INSIGHTS
- Founded in 2006, Shopify is a publicly traded company that is domiciled in Canada.
- Shopify's number of paying subscribers had grown from 6,656 in 2009 to 609,000 in 2017.
- Shopify's number of paying subscribers had grown from an estimated 1,355 merchants in 2006 to an estimated 3,915 merchants in 2008.
OVERVIEW
As requested, rows 2-15 of the Subscribers by Year tab of the attached spreadsheet have been populated with the appropriate information. Shopify's number of paying subscribers had grown from an estimated 1,355 merchants in 2006, when the company was founded, to 609,000 merchants in 2017. Please note that while the figures for years 2009-2017 are readily available, the figures for the preceding years are not and were consequently estimated. The succeeding two sections explain how these values were determined.
METHODOLOGY
We began by checking where Shopify is domiciled and whether the company is publicly traded. Shopify's LinkedIn profile indicates that it is a public company based in Canada. Both this LinkedIn profile and Shopify's website show that the company was founded in 2006 instead of 2004. To find out if Shopify's merchant base is a mix of paying and non-paying subscribers, we looked at the company's pricing page. From the pricing page, we learned that Shopify offers a free 30-day trial, after which users must pay a monthly subscription fee to continue using the service. Shopify has three price tiers, namely, Basic Shopify, Shopify, and Advanced Shopify, whose monthly prices are $13, $54, and $107, respectively.
Since Shopify is a publicly traded company that is listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE), we examined its regulatory filings for information on the company's number of paying subscribers. The company completed its IPO or initial public offering last May 2015 only, so its regulatory filings date back to 2014 only. From these filings, particularly Forms 40-F and 20-F, and the company website, we were able to determine Shopify's number of paying subscribers in years 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, and 2017. Both Forms 40-F and 20-F are filings with the Securities and Exchange commission (SEC); the first one is required of "companies domiciled in Canada with securities registered in the U.S.," while the second one is required of "all "foreign private issuers" with listed equity shares on exchanges in the United States." Content-wise, Form 40-F is similar to Form 10-K.
To find the company's number of paying subscribers in years preceding 2009, we used the percentage growth between 2009 and 2010. Our search through articles and reports about Shopify in these earlier years indicated that the company had not disclosed statistics on its merchant base. Perhaps like other incipient businesses, Shopify had been wary of divulging information on its operational performance.
2009-2017
Shopify's Form 40-F for the year ended 31 December 2017 readily indicates that the company's number of merchants as of 31 December 2016 and 31 December 2017 were 377,500 and 609,000, respectively. The company defines 'merchants' as "the total number of unique shops that are paying for a subscription" to its platform.
Meanwhile, Shopify's Form 20-F for the year ended 31 December 2015 reveals that the company's number of merchants as of 31 December 2015 was 243,468, 68.3% higher than its number of merchants as of 31 December 2014. Given this percentage growth, we can compute that the company's number of merchants as of 31 December 2014 was 144,663.
Shopify's website indicates that the company's number of merchants in 2009, 2010, 2011, 2012, and 2013 was 6,656, 11,323, 18,200, 41,910, and 81,939, respectively.
2006-2008
Between 2009 and 2010, the number of merchants on the platform had grown by 70%.
If we assume that the number of merchants had grown at a yearly growth rate of 70% during the period 2006-2008, we can estimate the yearly values to be as follows:
2008: 6,565 / 1.70 = 3,915
2007: 3,915 / 1.70 = 2,303
2006: 2,303 / 1.70 = 1,355
CONCLUSION
Shopify's yearly number of paying subscribers from its founding year up to 2017 has been entered in the Subscribers by Year tab of the attached spreadsheet as instructed. Actual values were found for years 2009 to 2017, while estimated values were determined for years 2006-2008. As can be seen in the spreadsheet, Shopify's number of paying subscribers had increased from an estimated 1,355 merchants in 2006 to 609,000 merchants in 2017. Shopify's website indicates that the company was founded in 2006 rather than 2004.