants navigate the welcome return of foot traffic to their brick-and-mortar stores, and enabled them to leverage the growing volume of commerce on social, in search and in apps. Being able to offer a delivery promise and fast fulfillment across all these channels boosts conversion. We are confident

Deliverr's ability to simplify the process, and arm merchants with visibility and control from the display of a delivery promise across multiple channels through its completion, will be a huge benefit to our merchants."

First-Quarter Financial Highlights

• • Total revenue in the first quarter grew 22% to $1.2 billion, which represents a two-year compound annual growth rate of 60%. The first quarter of 2021 marked the highest revenue growth in the company's history

1. 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.

as a public company driven by stimulus and COVID-19 lockdowns. Shopify merchants are emerging from the last two years stronger and better prepared for commerce everywhere.

• • Monthly Recurring Revenue1 ("MRR") as of March 31, 2022 was $105.2 million. MRR increased 17% year over year, up from $89.9 million as of March 31, 2021 as more merchants joined the platform and the number of retail locations using POS Pro increased. Shopify Plus contributed $31.8 million, or 30%, of

  MRR compared with 26% of MRR as of March 31, 2021, as larger merchants seek out greater value from their digital platforms.

• • Subscription Solutions revenue was $344.8 million, up 8% 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 in the first quarter of 2021.

• • Gross Merchandise Volume2 ("GMV") for the first quarter was $43.2 billion, which represents a two-year compound annual growth rate of 57% and an increase of $5.9 billion, or 16% over the first quarter of 2021.

  Gross Payments Volume3 ("GPV") grew to $22.0 billion, which accounted for 51% of GMV processed in the quarter, versus $17.3 billion, or 46%, for the first 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 expanded availability of our POS Pro hardware with integrated payments.

• • Merchant Solutions revenue was $858.9 million, up 29% 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.

• • Gross profit dollars grew 14% to $637.6 million in the first quarter of 2022, compared with $558.7 million for the first quarter of 2021, reflecting primarily a greater mix of lower-margin Merchant Solutions revenue, lower margins in Shopify Payments due to mix, increased investments in our cloud infrastructure, and the impact of the change in terms for our app and theme partners.

• • Adjusted gross profit4 dollars grew 14% to $646.1 million in the first quarter of 2022, compared with $565.1 million for the first quarter of 2021.

• • Operating loss for the first quarter of 2022 was $98.0 million, or 8% of revenue, versus income of $118.9

  million, or 12% of revenue, for the comparable period a year ago.

• • Adjusted operating income4 for the first quarter of 2022 was $31.9 million, or 3% of revenue, compared with adjusted operating income of $210.8 million or 21% of revenue in the first quarter of 2021. The difference primarily reflects the expansion of our R&D and sales and marketing teams as well as offline performance marketing initiatives.

• 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, unrealized and realized gains and losses on equity and other investments, and tax effects related to non-GAAP adjustments. Please refer to "Non-GAAP Financial Measures" in this press release for more information.

• • Net loss for the first quarter of 2022 was $1.5 billion, or $11.70 per basic and diluted share, compared with net income of $1.3 billion, or $9.94 per diluted share, for the first quarter of 2021. Q1 2022 net loss includes a $1.6 billion net unrealized and realized loss on our equity and other investments.

• • Adjusted net income4 for the first quarter of 2022 was $25.1 million, or $0.20 per diluted share, compared with adjusted net income of $254.1 million, or $2.01 per diluted share, for the first quarter of 2021.

• • At March 31, 2022, Shopify had $7.25 billion in cash, cash equivalents and marketable securities, compared with $7.77 billion at December 31, 2021.

First-Quarter Business Highlights

• • Shopify completed the roll out of Shopify Markets to all merchants, making cross-border commerce easier for merchants worldwide. Since fully rolling out in February, tens of thousands of merchants have added or localized a market using Shopify Markets.

• • Shopify launched LinkPop, a customizable link-in-bio tool that lets Shopify merchants and non-merchants sell products with shoppable links and gives users powerful analytics tools to see which contents and products captivate their followers.

• • Merchants in the U.S., Canada, and the U.K. received $346.7 million in merchant cash advances and loans from Shopify Capital in the first quarter of 2022, an increase of 12% versus the $308.6 million funded in the first quarter of last year. Shopify Capital has grown to $3.3 billion in cumulative capital funded since its launch in April 2016, approximately $486.5 million of which was outstanding on March 31, 2022.

• • Shopify continued to build simple and fast fulfillment through Shopify Fulfillment Network, introducing an improved inbound transfer experience, easier inventory tracking across our fulfillment centers, and the ability to add new products directly in the merchant-facing app, saving merchants time, cost, and effort.

• • Shopify announced it became the first Canadian company to sign a power purchase agreement (PPA)

  equivalent to powering 100% of office buildings and employee home offices across North America with wind energy.

Subsequent to First Quarter 2022

• • Shopify announced its support of nine new tech-driven innovators in carbon removal through our

  Sustainability Fund, bringing our total carbon removal purchase commitment to $32 million. Shopify is the largest purchaser for eight and the first purchaser for four of these new partners. As the largest purchaser,

• 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, unrealized and realized gains and losses on equity and other investments, and tax effects related to non-GAAP adjustments. Please refer to "Non-GAAP Financial Measures" in this press release for more information.

we are providing companies with a strong revenue stream that helps them secure financing, and as the first purchaser, we are sending a clear market signal for others to buy from these partners.

• • Shopify published its 2021 Global Economic Impact report, showcasing Shopify's role in driving significant business growth and expansion for entrepreneurs and economies around the world. In 2021, businesses on Shopify generated over $444 billion in global economic impact, supporting five million jobs worldwide, up 45% and 39%, respectively, from 2020. In addition, our partner ecosystem generated $32 billion in revenue, up 45% over 2020, as our merchants' selling drove tremendous volumes of economic activity.

• • Shopify announced a 10-for-1 split of its Class A and Class B shares as well as updates to its governance structure, both of which will be voted on at its Annual General and Special Meeting of Shareholders in

  June.

Acquisition of Deliverr

Shopify has reached an agreement to acquire Deliverr, Inc., a fulfillment technology provider, to provide simplicity and scale to millions of merchants, and to remove the complexity of fragmented supply chain management. With the addition of Deliverr's network management software; team of software engineers, operations experts and customer champions with deep domain expertise; and asset-lite network of warehouse, carrier, and last mile partners, Shopify gains visibility and control of movements along the supply chain, empowering merchants to offer and achieve fast delivery promises across channels. By integrating the end-to-end software and logistics platform into the Shopify ecosystem, Shopify will streamline logistics to provide simplicity and scale advantages for merchants.

"Our goal is to not only level the playing field for independent businesses, but tilt it in their favor - turning their size and agility into a superpower," said Tobi Lütke, Shopify's CEO. "Together with Deliverr, Shopify Fulfillment

Network will give millions of growing businesses access to a simple, powerful logistics platform that will allow them to make their customers happy over and over again."

Deliverr offers scalable logistics infrastructure for end-to-end inventory orchestration, including:

• • inventory receiving and inspection and cross-docking capabilities;

• • inventory placement algorithms that route inventory based on predicted merchant demand;

• • preparation, storage, and freight services;

• • real-time fulfillment optimization across online, brick-and-mortar, B2B and wholesale channels; and an

• • asset-lite network of warehouse, carrier and last-mile partners offering elastic warehouse capacity to thousands of merchants.

Deliverr's asset-light infrastructure complements and extends the reach of Shopify's network of large-capacity, self-operated hubs, and enhances affordable access to a two-day delivery promise in the U.S. across all channels.

With Deliverr, Shopify strengthens its ability to offer merchants simplified inventory management, demand-driven inventory balancing, and fast delivery from coast to coast, with minimal inventory required. Deliverr, which ships over a million orders per month across the U.S., has already benefited thousands of merchants, many of whom use

Shopify, as the hyper-fragmented market of freight forwarders, transportation providers, and 3rd-party logistics companies can be overwhelming for users.

The addition of Deliverr will more than double the size of Shopify's fulfillment team with talent that is steeped in the logistics industry. Led by Harish Abbott, Deliverr's CEO, Deliverr's revenues have grown rapidly due to its ability to provide two-day delivery service across multiple channels including online stores, search and social channels and large ecommerce marketplaces like Amazon, eBay, Etsy, and Walmart. Together with Shopify's 6

River Systems, which powers embedded technologies for warehouses, Shopify is building the most robust merchant-obsessed network for the future of global logistics, for everyone. Shopify Fulfillment Network, 6 River

Systems, and Deliverr will collectively form a broader logistics unit within Shopify under the group's newly appointed CEO, Aaron Brown, who has led Shopify Fulfillment Network since 2020.

Transaction Terms

Under the terms of the agreement, Shopify will acquire all of Deliverr's outstanding securities in a transaction valued at approximately $2.1 billion, consisting of approximately 80% in cash and 20% in Shopify Class A

Subordinate Voting Shares. Deliverr's key management elected to take a significant portion of their stockholder consideration as Shopify Class A Subordinate Voting Shares that will vest subject to certain conditions. The parties expect the transaction to close following regulatory review.

The anticipated benefits of Shopify's acquisition of Deliverr are described in greater detail on our news page.

2022 Outlook