Shopify (NYSE:SHOP) reported fourth-quarter results on Feb. 15. The leading provider of cloud-based commerce solutions is enjoying torrid revenue growth as its customer base rapidly expands.

Shopify results: The raw numbers


Q4 2016

Q4 2015

Year-Over-Year Change


$130.383 million

$70.173 million


Net loss

($8.867 million)

($6.307 million)


Net loss per share




Data source: Shopify Q4 2016 earnings press release.

Entrepreneur sign

Image source: Getty Images.

What happened with Shopify this quarter?

Subscription revenue surged 63% year over year to $56.4 million, with the number of merchants using Shopify's platform rising to more than 375,000, up from 325,000 in the third quarter and 243,000 in the fourth quarter of 2015. Notably, monthly recurring revenue (the number of merchants with a subscription times the average subscription fee) as of Dec. 31, 2016, was $18.5 million, representing growth of 63% from the prior-year quarter.

Sales for Shopify's merchant solutions segment -- which includes the company's payments and shipping services -- rose an even more impressive 108%, to $49.7 million.

Together, that fueled an 86% increase in total revenue to $130.4 million, which was significantly above Shopify's guidance for fourth-quarter revenue of $120 million to $122 million.

Moreover, gross merchandise volume -- which represents the total dollar value of orders processed on Shopify's platform -- soared 94% to $5.5 billion in the fourth quarter. And gross payments volume, which is the amount of GMV processed through Shopify Payments, grew 120% to $2.2 billion. That accounted for 39% of GMV processed in the quarter, up from 37% in Q4 2015.

Still, Shopify remains unprofitable. Fourth-quarter operating loss was $9.3 million, or 7% of revenue, versus $6.5 million, or 9% of revenue, in the year-ago period.

What management had to say

In a press release, founder and CEO Tobi Lutke highlighted the long-term growth opportunity that lies ahead for Shopify as it scales its business along with its customers.

Our work at Shopify is to help entrepreneurs thrive in a space that's changing all the time, and we did our job especially well this past holiday season. That eight of our ten top sellers over the Black Friday Cyber Monday weekend were merchants that had upgraded from lower-priced plans reminds us that today's start-ups become tomorrow's superstars, at a velocity that appears to be increasing all the time. As the engine powering the growth of these merchants, Shopify has an opportunity that stretches years into the future.

Looking forward

Shopify expects first-quarter revenue of $120 million to $122 million, with a GAAP operating loss of $20 million to $22 million. For the full year, Shopify is forecasting revenue in the range of $580 million to $600 million, with an operating loss of $73 million to $77 million.

"That we grew revenue by 90% and GMV by 99% for the full year 2016 speaks to the enormous opportunity in retail right now and our strategic position within it," said CFO Russ Jones. "Throughout 2017 we will continue to build out our ability to seize this opportunity by expanding not only our existing features, such as channels, payments, shipping and capital, but also our facilities and infrastructure."