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Shopify IPO Filing Shows the Risks and Rewards in Ecommerce

Another ecommerce platform has filed its intention to go public – Shopify filed a Form F-1 with the SEC on Tuesday, as well as filing with regulatory authorities in Canada. The move follows online marketplace Etsy’s IPO filing in March, with its IPO kicking off on Thursday.

Shopify helps merchants design, set up and manage their stores using its cloud-based platform, and the company shared some interesting information in its prospectus, including strong year-over-year growth – and revealed it’s not yet showing a profit:

As of March 31, 2015, we had 162,261 merchants from approximately 150 countries using our platform, representing growth of 68.2% in the number of merchants using our platform relative to March 31, 2014.

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In 2014, our platform processed Gross Merchandise Volume, or GMV, of $3.8 billion, representing an increase of 132.9% from the year ended December 31, 2013.

In the three months ended March 31, 2015, our platform processed GMV of $1.3 billion, representing an increase of 107.8% from the three months ended March 31, 2014.

Our business has experienced rapid growth. Our total revenue increased from $23.7 million in 2012, to $50.3 million in 2013 and to $105.0 million in 2014, representing year-over-year increases of 111.9% and 109.0%, respectively.

In addition, our total revenue for the three months ended March 31, 2015 was $37.3 million, an increase of 98.5% from the three months ended March 31, 2014.

We had net losses of $1.2 million in 2012, $4.8 million in 2013, $22.3 million in 2014, $6.4 million in the three months ended March 31, 2014 and $4.5 million in the three months ended March 31, 2015.

It also highlighted a problem facing all ecommerce players, and one that online sellers can relate to:

We rely on search engines and social networking sites to attract a meaningful portion of our merchants. If we are not able to generate traffic to our website through search engines and social networking sites, our ability to attract new merchants may be impaired. In addition, if our merchants are not able to generate traffic to their shops through search engines and social networking sites, their ability to attract consumers may be impaired.

Another store-hosting platform, PrestaShop, sees Shopify’s IPO as a positive sign for the industry, and for firms that are opening up ecommerce to small and medium sized businesses. “Shopify’s announcement is yet another indicator of how healthy the ecommerce technology market is today, and moving forward,” PrestaShop CMO Leah Anathan told EcommerceBytes.

Anatham said that only a few years ago, a retailer going online needed hundreds of thousands to millions of dollars in annual revenue to make an ecommerce business viable. “That’s not the case anymore. Together, the technology leaders in ecommerce are taking a growing market, and opening this up further by enabling more and more small businesses to profitably participate.”

Shopify intends to list on the New York Stock Exchange (SHOP) and the Toronto Stock Exchange (SH).

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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