(Mark One) | |
¨ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR | |
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2015 | |
OR | |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR | |
¨ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report |
PART I | |
PART II | |
PART III | |
Financial Statements | F-1 |
EX-10.8: Stock Option Plan | |
EX-10.9: Fourth Amended and Restated Stock Option Plan | |
EX- 10.10: Long Term Incentive Plan | |
EX-12.1: Section 302 Certification of CEO | |
EX-12.2: Section 302 Certification of CFO | |
EX-13.1: Section 906 Certification of CEO and CFO |
EX-15.1: Management's Discussion & Analysis | |
EX-23.1: Auditor's Consent |
• | the size of our addressable markets and our ability to serve those markets; |
• | the achievement of advances in and expansion of our platform and our solutions; |
• | our ability to predict future commerce trends and technology; |
• | the intended growth of our business and making investments to drive future growth; |
• | our ability to reach economies of scale; |
• | the growth of our merchants’ revenues; |
• | the growth of our third-party ecosystem, including formation of strategic partnerships; |
• | potential selective acquisitions and investments; |
• | the expansion of our platform into new markets; |
• | fluctuations in our future gross margin percentages; and |
• | our expectations on future incurred costs. |
• | our ability to generate revenue while controlling our costs and expenses; |
• | our ability to manage our growth effectively; |
• | the absence of material adverse changes in our industry or the global economy; |
• | trends in our industry and markets; |
• | our ability to maintain good business relationships with our merchants, vendors and partners; |
• | our ability to develop solutions that keep pace with the changes in technology, evolving industry standards, changes to the regulatory environment, new product introductions by competitors and changing merchant preferences and requirements; |
• | our ability to protect our intellectual property rights; |
• | our continued compliance with third-party license terms and the non-infringement of third-party intellectual property rights; |
• | our ability to manage and integrate acquisitions; |
• | our ability to retain key personnel; and |
• | our ability to raise sufficient debt or equity financing to support our continued growth. |
• | our rapid growth may not be sustainable and depends on our ability to attract new merchants, retain existing merchants and increase sales to both new and existing merchants; |
• | our business could be harmed if we fail to manage our growth effectively; |
• | we have a history of losses and we may be unable to achieve profitability; |
• | our limited operating history in a new and developing market makes it difficult to evaluate our current business and future prospects and may increase the risk that we will not be successful; |
• | if we fail to improve and enhance the functionality, performance, reliability, design, security and scalability of our platform in a manner that responds to our merchants’ evolving needs, our business may be adversely affected; |
• | a denial of service attack or security breach could delay or interrupt service to our merchants and their customers, harm our reputation or subject us to significant liability; |
• | payment transactions on Shopify Payments may subject us to regulatory requirements and other risks that could be costly and difficult to comply with or that could harm our business; |
• | we rely on a single supplier to provide the technology we offer through Shopify Payments; |
• | if the security of personally identifiable information we store relating to merchants and their customers is breached or otherwise subjected to unauthorized access, our reputation may be harmed and we may be exposed to liability; |
• | if our software contains serious errors or defects, we may lose revenue and market acceptance and may incur costs to defend or settle claims with our merchants; |
• | exchange rate fluctuations may negatively affect our results of operations; |
• | we may be unable to achieve or maintain data transmission capacity; |
• | our growth depends in part on the success of our strategic relationships with third parties; |
• | if we fail to maintain a consistently high level of customer service, our brand, business and financial results may be harmed; |
• | we use a limited number of data centers and any disruption of service at our data facilities could harm our business; |
• | if our solutions do not operate as effectively when accessed through mobile devices, our merchants and their customers may not be satisfied with our solutions; |
• | changes to technologies used in our platform or new versions or upgrades of operating systems and internet browsers could adversely impact the process by which merchants and customers interface with our platform; |
• | the impact of worldwide economic conditions, including the resulting effect on spending by SMBs, may adversely affect our business, operating results and financial condition; |
• | we may be subject to claims by third-parties of intellectual property infringement; |
• | we may be unable to obtain, maintain and protect our intellectual property rights and proprietary information or prevent third-parties from making unauthorized use of our technology; |
• | our use of “open source” software could negatively affect our ability to sell our solutions and subject us to possible litigation; |
• | 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 and 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; |
• | if we fail to effectively maintain, promote and enhance our brand, our business and competitive advantage may be harmed; |
• | if we are unable to hire, retain and motivate qualified personnel, our business will suffer; |
• | we are dependent on the continued services and performance of our senior management and other key employees, the loss of any of whom could adversely affect our business, operating results and financial condition; |
• | activities of merchants or the content of their shops could damage our brand, subject us to liability and harm our business and financial results; |
• | our operating results are subject to seasonal fluctuations; |
• | our business is susceptible to risks associated with international sales and the use of our platform in various countries; |
• | if third-party apps and themes change such that we do not or cannot maintain the compatibility of our platform with these apps and themes, or if we fail to provide third-party apps and themes that our merchants desire to add to their shops, demand for our platform could decline; |
• | we rely on computer hardware, purchased or leased, and software licensed from and services rendered by third-parties in order to provide our solutions and run our business, sometimes by a single-source supplier; |
• | we may not be able to compete successfully against current and future competitors; |
• | we do not have the history with our solutions or pricing models necessary to accurately predict optimal pricing necessary to attract new merchants and retain existing merchants; |
• | we have in the past made and in the future may make acquisitions and investments that could divert management’s attention, result in operating difficulties and dilution to our shareholders and otherwise disrupt our operations and adversely affect our business, operating results or financial position; |
• | provisions of our debt instruments may restrict our ability to pursue our business strategies; |
• | we may need to raise additional funds to pursue our growth strategy or continue our operations, and we may be unable to raise capital when needed or on acceptable terms; |
• | unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition; |
• | new tax laws could be enacted or existing laws could be applied to us or our merchants, which could increase the costs of our solutions and adversely impact our business; |
• | if we are required to collect state and local business taxes and sales and use taxes in additional jurisdictions, we might be subject to tax liability for past sales; |
• | we may not be able to use a significant portion of our tax carryforwards which could adversely affect our profitability; |
• | we are dependent upon consumers’ and merchants’ willingness to use the internet for commerce; |
• | we may face challenges in expanding into new geographic regions; and |
• | our reported financial results may be materially and adversely affected by changes in accounting principles generally accepted in the United States. |
Years ended | |||||||||||||||
December 31, 2015 | December 31, 2014 | December 31, 2013 | December 31, 2012 | ||||||||||||
(in thousands, except share and per share data) | |||||||||||||||
Consolidated Statement of Operations Information: | |||||||||||||||
Revenues: | |||||||||||||||
Subscription solutions | $ | 111,979 | $ | 66,668 | $ | 38,339 | $ | 19,200 | |||||||
Merchant solutions | 93,254 | 38,350 | 11,913 | 4,513 | |||||||||||
205,233 | 105,018 | 50,252 | 23,713 | ||||||||||||
Cost of revenues (1): | |||||||||||||||
Subscription solutions | 24,531 | 16,790 | 8,504 | 4,291 | |||||||||||
Merchant solutions | 69,631 | 26,433 | 5,009 | 485 | |||||||||||
94,162 | 43,223 | 13,513 | 4,776 | ||||||||||||
Gross profit | 111,071 | 61,795 | 36,739 | 18,937 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing (1) | 70,374 | 45,929 | 23,351 | 12,262 | |||||||||||
Research and development (1)(2) | 39,722 | 25,915 | 13,682 | 6,452 | |||||||||||
General and administrative (1)(3) | 18,731 | 11,566 | 3,975 | 1,737 | |||||||||||
128,827 | 83,410 | 41,008 | 20,451 | ||||||||||||
Loss from operations | (17,756) | (21,615) | (4,269) | (1,514) | |||||||||||
Other income (expense) | (1,034) | (696) | (568) | 282 | |||||||||||
Net loss and comprehensive loss | $ | (18,790 | ) | $ | (22,311 | ) | $ | (4,837 | ) | $ | (1,232 | ) | |||
Basic and diluted net loss per share attributable to shareholders (3) | $ | (0.30 | ) | $ | (0.57 | ) | $ | (0.13 | ) | $ | (0.03 | ) | |||
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders(4) | 61,716,065 | 38,940,252 | 37,248,710 | 36,155,333 |
Years ended | |||||||||||||||
December 31, 2015 | December 31, 2014 | December 31, 2013 | December 31, 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Cost of revenues | $ | 345 | $ | 259 | $ | 113 | $ | 11 | |||||||
Sales and marketing | 1,351 | 696 | 354 | 66 | |||||||||||
Research and development | 6,373 | 2,776 | 1,152 | 282 | |||||||||||
General and administrative | 2,419 | 712 | 147 | 49 | |||||||||||
$ | 10,488 | $ | 4,443 | $ | 1,766 | $ | 408 |
Years ended | |||||||||||
December 31, 2015 | December 31, 2014 | December 31, 2013 | |||||||||
(in thousands) | |||||||||||
Balance Sheet Information: | |||||||||||
Cash, cash equivalents and marketable securities | $ | 190,173 | $ | 59,662 | $ | 83,529 | |||||
Working capital | 165,228 | 48,610 | 77,960 | ||||||||
Total assets | 243,712 | 95,193 | 95,788 | ||||||||
Total liabilities | 48,395 | 27,461 | 10,407 | ||||||||
Capital stock | 243,171 | 96,796 | 92,134 |
• | we pay interchange and other fees, which may increase our operating expenses; |
• | if we are unable to maintain our chargeback rate at acceptable levels, our credit card fees may increase or credit card issuers may terminate their relationship with us; |
• | increased costs and diversion of management time and effort and other resources to deal with fraudulent transactions or chargeback disputes; |
• | potential fraudulent or otherwise illegal activity by merchants, their customers, developers, employees or third parties; |
• | restrictions on funds or required reserves related to payments; and |
• | additional disclosure and other requirements, including new reporting regulations and new credit card association rules. |
• | greater difficulty in enforcing contracts, including our universal terms of service and other agreements; |
• | lack of familiarity and burdens and complexity involved with complying with multiple, conflicting and changing foreign laws, standards, regulatory requirements, tariffs, export controls and other barriers; |
• | difficulties in ensuring compliance with countries’ multiple, conflicting and changing international trade, customs and sanctions laws; |
• | data privacy laws which may require that merchant and customer data be stored and processed in a designated territory; |
• | difficulties in managing systems integrators and technology partners; |
• | differing technology standards; |
• | potentially adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems and restrictions on the repatriation of earnings; |
• | uncertain political and economic climates; |
• | currency exchange rates; |
• | reduced or uncertain protection for intellectual property rights in some countries; and |
• | new and different sources of competition. |
• | diversion of management time and focus from operating our business; |
• | use of resources that are needed in other areas of our business; |
• | in the case of an acquisition, implementation or remediation of controls, procedures and policies of the acquired company; |
• | in the case of an acquisition, difficulty integrating the accounting systems and operations of the acquired company, including potential risks to our corporate culture; |
• | in the case of an acquisition, coordination of product, engineering and selling and marketing functions, including difficulties and additional expenses associated with supporting legacy services and products and hosting infrastructure of the acquired company and difficulty converting the customers of the acquired company onto our platform and contract terms, including disparities in the revenues, licensing, support or professional services model of the acquired company; |
• | in the case of an acquisition, retention and integration of employees from the acquired company; |
• | unforeseen costs or liabilities; |
• | adverse effects to our existing business relationships with partners and merchants as a result of the acquisition or investment; |
• | the possibility of adverse tax consequences; |
• | litigation or other claims arising in connection with the acquired company or investment; and |
• | in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries. |
• | dispose of assets; |
• | complete mergers or acquisitions; |
• | incur indebtedness; |
• | encumber assets; |
• | pay dividends or make other distributions to holders of our shares; |
• | make specified investments; |
• | change certain key management personnel; |
• | engage in any business other than the businesses we currently engage in; and |
• | engage in transactions with our affiliates. |
• | changes in the valuation of our deferred tax assets and liabilities; |
• | expected timing and amount of the release of any tax valuation allowances; |
• | tax effects of stock-based compensation; |
• | costs related to intercompany restructurings; |
• | changes in tax laws, regulations or interpretations thereof; or |
• | future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated earnings in countries where we have higher statutory tax rates. |
• | significant volatility in the market price and trading volume of comparable companies; |
• | actual or anticipated changes or fluctuations in our operating results or in the expectations of market analysts; |
• | adverse market reaction to any indebtedness we may incur or securities we may issue in the future; |
• | short sales, hedging and other derivative transactions in our shares; |
• | announcements of technological innovations, new products, strategic alliances or significant agreements by us or by our competitors; |
• | changes in the prices of our solutions or the prices of our competitors’ solutions; |
• | litigation or regulatory action against us; |
• | investors’ general perception of us and the public’s reaction to our press releases, our other public announcements and our filings with the U.S. Securities and Exchange Commission, or the SEC, and Canadian securities regulators; |
• | the market’s reaction to our reduced disclosure as a result of being an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act; |
• | publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts; |
• | changes in general political, economic, industry and market conditions and trends; |
• | sales of our Class A subordinate voting shares and Class B multiple voting shares by our directors, executive officers and existing shareholders; |
• | recruitment or departure of key personnel; and |
• | the other risk factors described in this section of the Annual Report. |
• | require that any action to be taken by our shareholders be effected at a duly called annual or special meeting and not by written consent; |
• | establish an advance notice procedure for shareholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; and |
• | require the approval of a two-thirds majority of the votes cast by shareholders present in person or by proxy in order to amend certain provisions of our restated articles of incorporation, including, in some circumstances, by separate class votes of holders of our Class A subordinate voting shares and Class B multiple voting shares. |
• | A Multi-Channel Commerce Platform. The Shopify platform enables merchants to sell their products across different sales channels, including web, mobile storefronts, social media storefronts and physical retail locations. Currently, more than half of our merchants’ storefront traffic comes from mobile devices and approximately one quarter of our merchants have activated social media channels for selling. Merchants can easily add a new sales channel without the need to install new hardware or software infrastructure. Our platform provides merchants with a single view of their business, combining and synchronizing their entire customer, inventory, order, product, payment and other data that originate in these different sales channels. |
• | A Simplified Merchant Experience. The Shopify platform simplifies commerce technology and makes it accessible for merchants of all sizes. Our platform provides merchants with an intuitive user experience that requires no up-front training to implement and use. By integrating multiple channels into a single platform, Shopify is designed to remove the complexities inherent in separate systems and democratize commerce. |
• | The Latest Technologies, Seamlessly Integrated. The Shopify platform is designed to integrate the latest technologies that a merchant needs to sell products and operate a multi-channel retail business from any device. For example, our platform enables merchants to offer both mobile web and custom mobile applications that seamlessly integrate with other channels. Merchants can also use Shopify Mobile, our iPhone and Android application, to track and manage their business on the go. Our high-availability, continuously deployed, multi-tenant architecture ensures that all of our merchants are able to operate with the latest features and the newest innovations without any need to patch or upgrade their software. In 2015, we released thousands of updates to our platform that were immediately available to all of our merchants. We continue to add functionality and innovative features to our platform to address new technologies and the rapidly changing needs of merchants. |
• | A Platform Designed to Launch and Grow Brands. Merchants can launch and build their brand on the Shopify platform and sell direct to consumers without any intermediaries or middlemen. Merchants can quickly begin selling and accepting payments in-person using their mobile phone, and they can set up a website and begin taking orders globally. Merchants can select a professional-looking storefront design from a curated selection of approximately 150 templates available in the Shopify Theme Store and tailor it to match their brand’s look and feel with just a few clicks. Merchants can also use our internally developed design language to fully customize their storefront, or hire a third-party designer who is a trusted Shopify Expert to build their storefront for them. Using the Shopify platform, a merchant’s brand is always at the forefront of the experience, and we help merchants make that experience memorable to consumers. |
• | A Platform for Merchant Success. The Shopify platform includes advanced features and resources to help merchants sell more products. Our platform has strong search engine optimization, social media marketing features and advanced analytics built in. Our Shopify Guru team is also available on chat, email and phone 24/7 to help educate merchants on how to drive traffic to their shops and manage their businesses more effectively. Because our goals are aligned with those of our merchants, we do not restrict merchants with sales limits or bandwidth caps. As merchants begin to sell more, we offer more advanced plans with additional features such as lower payment processing and shipping rates as well as dedicated account management. |
• | Enterprise-level Security, Scalability and Reliability. The Shopify platform offers security, scalability and reliability that is normally only available to businesses with enterprise-level budgets, while at the same time being easy to use and affordable for smaller businesses. This is important because we believe the Shopify platform is mission-critical for all of our merchants. Our merchants’ data is stored in two co-located facilities in geographically dispersed, fault-tolerant data centers with distributed denial of service prevention appliances, intrusion-detection systems and 24/7 operational monitoring. We have been certified as a PCI DSS Level 1 compliant service provider, which is the highest level of compliance available, and a third-party qualified security assessor audits our platform annually. Our platform has been built to handle large spikes in traffic that accompany events such as new product releases, holiday shopping seasons and flash sales, and has been benchmarked to process at least 25,000 requests per second based on platform load testing. Our Shopify Plus plan offering, launched in February 2014, addresses the needs of our larger merchants and allows entrepreneurs to scale without leaving the Shopify platform. Shopify Plus offers merchants enterprise-grade selling capabilities at a lower cost and faster time to market than traditional enterprise software. Shopify Plus serves high-volume businesses as well as global brands looking for a reliable and scalable ecommerce solution that has a faster time to market and is mobile-optimized. |
• | An Open Platform with a Thriving Ecosystem. A rich ecosystem of app developers, theme designers and other partners has evolved around the Shopify platform. Agencies that build merchants’ web and mobile shops on our platform refer merchants to us and we refer work to them using our Shopify Experts directory. The Shopify platform’s functionality is highly extensible and can be expanded using our application program interface, or |
• | Grow our Base of Merchants. We believe that we have a significant opportunity to increase the size of our current merchant base. We intend to continue to strategically invest in marketing programs that enhance the awareness of our brand and solutions among businesses at different stages of their lifecycle, from entrepreneurs just starting a business to larger, well-established businesses. While we believe it is important to establish relationships early in the business lifecycle and grow along with our merchants, we also see the opportunity from larger businesses looking for faster time-to-market and better value as they innovate to meet rapidly evolving consumer demands. We intend to grow our base of merchants primarily by inspiring entrepreneurship through marketing programs including our Build A Business competition and Shopify Blog. Tens of thousands of newly launched businesses entered our last Build A Business competition and sold greater than $250 million worth of products on our platform during the eight-month competition. Additionally, with the introduction of Shopify Plus, we are investing in additional sales capacity focused on larger merchants, and began to hire and train outbound sales representatives for Shopify Plus in early 2015. |
• | Grow our Merchants’ Revenue. Our goals are closely aligned with the goals of our merchants. The more a merchant sells on our platform, the more revenue we generate as they process more transactions, upgrade plans, add additional sales channels, ship more products and use additional solutions. We intend to continue to improve our platform to help our merchants sell more and expect to continue to use initiatives such as our Retail Tour roadshows, Shopify Blog and Shopify Guru programs to educate our merchant base on how they can be even more successful using our platform. Last year, the Shopify Blog had over twenty million page views, making it one of the internet’s top ecommerce and entrepreneurial blogs. |
• | Continuous Innovation and Expansion of our Platform. Our platform is built to support innovation and the rapid technology changes in commerce. Six years ago, we foresaw the rise of mobile and launched our iPhone-based Shopify Mobile application to allow merchants to manage their business on the go. We intend to continue to build more sales channels and additional functionality to make our merchants more effective and further differentiate our platform. We have done this with Shopify Payments, which eliminates the need for merchants to set up and maintain a direct relationship with a third-party payment gateway, gives merchants access to low credit card processing rates and allows us to cross-sell additional solutions to our merchant base. We added functionality more recently with Shopify Shipping, which allows merchants to print postage labels and ship products at discounted rates directly through Shopify. We intend to follow this same approach with other merchant solutions in the future. |
• | Continue to Grow and Develop our Ecosystem. We have a thriving third-party ecosystem that includes app developers, theme designers and other partners that bolster the functionality of our platform. This ecosystem has grown in part due to the platform’s functionality, which is highly extensible and can be expanded through our API. There are currently more than 1,200 apps available in the Shopify App Store. We believe that growing our ecosystem makes the Shopify platform more attractive and stickier, which further expands our merchant base, and in turn drives additional growth of our ecosystem. |
• | Continue to Expand our Partner Programs. We have strong relationships with thousands of design and marketing agencies throughout the world. These agencies build merchant web and mobile shops on our platform. They refer merchants to us and we refer work to them using our Shopify Experts directory. We |
• | Continue to Build for the Long-term. We have a culture of iteration and testing new ideas with a focus on maximizing long-term value. As we continue to build for the future, we may consider focused international expansion, strategic partnerships, new solutions and selective acquisitions. |
• | Real-Time Dashboard: Provides merchants with a real-time overview of how their business is performing, where orders are coming from (including by channel and by customer), how different products are performing, what actions need the merchant’s attention, and advice on how to increase their business and make more money. |
• | Products and Inventory Management: Allows merchants to keep track of all of their products, including adding and removing products, managing and organizing product details, updating prices, changing product descriptions and photos, and tracking inventory. |
• | Order Processing, Management and Fulfillment: Provides a sales inbox where merchants can process and manage their orders, capture payments, track incoming inventory and ship orders or update fulfillment services. |
• | Shopify Payments (Currently available in the United States, Canada, the United Kingdom and Australia): An integrated payment processing solution that allows merchants to accept credit cards at attractive rates. In addition, directly from the Shopify platform, merchants can dispute any chargebacks and have full visibility of cash transfers to their bank account. It also provides flexibility to allow merchants to accept PayPal, Bitcoins and other alternative payment methods. We provide Shopify Payments under payment services provider agreements with Stripe. These agreements renew every 12 months, unless either party provides a notice of termination prior to the end of the then-current term. Under these agreements, we pay Stripe monthly fees based on the value of orders processed through Shopify Payments. |
• | Payment Gateways: For merchants in locations where Shopify Payments is not yet available, or in situations where the merchant already has a preferred payment-processing partner, the Shopify platform connects to over 100 payment gateways, allowing merchants to continue with those relationships. |
• | Discounts and Gift Cards: Allows merchants to offer discounts and coupons, as well as to sell and manage gift cards. |
• | Customer Management: Gives merchants a single view of their customers across channels, allowing them to manage those relationships and search and analyze customer information for insights that help merchants provide their customers with more personalized shopping experiences. |
• | Reporting and Analytics: Gives merchants real-time reports on their products, orders, payments, customers, customer preferences and other matters to gain advanced insights and further their business objectives. |
• | Security. Credit card processing on the Shopify platform is performed by a dedicated, highly scalable, geographically redundant, high-security environment with specialized policies and procedures in place. The environment is designed to be highly isolated and secure and exceeds the requirements of PCI DSS. We have been certified as a PCI DSS Level 1 compliant service provider, which is the highest level of compliance available. We use firewalls, denial of service mitigation appliances, advanced encryption, intrusion detection systems, two-factor authentication and other technology to keep our merchants’ data secure. |
• | Scalability. The cloud-based architecture of our platform has been designed to support sudden traffic and order spikes from our merchants. We use a technology called “containerization” to efficiently scale our computing resources across our platform. We have benchmarked the Shopify platform to handle at least 25,000 requests per second and 12,000 orders per minute based on platform load testing. |
• | Reliability. Our platform includes servers in geographically dispersed, co-located data centers that are fault-tolerant and ensure that our platform is highly reliable. Because Shopify is at the heart of our merchants’ businesses, we employ a highly redundant, horizontally scalable, shared architecture to ensure resiliency and high availability. |
• | Performance. We believe that the faster our merchants’ shops appear to their customers, the more our merchants will sell. We have a dedicated team that is constantly profiling and optimizing the performance of the Shopify platform. We leverage content delivery networks with global points of presence to ensure that content and data is delivered quickly to users across the globe. In 2015, online shops hosted on our platform had sub 100 millisecond median response times, which we believe is much lower than the industry average based on the results of a third-party analytics reporting tool. In 2015, our merchants’ shops averaged 140 million unique monthly visitors, 59% of which were from mobile devices, and we processed an average of 8.7 million orders per month. |
• | Deployment. The Shopify platform is “single branch” software, which means that all of our merchants use the latest version of Shopify at all times. The result is that we have no overhead in maintaining older versions of our platform. Our software deployment process enables us to quickly distribute new software as soon as it is ready. This is made possible by our ongoing investment in end-to-end automation and comprehensive test suites. |
• | vision for commerce and product strategy; |
• | simplicity and ease of use; |
• | integration of multiple channels; |
• | cost-effective solution; |
• | breadth and depth of functionality; |
• | pace of innovation; |
• | ability to scale; |
• | security and reliability; |
• | support for a merchant’s brand development; and |
• | brand recognition and reputation. |
• | ecommerce software vendors; |
• | content management systems; |
• | payment processors; |
• | POS software providers; |
• | domain registrars; and |
• | marketplaces. |
• | Get shit done |
• | Build for the long-term |
• | Focus on simple solutions |
• | Act like owners |
• | Thrive on change |
Location | Square Feet | Date Lease Ends | Purpose |
Ottawa, Canada(1) | 154,302 | December 31, 2026 | Office Space |
Kitchener-Waterloo, Canada(1) | 39,173 | September 30, 2022 | Office Space |
Toronto, Canada(1) | 36,771 | August 31, 2021 | Office Space |
Montreal, Canada(1) | 30,663 | June 30, 2026 | Office Space |
Name and Place of Residence | Age | Position | Principal Occupation |
Tobias Lütke Ontario, Canada | 35 | Chief Executive Officer Chairman of the Board | Chief Executive Officer, Shopify |
Russell Jones Ontario, Canada | 56 | Chief Financial Officer | Chief Financial Officer, Shopify |
Harley Finkelstein Ontario, Canada | 32 | Chief Operating Officer | Chief Operating Officer, Shopify |
Daniel Weinand Ontario, Canada | 36 | Chief Design Officer | Chief Design Officer, Shopify |
Craig Miller Ontario, Canada | 33 | Chief Marketing Officer | Chief Marketing Officer, Shopify |
Brittany Forsyth Ontario, Canada | 28 | Senior Vice President of Human Relations | Senior Vice President of Human Relations, Shopify |
Joseph Frasca Ontario, Canada | 42 | Senior Vice President, General Counsel and Secretary | Senior Vice President, General Counsel and Secretary, Shopify |
Jean-Michel Lemieux Ontario, Canada | 43 | Senior Vice President, Engineering | Senior Vice President, Engineering, Shopify |
Robert Ashe Ontario, Canada | 56 | Director | Corporate director |
Steven Collins Florida, United States | 51 | Director | Corporate director |
Jeremy Levine New York, United States | 42 | Director | Partner, Bessemer Venture Partners |
Trevor Oelschig California, United States | 41 | Director | Partner, Bessemer Venture Partners |
John Phillips Ontario, Canada | 65 | Director | Corporate director |
Name and Principal Position | Salary(1) ($) | Share- based Awards(2) ($) | Option- based Awards(3) ($) | Non-Equity Incentive Plan Compensation(4) ($) | Pension Value(5) ($) | All Other Compensation(6) ($) | Total Compensation ($) | ||
Annual incentive plans | Long-term incentive plans | ||||||||
Tobias Lütke | $310,675 | - | - | - | - | - | $11,556 | $322,231 | |
Chief Executive Officer | |||||||||
Russell Jones | $234,813 | - | - | - | - | - | $4,753 | $239,566 | |
Chief Financial Officer | |||||||||
Harley Finkelstein | $234,813 | - | - | - | - | - | $4,658 | $239,471 | |
Chief Operating Officer | |||||||||
Craig Miller | $234,813 | - | - | - | - | - | $5,019 | $239,832 | |
Chief Marketing Officer | |||||||||
Daniel Weinand | $234,813 | - | - | - | - | - | $4,670 | $239,483 | |
Chief Design Officer |
(1) | Base salaries are paid to our named executive officers in Canadian dollars. For the year ending December 31, 2015, we paid a base salary of C$430,000 to Mr Lütke, C$325,000 to Mr. Jones, and C$325,001 to each of Messrs. Finkelstein, Miller and Weinand. The base salary amounts reported in the above table have been converted to U.S. dollars using an exchange rate of C$1.00 = US$0.7225, which was the Bank of Canada noon rate on December 31st, 2015. |
(2) | We did not grant any share-based awards to our named executive officers in 2015. |
(3) | We did not grant any option-based awards to our named executive officers in 2015. |
(4) | We do not currently offer non-equity incentive plan compensation. |
(5) | We do not currently offer a deferred compensation plan or pension plan. |
(6) | None of the named executive officers are entitled to perquisites or other personal benefits which, in the aggregate, are worth over C$50,000 or over 10% of their base salary. |
Option-Based Awards | Share-Based Awards | |||||
Name | Number of securities underlying unexercised options exercisable(1) (#) | Option Exercise Price(2) ($) | Option expiration date | Value of Unexercised In-The- Money Options(3) ($) | Number of shares or units that have not vested (#) | Market or payout value of share-based awards that have not vested ($) |
Tobias Lütke | 425,899 | 0.09 | July 1, 2018 | 10,951,269 | — | — |
332,730 | 0.12 | September 30, 2020 | 8,545,970 | — | — | |
403,348 | 6.22 | December 17, 2024 | 7,897,554 | — | — | |
Russell Jones | 302,015 | 0.15 | April 26, 2021 | 7,746,081 | — | — |
181,255 | 0.36 | March 28, 2022 | 4,610,765 | — | — | |
121,004 | 6.22 | December 17, 2024 | 2,369,258 | — | — | |
Harley Finkelstein | 172,509 | 0.12 | June 7, 2020 | 4,430,790 | — | — |
166,365 | 0.12 | September 30, 2020 | 4,272,985 | — | — | |
174,870 | 0.15 | August 10, 2021 | 4,485,066 | — | — | |
80,670 | 6.22 | December 17, 2024 | 1,579,519 | — | — | |
Craig Miller | 522,568 | 0.15 | August 10, 2021 | 13,402,824 | — | — |
100,000 | 0.74 | July 12, 2023 | 2,506,000 | — | — | |
322,678 | 6.22 | December 17, 2024 | 6,318,035 | — | — | |
Daniel Weinand | 80,670 | 6.22 | December 17, 2024 | 1,579,519 | — | — |
(1) | The stock options reflected in this column were granted under our Legacy Option Plan, each such option is exercisable for one Class B multiple voting share. For a description of the terms of stock options granted under our Legacy Option Plan, see “-Incentive Plans-Legacy Option Plan.” |
(2) | Some of these options have an exercise price in Canadian dollars. Such exercise prices have been converted to U.S. dollars using an exchange rate of C$1.00 = US$0.7225, which was the Bank of Canada noon rate on December 31, 2015. |
(3) | The value of unexercised in-the-money options is calculated based on the closing price on the NYSE of $25.80 on December 31, 2015 of our Class A subordinate voting shares. Each Class B multiple voting share is convertible, at the option of the holder, into one Class A subordinate voting share. |
Name | Option-Based Awards- Value Vested During the Year(1) ($) | Share-Based Awards- Value Vested During the Year ($) |
Tobias Lütke | 2,467,981 | — |
Russell Jones | 2,120,961 | — |
Harley Finkelstein | 1,660,990 | — |
Craig Miller | 2,885,371 | — |
Daniel Weinand | 493,592 | — |
(1) | The value of options vested during the year is calculated based on the closing price on the NYSE of $25.80 on December 31, 2015 of our Class A subordinate voting share. Each Class B multiple voting share is convertible, at the option of the holder, into one Class A subordinate voting share. |
Name and Principal Position | Event | Severance(1) ($) | Options(2)(3) ($) | Other Payments ($) | Total ($) |
Tobias Lütke Chief Executive Officer | Termination other than for cause; Change in control | 429,641 | 7,154,392 | — | 7,584,033 |
Russell Jones Chief Financial Officer | Termination other than for cause; Involuntary termination on or immediately prior to a change in control | 119,783 | 3,414,165 | — | 3,533,948 |
Harley Finkelstein Chief Operating Officer | - | — | — | — | — |
Craig Miller Chief Marketing Officer | Termination other than for cause; Change in control | 119,916 | — | — | 119,916 |
Daniel Weinand Chief Design Officer | - | — | — | — | — |
(1) | Severance payments are calculated based on the base salary we pay to the executive officer, which is paid in Canadian dollars. The severance amounts reported in the table have been converted to U.S. dollars using an exchange rate of C$1.00 = US$0.7225, which was the Bank of Canada noon rate on December 31, 2015. |
(2) | The value of unvested options is calculated based on the closing price on the NYSE of 25.80 on December 31, 2015 of our Class A subordinate voting shares. Each Class B multiple voting share is convertible, at the option of the holder, into one Class A subordinate voting share. |
(3) | Mr. Lütke’s employment agreement provides that the vesting of any unvested equity awarded to Mr. Lütke will be accelerated in the event of a change in control transaction. Mr. Jones’ agreement provides that the vesting of any unvested equity awarded to Mr. Jones will be accelerated in the event of his involuntary termination of employment on or immediately prior to the time of completion of a change in control transaction. |
Event | Provisions | |
Termination for cause | Forfeiture of all unvested options Cancellation of all unexercised options as of date of termination | |
Resignation | Forfeiture of all unvested options 90 days after resignation to exercise vested options | |
Termination other than for cause | Forfeiture of all unvested options 90 days after termination to exercise vested options | |
Retirement | Forfeiture of all unvested options 90 days after retirement to exercise vested options | |
Death or disability | Forfeiture of all unvested options one year after event to exercise vested options |
• | increase the maximum number of Class A subordinate voting shares issuable under the LTIP, other than an adjustment pursuant to a change in capitalization; or |
• | amend the amendment provisions of the LTIP. |
• | the quality and integrity of our financial statements and related information; |
• | the independence, qualifications, appointment and performance of our external auditor; |
• | our disclosure controls and procedures, internal control over financial reporting and management’s responsibility for assessing and reporting on the effectiveness of such controls; |
• | our compliance with applicable legal and regulatory requirements; and |
• | our enterprise risk management processes. |
• | reviewing at least annually our executive compensation plans; |
• | evaluating at least once a year our Chief Executive Officer’s performance in light of the goals and objectives established by our board of directors and, based on such evaluation, with appropriate input from other independent members of our board of directors, determining the Chief Executive officer’s annual compensation; |
• | reviewing on an annual basis the evaluation process and compensation structure for our executive officers and, in consultation with our Chief Executive Officer, reviewing the performance of the other executive officers in order to make recommendations to our board of directors with respect to the compensation for such officers; |
• | assessing the competitiveness and appropriateness of our policies relating to the compensation of executive officers on an annual basis; and |
• | reviewing and, if appropriate, recommending to our board of directors the approval of any adoption, amendment and termination of our incentive and equity-based incentive compensation plans (and the aggregate number of shares to be reserved for issuance thereunder), and overseeing their administration and discharging any duties imposed on the compensation committee by any of those plans. |
• | identifying individuals qualified to become members of our board of directors; |
• | selecting or recommending that our board of directors select director nominees for the next annual meeting of shareholders and determining the composition of our board of directors and its committees; |
• | developing and overseeing a process to assess our board of directors, the Chairman of the board, the committees of the board, the chairs of the committees, individual directors and management; and |
• | developing and implementing our corporate governance guidelines. |
Years ended | ||||||||
December 31, 2015 | December 31, 2014 | December 31, 2013 | ||||||
Canada | 979 | 520 | 324 | |||||
Ireland | 43 | — | — | |||||
Other Countries | 26 | 15 | 10 | |||||
1,048 | 535 | 334 |
• | each person known to our management to be the beneficial owner of 5% or more of our outstanding capital; |
• | each of our directors and executive officers; and |
• | all of our current directors and executive officers as a group. |
Class A subordinate voting shares | Class B multiple voting shares | % of Total Voting Power | |||||
Number | % | Number | % | % | |||
5% Shareholders | |||||||
Entities affiliated with Bessemer Venture Partners(1) | 12,124,514 | 21.32% | - | - | 4.19% | ||
Klister Credit Corp.(2) | 750,000 | 1.32% | 4,246,060 | 18.25% | 14.93% | ||
OMERS Ventures II, L.P.(3) | - | - | 3,229,485 | 13.88% | 11.16% | ||
Bruce McKean | 3,713,865 | 6.53% | - | - | 1.28% | ||
Entities affiliated with Georgian Partners (4) | 1,503,030 | 2.64% | 2,151,775 | 9.25% | 7.95% | ||
Entities affiliated with Insight Venture Partners(5) | - | - | 2,960,275 | 12.73% | 10.23% | ||
Entities affiliated with FirstMark Capital(6) | 7,921,775 | 13.93% | - | - | 2.74% | ||
Executive Officers and Directors | |||||||
Tobias Lütke(7) | 479,500 | * | 9,390,481 | 40.37% | 32.6% | ||
Russell Jones(8) | 135,000 | * | 557,610 | 2.40% | 1.97% | ||
Harley Finkelstein(9) | 137,603 | * | 447,356 | 1.92% | * | ||
Daniel Weinand(10) | 1,621,273 | 2.85% | 28,571 | * | 1.59% | ||
Cody Fauser(11) | 1,286,591 | 2.26% | 6,723 | * | * | ||
Craig Miller | - | - | 523,146 | 2.25% | 1.81% | ||
Toby Shannan | - | - | 296,975 | 1.28% | 1.03% | ||
Brittany Forsyth | 24,267 | * | 58,417 | * | * | ||
Joseph Frasca | - | - | 47,514 | * | * | ||
Jean-Michel Lemieux | 3,800 | * | - | - | * | ||
Robert Ashe | 58,825 | * | 21,875 | * | * | ||
Steve Collins | - | - | 31,250 | * | * | ||
Jeremy Levine(12) | 12,357,221 | 21.73% | - | - | 4.27% | ||
Trevor Oelschig(13) | 12,127,157 | 21.32% | - | - | 4.19% | ||
John Phillips(2) | 375,000 | * | 2,123,030 | 9.13% | 7.46% | ||
Executive Officers and Directors as a group(15 persons)(14) | 28,606,237 | 50.29% | 13,532,948 | 58.18% | 56.63% |
High | Low | |
NYSE: SHOP | $42.13 | $18.48 |
TSX: SH | C$53.50 | C$26.84 |
Q2 2015 (May 21, 2015 - June 30, 2015) | Q3 2015 | Q4 2015 | |
NYSE: SHOP High | $42.13 | $41.11 | $39.29 |
NYSE: SHOP Low | $24.11 | $22.70 | $24.06 |
TSX: SH High | C$51.92 | C$53.50 | C$51.29 |
TSX: SH Low | C$30.00 | C$30.50 | C$33.30 |
August 2015 | September 2015 | October 2015 | November 2015 | December 2015 | January 2016 | |
NYSE: SHOP High | $41.11 | $37.95 | $39.29 | $33.93 | $27.40 | $26.50 |
NYSE: SHOP Low | $22.70 | $25.55 | $29.72 | $25.53 | $24.06 | $18.48 |
TSX: SH High | C$53.50 | C$49.85 | C$51.29 | C$44.24 | C$37.44 | C$36.82 |
TSX: SH Low | C$30.50 | C$34.00 | C$39.49 | C$34.00 | C$33.30 | C$26.84 |
• | change the rights, privileges, restrictions or conditions attached to the shares of that class; |
• | increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of that class; and |
• | make any class of shares having rights or privileges inferior to the shares of such class equal or superior to the shares of that class. |
(a) | offers a price per Class A subordinate voting share at least as high as the highest price per share paid or required to be paid pursuant to the take-over bid for the Class B multiple voting shares; |
(b) | provides that the percentage of outstanding Class A subordinate voting shares to be taken up (exclusive of shares owned immediately prior to the offer by the offeror or persons acting jointly or in concert with the offeror) is at least as high as the percentage of outstanding Class B multiple voting shares to be sold (exclusive of Class B multiple voting shares owned immediately prior to the offer by the offeror and persons acting jointly or in concert with the offeror); |
(c) | has no condition attached other than the right not to take up and pay for Class A subordinate voting shares tendered if no shares are purchased pursuant to the offer for Class B multiple voting shares; and |
(d) | is in all other material respects identical to the offer for Class B multiple voting shares. |
• | the acquisition of our Class A subordinate voting shares and Class B multiple voting shares by a person in the ordinary course of that person’s business as a trader or dealer in securities; |
• | the acquisition or control of us in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Canada Act; and |
• | the acquisition or control of us by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of us, through the ownership of our voting interests, remains unchanged. |
• | 25% or more of the issued shares of any class or series of our capital stock was owned by one or any combination of (1) the Non-Canadian Holder, (2) persons with whom the Non-Canadian Holder did not deal with at “arm’s length” (within the meaning of the Tax Act), and (3) partnerships in which the Non-Canadian Holder or a person described in (2) holds a membership directly or indirectly through one or more partnerships, and |
• | more than 50% of the fair market value of the Class A subordinate voting share was derived directly or indirectly from one or any combination of real or immovable property situated in Canada, “Canadian resource properties” (as defined in the Tax Act), “timber resource properties” (as defined in the Tax Act), and options in respect of, or interests in, or for civil law rights in, any such foregoing properties, whether or not such properties exist. |
Fiscal 2015 | Fiscal 2014 | |
$ | $ | |
Audit Fees | 802 | 161 |
Audit-Related Fees | — | — |
Tax Fees | — | 69 |
Other Fees | 7 | — |
Total | 809 | 230 |
Exhibit No. | Description |
3.1(1) | Restated Articles of Incorporation of the Company. |
3.2(1) | By-laws of the Company. |
4.1(2) | Specimen Class A subordinate voting share certificate. |
4.2(2) | Specimen Class B multiple voting share certificate. |
10.1(3) | Third Amended and Restated Investors’ Rights Agreement, dated May 27, 2015. |
10.2(4) | Employment Agreement, dated October 15, 2010, between Shopify Inc. and Tobias Lütke. |
10.3(4) | Employment Agreement, dated March 7, 2011, between Shopify Inc. and Russell Jones. |
10.4(4) | Employment Agreement, dated July 5, 2011, between Shopify Inc. and Craig Miller. |
10.5(4) | Employment Agreement, dated December 9, 2010, between Shopify Inc. and Harley Finkelstein. |
10.6(4) | Employment Agreement, dated December 9, 2010, between Shopify Inc. and Daniel Weinand. |
10.7(4) | Form of Indemnity Agreement between the Company and its officers and directors. |
10.8 | Stock Option Plan. |
10.9 | Fourth Amended and Restated Stock Option Plan. |
10.10 | Long Term Incentive Plan. |
11.11(4)(a) | Payment Services Provider Agreement, dated July 22, 2013, between Stripe, Inc. and Shopify Payments (USA) Inc. |
10.12(4) | Addendum to Payment Services Provider Agreement for Canada, dated July 22, 2013, among Stripe, Inc., Shopify Payments (USA) Inc. and Shopify Payments (Canada) Inc. |
10.13(4) | Lease of Office Space Multi-Tenant Office Building, dated as of February 28, 2014, between Morguard Performance Court Limited and Shopify Inc. |
10.14(4) | Lease Amendment Agreement, dated August 25, 2014, between Morguard Performance Court Limited and Shopify Inc. |
10.15(4) | Second Lease Amendment Agreement, dated February 13, 2015, between Morguard Performance Court Limited and Shopify Inc. |
10.16(4) | Loan and Security Agreement, dated March 12, 2015, between Silicon Valley Bank and Shopify Inc. |
10.17(3) | Coattail Agreement, dated May 27, 2015, between Shopify Inc. and Computershare Trust Company of Canada. |
21.1(5) | Subsidiaries of the Company. |
12.1 | Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002. |
12.2 | Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002. |
13.1 | Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002. |
15.1 | Management’s Discussion and Analysis of Shopify Inc. for the year ended December 31, 2015. |
23.1 | Consent of PricewaterhouseCoopers LLP. |
(1) | Incorporated by reference to the Company’s Report on Form 6-K (File No. 001-37400), furnished on May 29, 2015. |
(2) | Incorporated by reference to the Company’s Registration Statement on Form F-1 (File No. 333-203401), filed on May 6, 2015. |
(3) | Incorporated by reference to the Company’s Report on Form 6-K (File No. 001-37400), furnished on June 1, 2015. |
(4) | Incorporated by reference to the Company’s Registration Statement on Form F-1 (File No. 333-203401), filed on April 14, 2015. |
(5) | Incorporated by reference to the Company's Report on Form 20-F (File No. 001-37400), filed on February 17, 2016. |
(a) | Company has omitted portions of the referenced exhibit pursuant to a request for confidential treatment under Rule 406 promulgated |
Exhibit No. | Description |
3.1(1) | Restated Articles of Incorporation of the Company. |
3.2(1) | By-laws of the Company. |
4.1(2) | Specimen Class A subordinate voting share certificate. |
4.2(2) | Specimen Class B multiple voting share certificate. |
10.1(3) | Third Amended and Restated Investors’ Rights Agreement, dated May 27, 2015. |
10.2(4) | Employment Agreement, dated October 15, 2010, between Shopify Inc. and Tobias Lütke. |
10.3(4) | Employment Agreement, dated March 7, 2011, between Shopify Inc. and Russell Jones. |
10.4(4) | Employment Agreement, dated July 5, 2011, between Shopify Inc. and Craig Miller. |
10.5(4) | Employment Agreement, dated December 9, 2010, between Shopify Inc. and Harley Finkelstein. |
10.6(4) | Employment Agreement, dated December 9, 2010, between Shopify Inc. and Daniel Weinand. |
10.7(4) | Form of Indemnity Agreement between the Company and its officers and directors. |
10.8 | Stock Option Plan. |
10.9 | Fourth Amended and Restated Stock Option Plan. |
10.10 | Long Term Incentive Plan. |
11.11(4)(a) | Payment Services Provider Agreement, dated July 22, 2013, between Stripe, Inc. and Shopify Payments (USA) Inc. |
10.12(4) | Addendum to Payment Services Provider Agreement for Canada, dated July 22, 2013, among Stripe, Inc., Shopify Payments (USA) Inc. and Shopify Payments (Canada) Inc. |
10.13(4) | Lease of Office Space Multi-Tenant Office Building, dated as of February 28, 2014, between Morguard Performance Court Limited and Shopify Inc. |
10.14(4) | Lease Amendment Agreement, dated August 25, 2014, between Morguard Performance Court Limited and Shopify Inc. |
10.15(4) | Second Lease Amendment Agreement, dated February 13, 2015, between Morguard Performance Court Limited and Shopify Inc. |
10.16(4) | Loan and Security Agreement, dated March 12, 2015, between Silicon Valley Bank and Shopify Inc. |
10.17(3) | Coattail Agreement, dated May 27, 2015, between Shopify Inc. and Computershare Trust Company of Canada. |
21.1(5) | Subsidiaries of the Company. |
12.1 | Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002. |
12.2 | Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002. |
13.1 | Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002. |
15.1 | Management’s Discussion and Analysis of Shopify Inc. for the year ended December 31, 2015. |
23.1 | Consent of PricewaterhouseCoopers LLP. |
(1) | Incorporated by reference to the Company’s Report on Form 6-K (File No. 001-37400), furnished on May 29, 2015. |
(2) | Incorporated by reference to the Company’s Registration Statement on Form F-1 (File No. 333-203401), filed on May 6, 2015. |
(3) | Incorporated by reference to the Company’s Report on Form 6-K (File No. 001-37400), furnished on June 1, 2015. |
(4) | Incorporated by reference to the Company’s Registration Statement on Form F-1 (File No. 333-203401), filed on April 14, 2015. |
(5) | Incorporated by reference to the Company's Report on Form 20-F (File No. 001-37400), filed on February 17, 2016. |
(a) | Company has omitted portions of the referenced exhibit pursuant to a request for confidential treatment under Rule 406 promulgated |
As at | |||||||
December 31, 2015 | December 31, 2014 | ||||||
Note | $ | $ | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | 4 | 110,070 | 41,953 | ||||
Marketable securities | 5 | 80,103 | 17,709 | ||||
Trade and other receivables | 6 | 6,089 | 7,227 | ||||
Other current assets | 7 | 6,203 | 1,495 | ||||
202,465 | 68,384 | ||||||
Long term assets | |||||||
Property and equipment | 8 | 33,048 | 21,728 | ||||
Intangible assets | 9 | 5,826 | 2,708 | ||||
Goodwill | 2,373 | 2,373 | |||||
41,247 | 26,809 | ||||||
Total assets | 243,712 | 95,193 | |||||
Liabilities and shareholders’ equity | |||||||
Current liabilities | |||||||
Accounts payable and accrued liabilities | 10 | 23,689 | 12,514 | ||||
Current portion of deferred revenue | 12,726 | 6,775 | |||||
Current portion of lease incentives | 11 | 822 | 485 | ||||
37,237 | 19,774 | ||||||
Long term liabilities | |||||||
Deferred revenue | 661 | 394 | |||||
Lease incentives | 11 | 10,497 | 7,293 | ||||
11,158 | 7,687 | ||||||
Commitments and contingencies | 13 | ||||||
Shareholders’ equity | |||||||
Convertible preferred shares; nil and 27,159,277 shares authorized, issued and outstanding (aggregate liquidation preference of nil and $87,500) | 14 | — | 87,056 | ||||
Common stock, unlimited Class A subordinate voting shares authorized, 56,877,089 and nil issued and outstanding; unlimited Class B multiple voting shares authorized, 23,212,769 and nil issued and outstanding; unlimited Common shares authorized, nil and 39,310,446 issued and outstanding | 14 | 231,452 | 4,055 | ||||
Additional paid-in capital | 11,719 | 5,685 | |||||
Accumulated deficit | (47,854 | ) | (29,064 | ) | |||
Total shareholders’ equity | 195,317 | 67,732 | |||||
Total liabilities and shareholders’ equity | 243,712 | 95,193 |
"Tobias Lütke" | "Steven Collins" | |
Tobias Lütke | Steven Collins | |
Chairman, Board of Directors | Chairman, Audit Committee |
Years ended | |||||||||||||
December 31, 2015 | December 31, 2014 | December 31, 2013 | |||||||||||
Note | $ | $ | $ | ||||||||||
Revenues | |||||||||||||
Subscription solutions | 18 | 111,979 | 66,668 | 38,339 | |||||||||
Merchant solutions | 18 | 93,254 | 38,350 | 11,913 | |||||||||
205,233 | 105,018 | 50,252 | |||||||||||
Cost of revenues | |||||||||||||
Subscription solutions | 24,531 | 16,790 | 8,504 | ||||||||||
Merchant solutions | 69,631 | 26,433 | 5,009 | ||||||||||
94,162 | 43,223 | 13,513 | |||||||||||
Gross profit | 111,071 | 61,795 | 36,739 | ||||||||||
Operating expenses | |||||||||||||
Sales and marketing | 70,374 | 45,929 | 23,351 | ||||||||||
Research and development, net of refundable tax credits of $1,058 (2014 – $1,295; 2013 – $891) | 39,722 | 25,915 | 13,682 | ||||||||||
General and administrative | 18,731 | 11,566 | 3,975 | ||||||||||
Total operating expenses | 128,827 | 83,410 | 41,008 | ||||||||||
Loss from operations | (17,756) | (21,615) | (4,269) | ||||||||||
Other income (expense) | |||||||||||||
Interest income, net | 200 | 57 | 42 | ||||||||||
Loss on asset disposal | — | (100) | (73) | ||||||||||
Foreign exchange loss | (1,234) | (653) | (537) | ||||||||||
(1,034) | (696) | (568) | |||||||||||
Net loss and comprehensive loss | (18,790) | (22,311) | (4,837) | ||||||||||
Basic and diluted net loss per share attributable to common shareholders | 15 | $ | (0.30 | ) | $ | (0.57 | ) | $ | (0.13 | ) | |||
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders | 15 | 61,716,065 | 38,940,252 | 37,248,710 |
Series A Convertible Preferred Shares | Series B Convertible Preferred Shares | Series C Convertible Preferred Shares | Common Stock | Additional Paid-In Capital $ | Accumulated Deficit $ | Total $ | ||||||||||||||||||||||||||||
Note | Shares | Amount $ | Shares | Amount $ | Shares | Amount $ | Shares | Amount $ | ||||||||||||||||||||||||||
As at December 31, 2012 | 13,025,765 | 5,346 | 7,247,070 | 11,952 | — | — | 36,453,715 | 1,840 | 747 | (1,916 | ) | 17,969 | ||||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | — | 1,658,197 | 445 | (150 | ) | — | 295 | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | 1,472 | — | 1,472 | |||||||||||||||||||||||
Issuance of common stock - business combination | — | — | — | — | — | — | 96,479 | 404 | — | — | 404 | |||||||||||||||||||||||
Vesting of restricted shares | — | — | — | — | — | — | 354,730 | 320 | — | — | 320 | |||||||||||||||||||||||
Issuance of Series C preferred shares | — | — | — | — | 6,886,442 | 69,758 | — | — | — | — | 69,758 | |||||||||||||||||||||||
Net loss and comprehensive loss for the year | — | — | — | — | — | — | — | — | — | (4,837 | ) | (4,837 | ) | |||||||||||||||||||||
As at December 31, 2013 | 13,025,765 | 5,346 | 7,247,070 | 11,952 | 6,886,442 | 69,758 | 38,563,121 | 3,009 | 2,069 | (6,753 | ) | 85,381 | ||||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | — | 305,649 | 395 | (255 | ) | — | 140 | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | 3,871 | — | 3,871 | |||||||||||||||||||||||
Vesting of restricted shares | — | — | — | — | — | — | 441,676 | 651 | — | — | 651 | |||||||||||||||||||||||
Net loss and comprehensive loss for the year | — | — | — | — | — | — | — | — | — | (22,311 | ) | (22,311 | ) | |||||||||||||||||||||
As at December 31, 2014 | 13,025,765 | 5,346 | 7,247,070 | 11,952 | 6,886,442 | 69,758 | 39,310,446 | 4,055 | 5,685 | (29,064 | ) | 67,732 | ||||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | — | 4,665,059 | 3,737 | (2,133 | ) | — | 1,604 | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | 8,167 | — | 8,167 | |||||||||||||||||||||||
Vesting of restricted shares | — | — | — | — | — | — | 100,076 | 353 | — | — | 353 | |||||||||||||||||||||||
Issuance of Class A subordinate voting shares upon initial public offering, net of offering costs of $14,259 | 1 | — | — | — | — | — | — | 8,855,000 | 136,251 | — | — | 136,251 | ||||||||||||||||||||||
Conversion of preferred shares to Class B multiple voting shares | (13,025,765 | ) | (5,346 | ) | (7,247,070 | ) | (11,952 | ) | (6,886,442 | ) | (69,758 | ) | 27,159,277 | 87,056 | — | — | — | |||||||||||||||||
Net loss and comprehensive loss for the year | — | — | — | — | — | — | — | — | — | (18,790 | ) | (18,790 | ) | |||||||||||||||||||||
As at December 31, 2015 | — | — | — | — | — | — | 80,089,858 | 231,452 | 11,719 | (47,854 | ) | 195,317 |
Years ended | ||||||||||
December 31, 2015 | December 31, 2014 | December 31, 2013 | ||||||||
Note | $ | $ | $ | |||||||
Cash flows from operating activities | ||||||||||
Net loss for the year | (18,790) | (22,311) | (4,837) | |||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||
Amortization and depreciation | 7,236 | 4,672 | 1,758 | |||||||
Stock-based compensation | 7,805 | 3,792 | 1,446 | |||||||
Vesting of restricted shares | 353 | 651 | 320 | |||||||
Loss on asset disposal | — | 100 | 73 | |||||||
Unrealized foreign exchange loss | 1,828 | 524 | 62 | |||||||
Changes in lease incentives | 3,541 | 7,292 | 236 | |||||||
Change in deferred revenue | 6,218 | 2,813 | 1,945 | |||||||
Changes in non-cash working capital items | 17 | 7,565 | 1,666 | 393 | ||||||
Net cash provided by (used in) operating activities | 15,756 | (801) | 1,396 | |||||||
Cash flows from investing activities | ||||||||||
Purchase of marketable securities | (111,154) | (20,131) | — | |||||||
Maturity of marketable securities | 48,350 | 2,375 | — | |||||||
Acquisitions of property and equipment | (16,525) | (20,573) | (3,462) | |||||||
Proceeds from disposal of property and equipment | — | 90 | — | |||||||
Acquisitions of intangible assets | (4,511) | (2,127) | (1,042) | |||||||
Acquisition of business, net of cash acquired | — | — | (828) | |||||||
Net cash used in investing activities | (83,840) | (40,366) | (5,332) | |||||||
Cash flows from financing activities | ||||||||||
Proceeds from initial public offering, net of issuance costs | 1 | 136,251 | — | — | ||||||
Issuance of Series C convertible preferred shares, net of issuance costs | — | — | 69,758 | |||||||
Proceeds from the exercise of stock options | 1,604 | 140 | 295 | |||||||
Net cash provided by financing activities | 137,855 | 140 | 70,053 | |||||||
Effect of foreign exchange on cash and cash equivalents | (1,654) | (549) | (243) | |||||||
Net increase (decrease) in cash and cash equivalents | 68,117 | (41,576) | 65,874 | |||||||
Cash and cash equivalents – Beginning of Year | 41,953 | 83,529 | 17,655 | |||||||
Cash and cash equivalents – End of Year | 110,070 | 41,953 | 83,529 | |||||||
Supplemental non-cash items | 17 |
1. | Nature of Business |
2. | Basis of Presentation and Consolidation |
3. | Significant Accounting Policies |
4. | Cash and Cash Equivalents |
5. | Financial Instruments |
Amount at Fair Value $ | Fair Value Measurements Using | ||||||||||
Level 1 $ | Level 2 $ | Level 3 $ | |||||||||
Assets: | |||||||||||
Cash equivalents: | |||||||||||
Money market funds | 59,655 | 59,655 | — | — | |||||||
U.S. term deposits | 21,259 | 21,259 | — | — | |||||||
Marketable securities: | |||||||||||
U.S. federal bonds | 35,970 | 35,970 | — | — | |||||||
Corporate bonds | 44,028 | — | 44,028 | — |
Amount at Fair Value $ | Fair Value Measurements Using | |||||||||
Level 1 $ | Level 2 $ | Level 3 $ | ||||||||
Assets: | ||||||||||
Cash equivalents: | ||||||||||
Money market funds | 31,271 | 31,271 | — | — | ||||||
Canadian guaranteed investment certificates | 1,294 | 1,294 | — | — | ||||||
U.S. term deposits | 3,500 | 3,500 | — | — | ||||||
Marketable securities: | ||||||||||
U.S. federal bonds | 5,502 | 5,502 | — | — | ||||||
Corporate bonds | 12,207 | — | 12,207 | — | ||||||
Derivatives: | ||||||||||
Foreign exchange forward contracts | 7 | — | 7 | — |
6. | Trade and Other Receivables |
2015 $ | 2014 $ | |||
Trade receivables | 1,701 | 838 | ||
Leasehold incentives receivable | 1,554 | 3,158 | ||
Unbilled revenues | 1,075 | 704 | ||
Refundable tax credits | 754 | 1,959 | ||
Sales tax receivable | 572 | 499 | ||
Other receivables | 433 | 69 | ||
6,089 | 7,227 |
7. | Other Current Assets |
2015 $ | 2014 $ | ||||
Prepaid expenses | 3,264 | 1,023 | |||
POS hardware | 1,550 | 290 | |||
Deposits | 1,389 | 175 | |||
Foreign exchange forward contracts | — | 7 | |||
6,203 | 1,495 |
8. | Property and Equipment |
2015 | ||||||||
Cost $ | Accumulated depreciation $ | Net book value $ | ||||||
Leasehold improvements | 23,225 | 2,057 | 21,168 | |||||
Computer equipment | 14,508 | 5,630 | 8,878 | |||||
Office furniture and equipment | 4,100 | 1,098 | 3,002 | |||||
41,833 | 8,785 | 33,048 |
2014 | ||||||||
Cost $ | Accumulated depreciation $ | Net book value $ | ||||||
Leasehold improvements | 15,014 | 352 | 14,662 | |||||
Computer equipment | 7,346 | 2,415 | 4,931 | |||||
Office furniture and equipment | 2,506 | 371 | 2,135 | |||||
24,866 | 3,138 | 21,728 |
2015 $ | 2014 $ | 2013 $ | ||||||
Cost of revenues | 3,086 | 1,599 | 572 | |||||
Sales and marketing | 1,040 | 795 | 344 | |||||
Research and development | 1,191 | 1,253 | 466 | |||||
General and administrative | 408 | 351 | 98 | |||||
5,725 | 3,998 | 1,480 |
9. | Intangible Assets |
2015 | ||||||||
Cost $ | Accumulated amortization $ | Net book value $ | ||||||
Software development costs | 4,238 | 1,143 | 3,095 | |||||
Purchased software | 3,668 | 1,242 | 2,426 | |||||
Domain names | 540 | 235 | 305 | |||||
8,446 | 2,620 | 5,826 |
2014 | ||||||||
Cost $ | Accumulated amortization $ | Net book value $ | ||||||
Software development costs | 1,925 | 445 | 1,480 | |||||
Purchased software | 1,806 | 588 | 1,218 | |||||
Domain names | 90 | 80 | 10 | |||||
3,821 | 1,113 | 2,708 |
2015 $ | 2014 $ | 2013 $ | ||||||
Cost of revenues | 750 | 608 | 240 | |||||
Sales and marketing | 186 | 33 | 32 | |||||
Research and development | 465 | 20 | 5 | |||||
General and administrative | 110 | 13 | 1 | |||||
1,511 | 674 | 278 |
Fiscal Year | Amount $ | |
2016 | 2,288 | |
2017 | 2,215 | |
2018 | 1,192 | |
2019 | 131 | |
Total | 5,826 |
10. | Accounts Payable and Accrued Liabilities |
2015 $ | 2014 $ | ||||
Trade accounts payable and trade accruals | 18,453 | 8,186 | |||
Other payables and accrued liabilities | 1,697 | 1,607 | |||
Accrued payroll taxes related to exercised stock options | 1,584 | — | |||
Employee related accruals | 1,150 | 539 | |||
Accrued sales tax | 805 | 2,182 | |||
23,689 | 12,514 |
11. | Lease Incentives |
2015 $ | 2014 $ | ||||
Lease incentives | 11,177 | 7,536 | |||
Other lease liabilities | 142 | 242 | |||
11,319 | 7,778 | ||||
Less: current portion | 822 | 485 | |||
Long-term portion | 10,497 | 7,293 |
12. | Credit Facilities |
13. | Commitments and Contingencies |
Fiscal Year | Amount $ | ||
2016 | 5,804 | ||
2017 | 7,809 | ||
2018 | 7,907 | ||
2019 | 7,958 | ||
2020 | 8,070 | ||
Thereafter | 42,594 | ||
Total future minimum lease payments | 80,142 |
14. | Shareholders’ Equity |
Shares Subject to Options Outstanding | Outstanding RSUs | |||||||||||||||||||
Number of Options (1) | Weighted Average Exercise Price $ | Remaining Contractual Term (in years) | Aggregate Intrinsic Value (2) $ | Weighted Average Grant Date Fair Value $ | Outstanding RSUs | Weighted Average Grant Date Fair Value $ | ||||||||||||||
Balance as at December 31, 2013 | 12,737,893 | 0.38 | — | — | — | — | — | |||||||||||||
Stock options granted | 2,985,495 | 5.28 | — | — | 5.63 | — | — | |||||||||||||
Stock options exercised | (305,649 | ) | 0.46 | — | — | — | — | — | ||||||||||||
Stock options forfeited | (386,351 | ) | 1.40 | — | — | — | — | — | ||||||||||||
Balance as at December 31, 2014 | 15,031,388 | 1.31 | 7.16 | 73,642 | — | — | — | |||||||||||||
Stock options granted | 1,259,025 | 22.16 | — | — | 12.16 | — | — | |||||||||||||
Stock options exercised | (4,665,059 | ) | 0.34 | — | — | — | — | — | ||||||||||||
Stock options forfeited | (421,328 | ) | 12.04 | — | — | — | — | — | ||||||||||||
RSUs granted | — | — | — | — | — | 503,701 | 32.01 | |||||||||||||
RSUs settled | — | — | — | — | — | — | — | |||||||||||||
RSUs forfeited | — | — | — | — | — | (75,135 | ) | 30.95 | ||||||||||||
Balance as at December 31, 2015 | 11,204,026 | 3.65 | 6.99 | 248,119 | — | 428,566 | 32.19 | |||||||||||||
Stock options exercisable as of December 31, 2015 | 6,902,359 | 0.82 | 6.03 | 172,415 |
• | Fair Value of Common Stock. Prior to the Company's IPO in May 2015, the Board of Directors, with input from management, exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of the Company's common stock as of the date of each option grant. Valuations of the Company’s stock were determined in accordance with the guidelines outlined in the American Institute of |
• | Expected Term. The Company determines the expected term based on the average period the stock options are expected to remain outstanding. The Company bases the expected term assumptions on its historical behavior combined with estimates of post-vesting holding period. |
• | Expected Volatility. The Company determines the price volatility factor based on the historical volatility of publicly traded industry peers. To determine its peer group of companies, the Company considers public companies in the technology industry and selects those that are similar to us in size, stage of life cycle, and financial leverage. The Company intends to continue to consistently apply this methodology using the same or similar public companies until a sufficient amount of historical information regarding the volatility of its own common stock price becomes available, or unless circumstances change such that the identified companies are no longer similar, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. |
• | Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes valuation model on the yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term of the stock options for each stock option group. |
• | Expected Dividend. The Company has not paid and does not anticipate paying any cash dividends in the foreseeable future and, therefore, uses an expected dividend yield of zero in the option pricing model. |
2015 | 2014 | 2013 | ||||||
Expected volatility | 64.3 | % | 62.4 | % | 73.9 | % | ||
Risk free interest rate | 1.62 | % | 1.82 | % | 1.67 | % | ||
Dividend yield | Nil | Nil | Nil | |||||
Average expected life | 5.26 | 5.73 | 6.06 |
Years ended | ||||||
December 31, 2015 | December 31, 2014 | December 31, 2013 | ||||
$ | $ | $ | ||||
Cost of revenues | 282 | 259 | 113 | |||
Sales and marketing | 1,099 | 696 | 354 | |||
Research and development | 4,509 | 2,776 | 1,152 | |||
General and administrative | 2,268 | 712 | 147 | |||
8,158 | 4,443 | 1,766 |
15. | Earnings per Share |
Years ended | ||||||||
December 31, 2015 | December 31, 2014 | December 31, 2013 | ||||||
Basic and diluted weighted average number of shares outstanding | 61,716,065 | 38,940,252 | 37,248,710 | |||||
The following items have been excluded from the diluted weighted average number of shares outstanding because they are anti-dilutive: | ||||||||
Stock options | 11,204,026 | 15,031,388 | 12,737,893 | |||||
Restricted share units | 428,566 | — | — | |||||
Restricted shares | 48,238 | 148,314 | 589,990 | |||||
Convertible preferred shares | — | 27,159,277 | 27,159,277 | |||||
11,680,830 | 42,338,979 | 40,487,160 |
16. | Income Taxes |
2015 $ | 2014 $ | 2013 $ | |||||||
Earnings (loss) before income taxes | (18,790 | ) | (22,311 | ) | (4,837 | ) | |||
Expected income tax expense (recovery) at Canadian statutory income tax rate of 26.51% (2014-26.51%) | (4,980 | ) | (5,915 | ) | (1,282 | ) | |||
Permanent differences | 1,333 | 1,203 | 435 | ||||||
Share issuance costs | (3,734 | ) | — | — | |||||
Effect of change in tax rates | — | — | (163 | ) | |||||
Utilization of tax credits | — | — | (93 | ) | |||||
Other | (8 | ) | (43 | ) | — | ||||
Foreign rate differential | (44 | ) | (3 | ) | (2 | ) | |||
Increase (decrease) in valuation allowance | 7,433 | 4,758 | 1,105 | ||||||
Provision for income tax (recovery) expense | — | — | — |
2015 $ | 2014 $ | |||||
Deferred tax assets | ||||||
Temporary differences on capital and intangible assets | 415 | 606 | ||||
Tax loss carryforwards | 3,799 | 3,415 | ||||
SR&ED expenditure carryforwards | 1,687 | 974 | ||||
Share issue costs | 3,345 | 39 | ||||
Investment tax credits | 1,253 | 497 | ||||
Lease accruals and other provisions | 4,316 | 1,664 | ||||
Total deferred tax assets | 14,815 | 7,195 | ||||
Valuation allowance | (14,011 | ) | (6,578 | ) | ||
804 | 617 | |||||
Deferred tax liabilities | ||||||
Capitalized software development costs | (804 | ) | (380 | ) | ||
Investment tax credits used or refunded | — | (237 | ) | |||
Total deferred tax liabilities | (804 | ) | (617 | ) | ||
Net deferred tax asset | — | — |
SR&ED Expenditures $ | Investment Tax Credits $ | Non-Capital Losses $ | |||||||
2031 | — | 45 | — | ||||||
2032 | — | 117 | 13 | ||||||
2033 | — | 232 | 11,235 | ||||||
2034 | — | 197 | 825 | ||||||
2035 | — | 895 | 2,191 | ||||||
Indefinite | 6,364 | — | — | ||||||
6,364 | 1,486 | 14,264 |
17. | Supplemental Cash Flow Information Items |
2015 $ | 2014 $ | 2013 $ | ||||||
Trade and other receivables | 1,176 | (3,930 | ) | (1,196 | ) | |||
Other current assets | (4,708) | (414) | (725) | |||||
Accounts payable and accrued liabilities | 11,097 | 6,010 | 2,314 | |||||
7,565 | 1,666 | 393 |
2015 $ | 2014 $ | 2013 $ | ||||||
Acquired property and equipment remaining unpaid | 1,295 | 853 | — | |||||
Acquired intangibles assets remaining unpaid | — | 250 | — | |||||
Capitalized stock-based compensation | 362 | 79 | 26 | |||||
Non-cash acquisitions of businesses | — | — | 404 |
18. | Geographical Information |
2015 | 2014 | 2013 | |||||||||||||||
Amount $ | % | Amount $ | % | Amount $ | % | ||||||||||||
Canada | 14,691 | 7.2 | % | 7,729 | 7.4 | % | 4,101 | 8.2 | % | ||||||||
United States | 144,748 | 70.5 | % | 72,149 | 68.7 | % | 31,743 | 63.2 | % | ||||||||
United Kingdom | 15,436 | 7.5 | % | 7,912 | 7.5 | % | 4,517 | 9.0 | % | ||||||||
Australia | 10,531 | 5.1 | % | 6,420 | 6.1 | % | 3,807 | 7.6 | % | ||||||||
Rest of World | 19,827 | 9.7 | % | 10,808 | 10.3 | % | 6,084 | 12.0 | % | ||||||||
205,233 | 100.0 | % | 105,018 | 100.0 | % | 50,252 | 100.0 | % |
2015 | 2014 | ||||||||||
Amount $ | % | Amount $ | % | ||||||||
Canada | 25,886 | 78.3 | % | 17,758 | 81.7 | % | |||||
United States | 7,162 | 21.7 | % | 3,970 | 18.3 | % | |||||
33,048 | 100.0 | % | 21,728 | 100.0 | % |
19. | Acquisitions |
20. | Comparative Figures |
(a) | “Affiliate” or “Affiliated” means, with respect to any specified Person, any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person (for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise); |
(b) | “Authorized Leave” means any leave of absence (paid or unpaid) approved in writing by the Corporation for a period of more than four (4) weeks that occurs while the Participant continues to be employed as a full-time employee by the Corporation or retained as a full-time Consultant by the Corporation and includes any parental leave, short term disability, or other bona fide paid or unpaid leave of absence or sabbatical period; |
(c) | “Board” means the board of directors of the Corporation as constituted from time to time, or a committee thereof to which authority has been delegated by the board of directors with respect to any particular functions of the board of directors, as set forth herein; |
(d) | “Business Day” means a day, other than a Saturday or Sunday, on which banking institutions in Ottawa, Ontario are not authorized or obligated by law to close; |
(e) | “Change of Control” means, unless the Board determines otherwise, the happening, in a single transaction or in a series of related transactions, of any of the following events: |
(i) | any transaction (other than a transaction described in clause (ii) below) pursuant to which any person or group of persons acting jointly or in concert acquires the direct or indirect beneficial ownership of securities of the Corporation representing 50% or more of the aggregate voting power of all of the Corporation’s then issued and outstanding securities entitled to vote in the election of directors of the Corporation, other than any such acquisition that occurs (A) upon the exercise or settlement of options or other securities granted by the Corporation under any of the Corporation’s equity incentive plans, or (B) as a result of the conversion of Multiple Voting Shares into Shares; |
(ii) | there is consummated an arrangement, amalgamation, merger, consolidation or similar transaction involving (directly or indirectly) the Corporation and, immediately after the consummation of such arrangement, amalgamation, merger, consolidation or similar transaction, |
(iii) | the sale, lease, exchange, license or other disposition of all or substantially all of the Corporation’s assets to a person other than a person that was an Affiliate of the Corporation at the time of such sale, lease, exchange, license or other disposition, other than a sale, lease, exchange, license or other disposition to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are beneficially owned by shareholders of the Corporation in substantially the same proportions as their beneficial ownership of the outstanding voting securities of the Corporation immediately prior to such sale, lease, exchange, license or other disposition; |
(iv) | the passing of a resolution by the Board or Shareholders to substantially liquidate the assets of the Corporation or wind up the Corporation’s business or significantly rearrange its affairs in one or more transactions or series of transactions or the commencement of proceedings for such a liquidation, winding-up or re-arrangement (except where such re-arrangement is part of a bona fide reorganization of the Corporation in circumstances where the business of the Corporation is continued and the shareholdings remain substantially the same following the re-arrangement); or |
(v) | individuals who, on the Effective Date, are members of the Board (the ”Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board. |
(f) | “Code” has the meaning given to that term in Appendix 1; |
(g) | “Consultant” has the meaning ascribed to that term in National Instrument 45-106 of the Canadian Securities Administrators; |
(h) | “Corporation” means Shopify Inc. and its respective successors and assigns; |
(i) | “Date of Grant” means the date on which a particular Option is granted by the Board as evidenced by the Grant Agreement pursuant to which the particular Option was granted; |
(j) | “Effective Date” has the meaning given to that term in Section 2.5; |
(k) | “Eligible Person” means any director, officer, employee or Consultant of the Corporation or any of its direct or indirect subsidiaries; |
(l) | “Exercise Notice” means an election to exercise Options granted to a Participant under this Plan, substantially in the form attached as Exhibit “B” to the Grant Agreement, as may be amended from time to time; |
(m) | “Exercise Period” means the period from the Vesting Date to the close of business on the Expiry Date during which a particular Option may be exercised in the manner described in Section 4.1; |
(n) | “Exercise Price” has the meaning given to that term in Section 3.2; |
(o) | “Expire” means, with respect to an Option or Legacy Option, the termination of such Option or Legacy Option, on the occurrence of which such Option or Legacy Option is void, incapable of exercise, and of no value whatsoever; and Expires and Expired have a similar meaning; |
(p) | “Expiry Date” means the date on which an Option Expires; |
(q) | “Fair Market Value” means, on any particular day, the Market Price of a Share, but if the Shares are not listed and posted for trading on an applicable stock exchange at the relevant time, it shall be the fair market value of the Share, as determined by the Board acting in good faith; |
(r) | “Grant Agreement” means an agreement between the Corporation and a Participant under which an Option is granted, substantially in the form attached hereto as Schedule “A”, as may be amended from time to time; |
(s) | “Incapacity” has the meaning given to that term in Section 4.3(c); |
(t) | “Incumbent Board” has the meaning given to that term in Section 1.1(e); |
(u) | “Legacy Option” means an option to purchase a newly issued Multiple Voting Share that is granted pursuant to the terms of the Legacy Option Plan; |
(v) | “Legacy Option Plan” means the Corporation’s Fourth Amended and Restated Incentive Stock Option Plan, as may be amended from time to time; |
(w) | “Long-Term Incentive Plan” means the Corporation’s long-term incentive plan, effective upon the Effective Date, as may be amended from time to time; |
(x) | “Market Price” means, on any particular day, the volume weighted average trading price of a Share on the New York Stock Exchange for the five (5) preceding days on which the Shares were traded, or on any other stock exchange as selected by the Board for these purposes; |
(y) | “Multiple Voting Shares” means the Class B multiple voting shares in the capital of the Corporation; |
(z) | “Option” means an option to purchase a newly issued Share that is granted to an Eligible Person pursuant to the terms of this Plan; |
(aa) | “Participant” means an Eligible Person to whom an Option has been granted; |
(bb) | “Person” means any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof; |
(cc) | “Plan” means this Stock Option Plan, as may be amended from time to time; |
(dd) | “Share” means a Class A subordinate voting share in the capital of the Corporation; |
(ee) | “Share Compensation Arrangement” means any stock option, stock option plan, employee stock purchase plan, long-term incentive plan or any other compensation or incentive mechanism of the Corporation involving the issuance or potential issuance of securities of the Corporation from treasury, including without limitation a Share purchase from treasury which is financially assisted by the Corporation by way of a loan, guarantee or otherwise, but does not include any such arrangement which does not involve the issuance from treasury or potential issuance from treasury of securities of the Corporation; |
(ff) | “Shareholders” means holders of Shares or Multiple Voting Shares; |
(gg) | “Stock Exchange” means the TSX or, if the Shares are not listed or posted for trading on the TSX but are listed and posted for trading on another stock exchange, the stock exchange on which the Shares are listed or posted for trading; |
(hh) | “Surrender” has the meaning given to that term in Section 4.1(c); |
(ii) | “Surrender Notice” has the meaning given to that term in Section 4.1(c); |
(jj) | “Termination Date” has the meaning given to that term in Section 4.3(c); |
(kk) | “TSX” means the Toronto Stock Exchange; and |
(ll) | “Vesting Date” means the date or dates determined in accordance with the terms of the Grant Agreement entered into in respect of such Options (as described in Section 3.3), on and after which a particular Option, or any part thereof, may be exercised, subject to amendment or acceleration from time to time in accordance with the terms hereof or the terms of the Grant Agreement. |
(a) | Whenever the Board is to exercise discretion or authority in the administration of the terms and conditions of this Plan, the term “discretion” or “authority” means the sole and absolute discretion of the Board. |
(b) | In the Plan, words importing the singular shall include the plural and vice versa and words importing any gender include any other gender. |
(c) | Unless otherwise specified in the Participant’s Grant Agreement, all references to money amounts are to United States currency. |
(d) | As used herein, the terms “Article” and “Section” mean and refer to the specified Article and Section of this Plan, respectively. |
(e) | The words “including” and “includes” mean “including (or includes) without limitation”. |
(f) | The Board shall administer this Plan. Nothing contained herein shall prevent the Board from adopting other or additional Share Compensation Arrangements or other compensation arrangements. |
(g) | Subject to the terms and conditions set forth herein, the Board has the authority: (i) to grant Options to purchase Shares to Eligible Persons; (ii) to determine the terms, including the limitations, restrictions, vesting period and conditions, if any, of such grants; (iii) to interpret this Plan and all agreements entered into hereunder; (iv) to adopt, amend and rescind such administrative guidelines and other rules relating to this Plan as it may from time to time deem advisable; and (v) to make all other determinations and to take all other actions in connection with the implementation and administration of this Plan as it may deem necessary or advisable. The Board’s guidelines, rules, interpretations, and determinations shall be conclusive and binding upon the Corporation, its subsidiaries, and all Participants, Eligible Persons and their legal, personal representatives and beneficiaries. |
(h) | Notwithstanding the foregoing or any other provision contained herein, the Board shall have the right to delegate the administration and operation of this Plan, in whole or in part, to a committee thereof. For greater certainty, any such delegation by the Board may be revoked at any time at the Board’s sole discretion. |
(i) | No member of the Board or any person acting pursuant to authority delegated by it hereunder shall be liable for any action or determination in connection with the Plan made or taken in good faith, and each member of the Board and each such person shall be entitled to indemnification by the Corporation with respect to any such action or determination. |
(j) | The Board may adopt such rules or regulations and vary the terms of this Plan and any grant hereunder as it considers necessary to address tax or other requirements of any applicable non-Canadian jurisdiction, including without limitation Sections 422 and 409A of the Code (with respect to Participants who are subject to taxation in the United States). |
(k) | The Plan shall not in any way fetter, limit, obligate, restrict or constrain the Board with regard to the allotment or issue of any Shares or any other securities in the capital of the Corporation other than as specifically provided for in the Plan. |
(a) | Subject to Section 2.2(c), the securities that may be acquired by Participants under this Plan shall consist of authorized but unissued Shares. |
(b) | The maximum number of Shares reserved for issuance, in the aggregate, under this Plan and the Long-Term Incentive Plan shall initially be equal to 2,500,000 Shares plus the number of Shares equal to the number of Multiple Voting Shares subject to the Legacy Option Plan’s available reserve as of the Effective Date. The number of Shares available for issuance, in the aggregate, under this Plan and the Long-Term Incentive Plan will be automatically, and without any further action on the part of the Board or the Shareholders, increased on January 1 of each year, beginning on January 1, 2016 and ending on January 1, 2026, in an amount equal to 5% of the aggregate number of outstanding Shares and Multiple Voting Shares on December 31 of the preceding calendar year. Notwithstanding the foregoing, the Board may |
(c) | If there is a change in the outstanding Shares by reason of any stock dividend or split, or in connection with a reclassification, reorganization or other change of Shares, consolidation, distribution (other than an ordinary course dividend in cash or Shares, but including for greater certainty shares or equity interests in a subsidiary or business unit of the Corporation or one of its subsidiaries or cash proceeds of the disposition of such a subsidiary or business unit), merger or amalgamation or similar corporate transaction, the Board shall make, subject to any required approval of the Stock Exchange, the appropriate substitution or adjustment in order to maintain the Participants’ economic rights in respect of their Options in connection with such change, including without limitation: |
(vi) | adjustments to the Exercise Price without any change in the total price applicable to the unexercised portion of the Option, but with a corresponding adjustment in the price for each Share covered by the Option, |
(vii) | adjustments to the number of Shares to which a Participant is entitled upon exercise of an Option, |
(viii) | adjustments permitting the immediate exercise of any outstanding Options that are not otherwise exercisable, or |
(ix) | adjustments to the number or kind of Shares or other securities reserved for issuance pursuant to the Plan and to the number or kind of Shares or other securities or other property issuable upon the exercise of Options. |
(a) | The Board may, in its sole discretion, suspend or terminate the Plan at any time or from time to time and/or amend or revise the terms of the Plan or of any Option granted under the Plan and any Grant Agreement relating thereto, provided that such suspension, termination, amendment, or revision shall: |
(i) | not adversely alter or impair any Option previously granted except as permitted by the terms of this Plan; |
(ii) | be in compliance with applicable law and subject to any regulatory approvals including, where required, the approval of the Stock Exchange; and |
(iii) | be subject to Shareholder approval, where required by law, the requirements of the Stock Exchange or this Plan. |
(b) | If the Plan is terminated, the provisions of the Plan and any administrative guidelines and other rules and regulations adopted by the Board and in force with respect to outstanding Options will continue in effect as long as any such Option or any rights pursuant thereto remain outstanding and, notwithstanding the termination of the Plan, the Board will remain able to make such interpretations and amendments to the Plan or the Options as they would have been entitled to make if the Plan were still in effect. |
(c) | Subject to Section 2.3(a), the Board may from time to time, in its discretion and without the approval of Shareholders, make changes to the Plan or any Option that do not require the approval of Shareholders under Section 2.3(d), which may include but are not limited to: |
(i) | any amendment of a “housekeeping” nature, including without limitation those made to clarify the meaning of an existing provision of the Plan, correct or supplement any provision of the Plan that is inconsistent with any other provision of the Plan, correct any grammatical or typographical errors or amend the definitions in the Plan regarding administration of the Plan; |
(ii) | a change to the vesting provisions of the Plan or any Option; |
(iii) | a change to the provisions governing assignability and the effect of termination of a Participant’s employment, contract or office; |
(iv) | the addition of a form of financial assistance and any amendment to a financial assistance provision which is adopted; |
(v) | a change to advance the date on which any Option may be exercised under the Plan; |
(vi) | a change to the definition of Eligible Persons; |
(vii) | the addition of a deferred or performance share unit or any other provision which results in Participants receiving securities while no cash consideration is received by the Corporation; and |
(viii) | an amendment of the Plan or an Option as necessary to comply with applicable law or the requirements of the Stock Exchange or any other regulatory body having authority over the Corporation, the Plan, the Participants or the Shareholders. |
(d) | Shareholder approval is required for the following amendments to the Plan: |
(i) | any increase in the maximum number of Shares that may be issuable from treasury pursuant to Options granted under the Plan (as set out in Section 2.2), other than an adjustment pursuant to Section 2.2(c); |
(ii) | any reduction in the Exercise Price of an Option after the Option has been granted or any cancellation of such Option and the substitution of that Option with a new Option with a reduced Exercise Price, except in the case of an adjustment pursuant to Section 2.2(c); |
(iii) | any extension of the maximum Expiry Date of an Option, except in case of an extension due to a black-out period; and |
(iv) | any amendment to Section 2.3(c) and Section 2.3(d). |
(a) | The Plan (including any amendments thereto), the terms of the grant of any Option under the Plan, the grant and exercise of any Option, and the Corporation’s obligation to sell and deliver Shares upon the exercise of any Option, shall be subject to all applicable federal, provincial, state and foreign laws, rules and regulations, the rules and regulations of the Stock Exchange and any other stock exchange on which the Shares are listed or posted for trading, and to such approvals by any regulatory or governmental agency as may, in the opinion of counsel to the Corporation, be required. The Corporation shall not be obliged by any provision of the Plan or the grant of any Option hereunder to issue or sell Shares in violation of such laws, rules and regulations or any condition of such approvals. |
(b) | No Option shall be granted, and no Shares shall be issued or sold hereunder, where such grant, issue, or sale would require registration of the Plan or of Shares under the securities laws of any foreign jurisdiction (other than the United States), and any purported grant of any Option or purported issue or sale of Shares hereunder in violation of this provision shall be void. |
(c) | The Corporation shall have no obligation to issue any Shares pursuant to this Plan unless upon official notice of issuance such Shares shall have been duly listed with the Stock Exchange (and any other stock exchange on which the Shares are listed or posted for trading). Shares issued and sold to Participants pursuant to the exercise of Options may be subject to limitations on sale or resale under applicable securities laws. |
(d) | If Shares cannot be issued to a Participant upon the exercise of an Option due to legal or regulatory restrictions, the obligation of the Corporation to issue such Shares shall terminate and any funds paid to the Corporation in connection with the exercise of such Option will be returned to the applicable Participant as soon as practicable. |
(i) | the Participant to whom the Options were granted; or |
(ii) | with the Corporation’s prior written approval and subject to such conditions as the Corporation may stipulate, such Participant’s family or retirement savings trust or any registered retirement savings plans or registered retirement income funds of which the Participant is and remains the annuitant; or |
(iii) | upon the Participant’s death, by the legal representative of the Participant’s estate; or |
(iv) | upon the Participant’s Incapacity, the legal representative having authority to deal with the property of the Participant; |
(a) | No Participant has any claim or right to be granted an Option (including, without limitation, an Option granted in substitution for any Option that has expired pursuant to the terms of this Plan), and the granting of any Option does not and is not to be construed as giving a Participant a right to continued employment or to remain a Consultant, director, officer or employee, as the case may be, of the Corporation or an Affiliate of the Corporation. Nothing contained in this Plan or in any Option granted under this Plan shall interfere in any way with the rights of the Corporation or an Affiliate of the Corporation in connection with the employment, retention or termination of any such person. |
(b) | No Participant has any rights or privileges as a shareholder of the Corporation in respect of Shares issuable on the exercise of rights to acquire Shares under any Option until the allotment and issuance to the Participant of certificates representing such Shares or the entry of such Participant’s name on the share register of the Corporation as the holder of Shares, and that person becomes the holder of record of those Shares. The Participant or the Participant’s legal representative shall not, by reason of the grant of any Option, be considered to be a shareholder of the Corporation until an Option has been duly exercised and shares have been issued in respect thereof. |
(c) | The Corporation makes no representation or warranty as to the future market value of the Shares or with respect to any income tax matters affecting the Participant resulting from the grant or exercise of an Option or transactions in the Shares. With respect to any fluctuations in the market price of Shares, neither the Corporation, nor any of its directors, officers, employees, shareholders or agents shall be liable for anything done or omitted to be done by such person or any other person with respect to the price, time, quantity or other conditions and circumstances of the issuance of Shares hereunder, or in any other manner related to the Plan. For greater certainty, no amount will be paid to, or in respect of, a Participant under the Plan or pursuant to any other arrangement, and no additional Options will be granted to such Participant to compensate for a downward fluctuation in the price of the Shares, nor will any other form of benefit be conferred upon, or in respect of, a Participant for such purpose. The Corporation does not assume responsibility for the income or other tax consequences resulting to the Participant and they are advised to consult with their own tax advisors. |
(d) | Subject to the provisions of this Plan, the Board may grant Options to any Eligible Person upon the terms, conditions and limitations set forth herein or such other terms, conditions and limitations as the Board may determine and set forth in the Grant Agreement; provided that no Option in respect of which Shareholder approval is required under the rules of the Stock Exchange is granted until the time that such grant has been approved by the Shareholders. |
(e) | An Option shall be evidenced by a Grant Agreement, signed on behalf of the Corporation. |
(f) | The grant of an Option to, or the exercise of an Option by, a Participant under the Plan shall neither entitle such Participant to receive nor preclude such Participant from receiving subsequently granted Options. |
(e) | All Options granted hereunder shall vest in accordance with the terms of the Grant Agreement entered into in respect of such Options. The Board has the right to accelerate the date upon which any Option becomes exercisable notwithstanding the vesting schedule set forth for such Option, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration. |
(f) | Notwithstanding any other provision of the Plan, unless otherwise approved by the Board, the vesting of any Options granted hereunder shall be suspended and postponed during any period of Authorized Leave and, upon a Participant’s return from such Authorized Leave, the vesting of such Options shall be extended by a period equivalent to such period of Authorized Leave. Notwithstanding the foregoing, upon a Participant’s return from an Authorized Leave that was a parental leave, the rate of vesting of such Participant’s Options shall be accelerated to twice the rate provided for in the Participant’s Grant Agreement until such time as the Participant holds vested Options in accordance with the original schedule of Vesting Dates provided for in the Participant’s Grant Agreement. For certainty, nothing contained herein shall limit the effect of Section 4.3 of the Plan upon the termination of any Participant’s employment or service as a Consultant, and the calculation of the number of Options vested as of a Participant’s Termination Date for purposes thereof shall take into account any suspension, postponement or adjustment of the vesting schedule applicable to such Options contemplated by this Section 3.3(b). |
(e) | Vested Options may only be exercised during the Exercise Period by the Participant or upon the Participant’s death or Incapacity, his or her legal representative (provided that such legal representative shall first deliver evidence satisfactory to the Corporation of entitlement to exercise such vested Options). Subject to the restrictions set out in this Plan and to any alternative exercise procedure which may be established from time to time by the Board, Options to acquire Shares may be exercised by delivering to the Corporation an Exercise Notice, together with a bank draft, certified cheque or other form of payment acceptable to the Corporation in an amount equal to the aggregate Exercise Price of the Shares to be purchased pursuant to the exercise of the Options and, if required by Section 2.6, the amount necessary to satisfy any source deductions or withholding taxes. |
(f) | Pursuant to the Exercise Notice, a Participant may choose to undertake a “cashless exercise” with the assistance of a broker in order to facilitate the exercise of such Participant’s Options. The “cashless exercise” procedure may include a sale of such number of Shares as is necessary to raise an amount equal to the aggregate Exercise Price for all Options being exercised by that Participant under an Exercise Notice. Pursuant to the Exercise Notice, the Participant may authorize the broker to sell Shares on the open market by means of a short sale and forward the proceeds of such short sale to the Corporation to satisfy the Exercise Price, promptly following which the Corporation shall issue the Shares underlying the number of Options as provided for in the Exercise Notice. The Participant shall also comply with Section 2.6 of this Plan with regards to any applicable withholding tax, and shall comply with all such other procedures and policies as the Corporation may prescribe or determine to be necessary or advisable from time to time in connection with such “cashless exercise.” |
(g) | In addition, in lieu of exercising any vested Option in the manner described in this Section 4, and pursuant to the terms of this Section 4, a Participant may, by surrendering an Option (“Surrender”) with a properly endorsed notice of Surrender to the Secretary of the Corporation, substantially in the form of Exhibit “C” to the Grant Agreement (a “Surrender Notice”), elect to receive that number of Shares calculated using the following formula, after deduction of any income tax and other amounts required by law to be withheld pursuant to Section 2.6: |
(h) | Where Shares are to be issued to the Participant pursuant to the terms of this Section 4.1, as soon as practicable following the receipt of the Exercise Notice and, if Options are exercised only in accordance with the terms of Section 4.1(a), the required bank draft, certified cheque or other acceptable form of payment, the Corporation shall duly issue such Shares to the Participant as fully paid and non-assessable. |
(g) | The Exercise Period shall be determined by the Board in its sole and absolute discretion at the time the Option is granted, and unless otherwise provided in the Participant’s Grant Agreement: |
(i) | each Option shall Expire ten (10) years after the Date of Grant; |
(ii) | the Exercise Period shall be automatically reduced or the Expiry Date postponed in accordance with this Article 4 upon the occurrence of any of the events referred to therein; and |
(iii) | no Option in respect of which Shareholder approval is required under the rules of the Stock Exchange shall be exercisable until the time that such Option has been approved by the Shareholders. |
(h) | Notwithstanding any other provision of the Plan, if the Expiry Date of an Option falls on a date upon which such Participant is prohibited from exercising such Option due to a black-out period or other trading restriction imposed by the Corporation, then the Expiry Date of such Option shall be automatically extended to the tenth (10th) Business Day following the date the relevant black-out period or other trading restriction imposed by the Corporation is lifted, terminated or removed; provided, however, that notwithstanding the foregoing, the Expiry Date of an Option shall in no case extend beyond the tenth (10th) anniversary of the date on which it is granted. |
(a) | Subject to Section 4.2, unless otherwise provided in the Participant’s Grant Agreement, employment agreement or consulting agreement: |
(ix) | if, at any time, a Participant ceases to be a full-time employee of the Corporation or a subsidiary as a result of the Participant’s retirement with the concurrence of the Board, any Options granted to such Participant and vested as of the Termination Date (as defined below) shall remain exercisable by such Participant until the earlier of: (i) 90 days following the Termination Date, and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date, all unvested Options of such Participant shall expire and such Participant shall no longer be eligible for a grant of Options; |
(x) | if, at any time, a Participant ceases to be a full-time employee of the Corporation or a subsidiary as a result of the Participant’s death or Incapacity, any Options granted to such Participant and vested as of the Termination Date shall remain exercisable by such Participant (or, in accordance with Section 2.7, the Participant’s legal representative) until the earlier of: (i) one year following the date of death or the date on which the Board determines that the Incapacity will prevent the employee from fulfilling his or her full-time duties with the Corporation, and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date, all unvested Options of such Participant shall expire; |
(xi) | if, at any time, a Participant ceases to be a full-time employee of the Corporation or a subsidiary as a result of the Participant’s termination for cause, then, as of the Termination Date, the vested and unvested Options granted to such Participant shall expire and be of no further force or effect whatsoever and such Participant shall no longer be eligible for a grant of Options; |
(xii) | if, at any time, a Participant ceases to be a full-time employee of the Corporation or a subsidiary as a result of the Participant’s resignation, then any Options granted to such Participant and vested as of the Termination Date shall remain exercisable by such Participant until the earlier of: (i) 90 days following the Termination Date, and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date, all unvested Options granted to such Participant shall expire and be of no further force or effect whatsoever and such Participant shall no longer be eligible for a grant of Options; |
(xiii) | if, at any time, a Participant ceases to be a full-time employee of the Corporation or a subsidiary as a result of the Participant’s dismissal without cause, any Options granted to such Participant and vested as of the Termination Date shall remain exercisable by such Participant until the earlier of: (i) 90 days following the Termination Date, and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date, all unvested Options of such Participant shall expire (for certainty, without regard to any period of reasonable notice that the Corporation or a subsidiary, as the case may be, may be required at law to provide to the Participant) and such Participant shall no longer be eligible for a grant of Options; |
(xiv) | where, in the case of a Consultant, the Participant’s consulting agreement or arrangement terminates by reason of: (i) termination by the Corporation or an Affiliate for any reason whatsoever other than for material breach of the consulting agreement or arrangement (whether or not such termination is effected in compliance with any termination provisions contained in the Participant’s consulting agreement or arrangement); or (ii) voluntary termination by the Participant, then any Options held by the Participant that are exercisable at the Termination Date continue to be exercisable by the Participant until the earlier of: (A) the date that is 90 days from the Termination Date; and (B) the date on which the particular Options expire in accordance with their terms. Any Options held by the Participant that are not exercisable at the Termination Date immediately expire and are cancelled on such date; |
(xv) | where, in the case of a Consultant, the Participant’s consulting agreement or arrangement terminates by reason of the death or Incapacity of the Participant, then any Options held by the Participant that are exercisable at the date of the death or Incapacity of the Participant continue to be exercisable by the Participant (or, in accordance with Section 2.7, the Participant’s legal representative) until the earlier of: (A) the date that is one year from the date of the death or Incapacity of the Participant; and (B) the date on which the particular Options expire in accordance with their terms. Any Options held by the Participant that are not exercisable at the date of the death or Incapacity of the Participant immediately expire and are cancelled on such date; |
(xvi) | where, in the case of a Consultant, the Participant’s consulting agreement or arrangement is terminated by the Corporation or an Affiliate for material breach of the consulting agreement or arrangement (whether or not such termination is effected in compliance with any termination provisions contained in the Participant’s consulting agreement or arrangement), then any Options held by the Participant, whether or not such Options are exercisable at the Termination Date, immediately expire and are cancelled on the Termination Date at a time determined by the Board, in its discretion; |
(xvii) | if, at any time, a Participant ceases to be a director, officer or member of an advisory board of the Corporation or a subsidiary (and is not or does not continue as a full-time employee of the Corporation or a subsidiary) for a reason other than the death or Incapacity of the Participant, the Options granted to such Participant and vested as of the Termination Date may be exercised by such Participant until the earlier of: (i) 90 days following the Termination Date, and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date, all unvested Options granted to such Participant shall cease and terminate and be of no further force or effect whatsoever; and |
(xviii) | if, at any time, a Participant ceases to be a director, officer or member of an advisory board of the Corporation or a subsidiary (and is not or does not continue as a full-time employee of the Corporation or a subsidiary) as a result of the Participant’s death or Incapacity, any Options granted to such Participant and vested as of the Termination Date shall remain exercisable by such Participant (or, in accordance with Section 2.7, the Participant’s legal representative) until the earlier of: (i) the date that is one year from the date of the death or Incapacity of the Participant; and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date, all unvested Options granted to such Participant shall cease and terminate and be of no further force or effect whatsoever. |
(b) | Notwithstanding any other provisions of this Section 4.3, the Board may extend the expiration date of vested and unvested Options of a Participant who ceases to be a full-time employee, Consultant, officer or director of the Corporation or a subsidiary beyond the expiry dates set out above, provided that such extended dates are not later than the initial assigned maximum expiry date of any such Option. |
(c) | For purposes of the foregoing: |
(i) | in the case of a Participant whose employment or term of office with the Corporation or a subsidiary terminates in the circumstances set out in Section 4.3, the date that is designated by the Corporation or a subsidiary, as the case may be, as the last day of the Participant’s employment or term of office with the Corporation or a subsidiary, as the case may be, provided that in the case of termination of employment by voluntary resignation by the Participant, such date shall not be earlier than the date notice of resignation was given, and “Termination Date” specifically does not mean the date on which any period of reasonable notice that the Corporation or a subsidiary, as the case may be, may be required at law to provide to the Participant, would expire; and |
(ii) | in the case of a Participant who is a Consultant and whose consulting agreement or arrangement with the Corporation or a subsidiary, as the case may be, terminates in the circumstances set out in Section 4.3, the date that is designated by the Corporation or a subsidiary, as the case may be, as the date on which the Participant’s consulting agreement or arrangement is terminated, provided that in the case of voluntary termination by the Participant, such date shall not be earlier than the date notice of voluntary termination was received by the Corporation, and “Termination Date” specifically does not mean the date on which any period of notice of termination that the Corporation or a subsidiary, as the case may be, may be required to provide to the Participant under the terms of the consulting agreement or arrangement, would expire. |
(a) | Notwithstanding anything else in this Plan or any Grant Agreement, the Board has the right to provide for the conversion or exchange of any outstanding Options into or for options, rights or other securities in any entity participating in or resulting from a Change of Control. |
(b) | Upon the Corporation entering into an agreement relating to a transaction which, if completed, would result in a Change of Control, or otherwise becoming aware of a pending Change of Control, the Corporation shall give written notice of the proposed Change of Control to the Option holders, together with a description of the effect of such Change of Control on outstanding Options, not less than seven (7) days prior to the closing of the transaction resulting in the Change of Control. |
(c) | The Board may, in its sole discretion, accelerate the vesting and/or the expiry date of any or all outstanding Options to provide that, notwithstanding the vesting provisions of such Options or any Grant Agreement, such designated outstanding Options shall be fully vested and conditionally exercisable upon (or prior to) the completion of the Change of Control provided that the Board shall not, in any case, authorize the exercise of Options pursuant to this Section 4.4(c) beyond the expiry date of the Options. If the Board elects to accelerate the vesting and/or the expiry date of the Options, then if any of such Options are not exercised within seven (7) days after the Option holders are given the notice contemplated in Section 4.4(b) (or such later expiry date as the Board may prescribe), such unexercised Options shall, unless the Board otherwise determines, terminate and expire following the completion of the proposed Change of Control. If, for any reason, the Change of Control does not occur within the contemplated time period, the acceleration of the vesting and the expiry date of the Options shall be retracted and vesting shall instead revert to the manner provided in the Grant Agreement. |
(d) | To the extent that the Change of Control would also result in a capital reorganization, arrangement, amalgamation or reclassification of the share capital of the Corporation and the Board does not accelerate the vesting and/or the expiry date of Options pursuant to Section 4.4(c), the Corporation shall make adequate provisions to ensure that, upon completion of the proposed Change of Control, the number and |
(e) | Notwithstanding anything else to the contrary herein, in the event of a potential Change of Control, the Board shall have the power, in its sole discretion, to modify the terms of this Plan and/or the Options (including, for greater certainty, to cause the vesting of all unvested Options) to assist the Participants to tender into a take-over bid or other transaction leading to a Change of Control. For greater certainty, in the event of a take-over bid or other transaction leading to a Change of Control, the Board shall have the power, in its sole discretion, to permit Participants to conditionally exercise their Options, such conditional exercise to be conditional upon the take-up by such offeror of the Shares or other securities tendered to such take-over bid in accordance with the terms of such take-over bid (or the effectiveness of such other transaction leading to a Change of Control). If, however, the potential Change of Control referred to in this Section 4.4(e) is not completed within the time specified therein (as the same may be extended), then notwithstanding this Section 4.4(e) or the definition of “Change of Control”: (i) any conditional exercise of vested Options shall be deemed to be null, void and of no effect, and such conditionally exercised Options shall for all purposes be deemed not to have been exercised, (ii) Shares which were issued pursuant to exercise of options which vested pursuant to this Section 4.4 shall be returned by the Participant to the Corporation and reinstated as authorized but unissued Shares, and (iii) the original terms applicable to Options which vested pursuant to this Section 4.4 shall be reinstated. |
1. | Interpretation |
(i) | For the purposes of this Appendix, the following terms have the following meanings: |
(i) | “Code” means the United States Internal Revenue Code of 1986, as amended, and any applicable United States Treasury Regulations and other binding regulatory guidance thereunder; |
(ii) | “Incentive Stock Option” means any Option granted under the Plan which is designated in the Grant Agreement (at the time it is granted) as an incentive stock option within the meaning of Section 422 of the Code or any successor thereto and satisfies the requirements of such section; |
(iii) | “Non-Qualified Option” means any Option granted under the Plan to a U.S. Participant which is not an Incentive Stock Option; |
(iv) | “Ten Percent Shareholder” means a U.S. Participant who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or any subsidiary of the Corporation, as applicable (determined in accordance with Section 422 of the Code); |
(v) | “Separation From Service” shall have the meaning as set forth in United States Treasury Regulation Section 1.409A-1(h) (after giving effect to the presumptions contained therein); and |
(vi) | “U.S. Participant” shall have the meaning set forth in Section 2(a), below. |
(j) | The Plan and this Appendix are complementary to each other and shall, with respect to Options granted to U.S. Participants, be read and deemed as one. In the event of any contradiction, whether |
2. | Application |
(a) | The following special rules and limitations are applicable to Options issued under the Plan to Participants subject to taxation in the United States (referred to hereunder as “U.S. Participants”) at the time of grant. |
(b) | Incentive Stock Options may be granted with respect to a maximum of 2,500,000 Shares. |
(c) | To the extent that the aggregate fair market value (determined as of the time the Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the U.S. Participant under all Share Compensation Arrangements of the Corporation and/or its Affiliates (if applicable) exceeds US$100,000 during any calendar year, the Options or portions thereof that exceed such limit (according to the order in which they are granted) shall be treated as Non-Qualified Options in accordance with Section 422(d) of the Code or any successor thereto, notwithstanding any contrary provision of the Plan and/or Grant Agreement. |
(d) | No U.S. Participant shall be permitted to defer the recognition of income beyond the exercise date of a Non-Qualified Option or beyond the date that the Shares received upon the exercise of an Incentive Stock Option are sold. |
(e) | Each U.S. Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or for the account of such U.S. Participant in connection with the Plan (including any taxes and penalties under Section 409A), and neither the Corporation nor any Affiliate of the Corporation shall have any obligation to pay, indemnify or otherwise hold such U.S. Participant (or any beneficiary) harmless from any or all of such taxes or penalties. |
(f) | The Corporation and its Affiliates, if applicable, shall withhold taxes according to the requirements of applicable laws, rules, and regulations, including the withholding of taxes at source to satisfy any applicable federal, provincial, state, or local tax withholding obligation and employment taxes. |
(g) | Each recipient of an Option hereunder who is or who becomes a U.S. Participant is advised to consult with his or her personal tax advisor with respect to the tax consequences under federal, state, local and other tax laws of the receipt and/or exercise of an Option hereunder. |
(h) | Without derogating from the powers and authorities of the Board detailed in the Plan, and unless specifically required under applicable law, the Board shall also have the sole and full discretion and authority to administer the provisions of this Appendix and all actions related thereto including, in addition to any powers and authorities specified in the Plan, the performance, from time to time and at any time, of either or both of the following: |
(i) | deciding whether to issue Options as Incentive Stock Options or as Non-Qualified Options; and |
(ii) | adopting standard forms of Grant Agreements to be applied with respect to U.S. Participants, incorporating and reflecting, inter alia, relevant provisions regarding the grant of Options |
3. | Exercise Price |
4. | Expiry of Option/Trading Blackouts |
5. | Disqualifying Disposition |
6. | Adjustments to Options |
7. | Amendment of Appendix |
8. | Ten Percent Shareholders |
(a) | If any U.S. Participant to whom an Incentive Stock Option is to be granted under this Plan is, at the time of the grant of such Option, a Ten Percent Shareholder, then the following special provisions shall apply: |
(x) | the per share price at which Shares may be purchased upon the exercise of an Incentive Stock Option shall be no less 110% of the fair market value of a Share at such time as the Option is granted (as determined under the applicable provisions of the Code), and |
(xi) | the maximum term of the Option shall not exceed five (5) years from the date the Option is granted. |
(b) | Subject to the provisions of this Section 8 regarding Ten Percent Shareholders, no Incentive Stock Option may be granted hereunder to a U.S. Participant following the expiry of ten (10) years after the date on which this Plan is adopted by the Board. |
(a) | Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Plan. |
(b) | Words importing the singular shall include the plural and vice versa and words importing any gender include any other gender. |
(c) | Unless otherwise specified herein, all references to money amounts are to United States currency. |
(d) | The words “including” and “includes” mean “including (or includes) without limitation” |
Corporation: | SHOPIFY INC. |
Participant: | __________________________________ |
Participant: | [●] |
Number of Options | [●] |
Exercise Price: | [●] |
Date of Grant: | [●] |
Vesting Schedule | [●] |
Expiry Date | [●] |
Type of Option | [Incentive Stock Option/Non-Qualified Option] |
Number of Shares to be Acquired: | _____________________________ | |
Option Exercise Price (per Share): | $_____________________________ | |
Aggregate Purchase Price: | $_____________________________ | |
Amount enclosed that is payable on account of any Source Deductions relating to this Option exercise (contact the Corporation for details of such amount): | $_____________________________ | |
□ Or check here if alternative arrangements have been made with the Corporation; |
Signature of Option Holder | ||
Name of Option Holder (Please Print) |
Signature of Option Holder | ||
Name of Option Holder (Please Print) |
2. | Term of Plan |
(a) | The shares that may be issued pursuant to the exercise of options (“Options”) granted under the Plan (including, for greater certainty, all options granted under the Prior Plan) are Class B multiple voting shares (the “Shares”) of the Corporation. |
(b) | The aggregate number of Shares reserved for issuance under the Plan is 18,216,207 Shares, subject to increase or decrease by reason of amalgamations, consolidations or subdivisions as provided in Section 15. No Option may be granted if such grant would have the effect of causing the total number of Shares subject to Options to exceed the above-noted total number of Shares reserved for issuance pursuant to the exercise of Options. |
(c) | Notwithstanding any other provision of this Plan, from and after the completion of an initial public offering of any securities of the Corporation (an “IPO”), no additional Options shall be granted under this Plan. |
4. | Administration |
(a) | The Plan shall be administered by the Board or any committee of directors of the Corporation designated by the Board (such designated directors being the “Administrators”). The Board or the Administrators, as the case may be, shall have full and complete authority to interpret the Plan and to prescribe such rules and regulations and make such other determinations as it or they deem necessary or desirable for the administration of the Plan, including without limitation the full power and authority to: |
(i) | adopt rules and regulations for implementing the Plan; |
(ii) | determine the eligibility of persons to participate in the Plan, the number of Shares subject to Options, the vesting period of the Options and the term of the Options; |
(iii) | determine when Options shall be granted, which eligible persons will be granted Options, the number of Shares subject to each Option granted to a Participant and the vesting for each Option; |
(iv) | interpret and construe the provisions of the Plan; |
(v) | restrict or limit the Shares and the nature of such restrictions and limitations, if any; |
(vi) | accelerate the exercisability or waive the termination of any Options, based on such factors as the Board or the Administrators may determine; |
(vii) | make exceptions to the Plan in circumstances which it or they determine to be exceptional; and |
(viii) | take such other steps as it or they determine to be necessary or desirable to give effect to the Plan. |
(b) | Decisions of the Board or the Administrators shall be recorded in writing and shall be binding on the Corporation and on all persons eligible to participate in the Plan. |
5. | Granting of Options to Participants |
(a) | Subject to any accelerated termination under this Plan, each Option shall be exercisable until the tenth (10th) anniversary of the date on which it is granted. Each Option that has not been exercised pursuant thereto on or before the close of business on such tenth (10th) anniversary shall forthwith expire and terminate and be of no further force or effect whatsoever. Notwithstanding any other provision of this Plan, should the expiration date for an Option fall on a date upon which such Participant is prohibited from exercising such Option due to a black-out period or other trading restriction imposed by the Corporation, then the expiration date for such Option shall be automatically extended to the tenth (10th) business day following the date the relevant black-out period or other trading restriction imposed by the Corporation is lifted, terminated or removed; provided, however, that notwithstanding the foregoing, the expiry date of an Option shall in no case extend beyond the tenth (10th) anniversary of the date on which it is granted. |
(b) | Unless otherwise specified by the Board at the time of granting Options and except as otherwise provided in this Plan, each Option will vest and be exercisable as per the following terms: |
Fraction of Total Number of Shares that may be Purchased | Exercise Period |
1/4 | From the later of (i) the first anniversary of the date the Participant became a full-time employee, consultant, officer or director of the Corporation or a subsidiary and (ii) the first anniversary of the date of grant (the applicable date being the “Initial Vesting Date”) to and including the tenth anniversary of the date of grant; and |
1/48 | From the end of each month following the Initial Vesting Date to and including the tenth anniversary of the date of grant; |
with the result that all of the Options subject to the grant shall be vested and all Shares subject to such Options may be purchased as of the fourth anniversary of the later of (i) the date the Participant became a full-time employee, consultant, officer or director of the Corporation or a subsidiary and (ii) the date of grant, to and including the tenth anniversary of the date of grant. |
(c) | Once a portion of an Option that has vested becomes exercisable, it remains exercisable until expiration or termination of the Option, unless otherwise specified by the Board in connection with the grant of such Option or pursuant to Section 16. Each Option or portion of an Option that has vested may be exercised at any time or from time to time, in whole or in part, for up to the total number of Shares with respect to which it is then exercisable. The Board or the Administrators has/have the right to accelerate the date upon which any portion of an Option becomes exercisable, notwithstanding the vesting schedule set forth for such Option. |
(d) | Notwithstanding any other provision of the Plan, unless otherwise approved by the Board, the vesting of any Options granted hereunder shall be suspended and postponed during any period of Authorized Leave (as defined below), and, upon a Participant’s return from such Authorized Leave, the vesting of such Options shall be extended by a period equivalent to such period of Authorized Leave. Notwithstanding the foregoing, upon a Participant’s return from an Authorized Leave that was a parental leave, the rate of vesting of such Participant’s Options shall be accelerated to twice the rate provided for in the Participant’s Stock Option Plan Agreement until such time as the Participant holds vested Options in accordance |
8. | Termination of Employment |
(a) | If, at any time, a Participant ceases to be a full-time employee of the Corporation or a subsidiary as a result of the Participant’s retirement with the concurrence of the Board or the Administrators, any Options granted to such Participant and vested as of the Termination Date shall remain exercisable by such Participant until the earlier of: (i) 90 days following the Termination Date, and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date, all unvested Options of such Participant shall expire and such Participant shall no longer be eligible for a grant of Options. |
(b) | If, at any time, a Participant ceases to be a full-time employee of the Corporation or a subsidiary as a result of the Participant’s death or Incapacity (as defined below), any Options granted to such Participant and vested as of the Termination Date shall remain exercisable by such Participant (or, in accordance with clause 14(b)(iii), the Participant’s legal representative) until the earlier of: (i) one year following the date of death or the date on which the Board or the Administrators determine(s) that the Incapacity will prevent the employee from fulfilling his or her full-time duties with the Corporation, and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date or at the date of the death or Incapacity of the Participant, as the case may be, all unvested Options of such Participant shall expire. |
(c) | If, at any time, a Participant ceases to be a full-time employee of the Corporation or a subsidiary as a result of the Participant’s termination for cause, then, as of the Termination Date, the vested and unvested Options granted to such Participant shall expire and be of no further force or effect whatsoever and such Participant shall no longer be eligible for a grant of Options. |
(d) | If, at any time, a Participant ceases to be a full-time employee of the Corporation or a subsidiary as a result of the Participant’s resignation, then any Options granted to such Participant and vested as of the Termination Date shall remain exercisable by |
(e) | If, at any time, a Participant ceases to be a full-time employee of the Corporation or a subsidiary as a result of the Participant’s dismissal without cause, any Options granted to such Participant and vested as of the Termination Date shall remain exercisable by such Participant until the earlier of: (i) 90 days following the Termination Date, and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date, all unvested Options of such Participant shall expire (for certainty, without regard to any period of reasonable notice that the Corporation or a subsidiary, as the case may be, may be required at law to provide to the Participant) and such Participant shall no longer be eligible for a grant of Options. |
(f) | Where, in the case of a consultant, the Participant’s consulting agreement or arrangement terminates by reason of: (i) termination by the Corporation or an affiliated corporation for any reason whatsoever other than for material breach of the consulting agreement or arrangement (whether or not such termination is effected in compliance with any termination provisions contained in the Participant’s consulting agreement or arrangement); or (ii) voluntary termination by the Participant, then any Options held by the Participant that are exercisable at the Termination Date continue to be exercisable by the Participant until the earlier of: (A) the date that is 90 days from the Termination Date; and (B) the date on which the particular Options expire in accordance with their terms. Any Options held by the Participant that are not exercisable at the Termination Date immediately expire and are cancelled on such date. |
(g) | Where, in the case of a consultant, the Participant’s consulting agreement or arrangement terminates by reason of the death or Incapacity of the Participant, then any Options held by the Participant that are exercisable at the date of the death or Incapacity of the Participant continue to be exercisable by the Participant (or, in accordance with clause 14(b)(iii), the Participant’s legal representative) until the earlier of: (A) the date that is one year from the date of the death or Incapacity of the Participant; and (B) the date on which the particular Options expire in accordance with their terms. Any Options held by the Participant that are not exercisable at the date of the death or Incapacity of the Participant immediately expire and are cancelled on such date. |
(h) | Where, in the case of a consultant, the Participant’s consulting agreement or arrangement is terminated by the Corporation or an affiliated corporation for material breach of the consulting agreement or arrangement (whether or not such termination is effected in compliance with any termination provisions contained in the |
(i) | If, at any time, a Participant ceases to be a director, officer or member of an advisory board of the Corporation or a subsidiary (and is not or does not continue as a full-time employee of the Corporation or a subsidiary) for a reason other than the death or Incapacity of the Participant, the Options granted to such Participant and vested as of the Termination Date may be exercised by such Participant until the earlier of: (i) 90 days following the Termination Date, and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date, all unvested Options granted to such Participant shall cease and terminate and be of no further force or effect whatsoever. |
(j) | If, at any time, a Participant ceases to be a director, officer or member of an advisory board of the Corporation or a subsidiary (and is not or does not continue as a full-time employee of the Corporation or a subsidiary) as a result of the Participant’s death or Incapacity, any Options granted to such Participant and vested as of the Termination Date shall remain exercisable by such Participant (or, in accordance with clause 14(b)(iii), the Participant’s legal representative) until the earlier of: (i) the date that is one year from the date of the death or Incapacity of the Participant; and (ii) the expiration of such vested Options in accordance with their terms. As of the Termination Date, all unvested Options granted to such Participant shall cease and terminate and be of no further force or effect whatsoever. |
(k) | Notwithstanding any other provisions of this Section 8, the Board or the Administrators may extend the expiration date of vested and unvested Options of a Participant who ceases to be a full-time employee, consultant, officer or director of the Corporation or a subsidiary beyond the expiry dates set out above, provided that such extended dates are not later than the initial assigned expiry date of any such Option. |
(i) | in the case of a Participant whose employment or term of office with the Corporation or a subsidiary terminates in the circumstances set out in Section 8, the date that is designated by the Corporation or a subsidiary, as the case |
(ii) | in the case of a Participant who is a consultant and whose consulting agreement or arrangement with the Corporation or a subsidiary, as the case may be, terminates in the circumstances set out in Section 8, the date that is designated by the Corporation or a subsidiary, as the case may be, as the date on which the Participant’s consulting agreement or arrangement is terminated, provided that in the case of voluntary termination by the Participant, such date shall not be earlier than the date notice of voluntary termination was received by the Corporation, and “Termination Date” specifically does not mean the date on which any period of notice of termination that the Corporation or a subsidiary, as the case may be, may be required to provide to the Participant under the terms of the consulting agreement or arrangement, would expire. |
(a) | Subject to Section 12(c), a vested Option may be exercised at any time, or from time to time, during its term. A person electing to exercise a vested Option shall give written notice of the election to the Secretary of the Corporation substantially in the form of Exhibit A to Schedule 1 (an “Exercise Notice”), or such other form acceptable to the Board or the Administrators, together with a bank draft, certified cheque or other form of payment acceptable to the Corporation in an amount equal to the Exercise Price for each Share to be acquired pursuant to the exercise of the Options. |
(b) | Pursuant to the Exercise Notice, a Participant may, for exercises taking place following an IPO, choose to undertake a “cashless exercise” with the assistance of a broker in order to facilitate the exercise of such Participant’s Options. The “cashless exercise” procedure may include a sale of such number of Class A subordinate voting shares of the Corporation (“Subordinate Voting Shares”) issuable after conversion by the Participant of the Shares as is necessary to raise an amount equal to the aggregate Exercise Price for all Options being exercised by that Participant under an Exercise Notice. Pursuant to the Exercise Notice, the Participant may authorize the broker to sell Subordinate Voting Shares on the open market by means of a short sale and forward the proceeds of such short sale to the Corporation to satisfy the Exercise Price, promptly following which the Corporation shall issue the Shares underlying the number of Options as provided for in the Exercise Notice. The Participant shall also provide all such documents as may be required under the Corporation’s constating documents to convert the necessary number of Shares issuable on the exercise of the Options into Subordinate Voting Shares, shall comply with Section 22 of the Plan with regards to any applicable withholding tax, and shall comply with all such other procedures and policies as the Corporation or the Administrators may prescribe or determine to be necessary or advisable from time to time in connection with such “cashless exercise.” |
(c) | The exercise of any Option shall be subject to the condition that if at any time the Corporation shall determine in its sole discretion that it is necessary or desirable to comply with any legal requirement or the requirements of any stock exchange or other regulatory authority as a condition of, or in connection with, such exercise or the issue of Shares or Subordinate Voting Shares, as applicable, as a result thereof, then in any such event such exercise shall not be effective unless such compliance shall have been effected on conditions satisfactory to the Corporation. |
(d) | Upon actual receipt by the Corporation of an Exercise Notice and payment for the Shares to be purchased, the person exercising the Option shall be registered in the share register of the Corporation as the holder of the appropriate number of Shares and a share certificate shall be issued to such person. |
(e) | The issuance of Shares upon the exercise of any Option shall, prior to the completion of an IPO, be conditional upon the Participant becoming a party to any existing shareholders’ agreement and/or any other agreement or voting trust as may be required by the Board, in its sole discretion, including, where applicable, the Minority Shareholder Adoption and Voting Trust Agreement executed and delivered by certain of the shareholders of the Corporation in favour of the Corporation. The issuance of Shares upon the exercise of any Option shall, following the completion of an IPO, be conditional upon the Participant becoming a party to the Corporation’s coattail agreement in respect of the Shares, unless such Participant delivers, together with an Exercise Notice, such documents and instruments as the Corporation may from time to time require effecting the conversion of all of the Shares issuable upon the exercise of the applicable Option into Subordinate Voting Shares of the Corporation. |
(i) | the Participant to whom the Options were granted; or |
(ii) | for Options that are not Incentive Stock Options, with the Corporation’s prior written approval and subject to such conditions as the Corporation may stipulate, such Participant's family or retirement savings trust or any registered retirement savings plan or registered retirement income fund, each as defined in the Income Tax Act (Canada) of which the Participant is and remains the annuitant; or |
(iii) | (A) upon the Participant’s death, by the legal representative of the Participant’s estate; or |
(B) | upon the Participant’s Incapacity, by the legal representative having authority to deal with the property of the Participant; |
(c) | A person exercising an Option may subscribe for Shares only in the person’s own name or in the person’s capacity as a legal representative. |
(d) | Prior to the occurrence of an IPO, Shares may not be sold, traded, pledged or otherwise dealt with or disposed of to a third party without the prior written approval of the Board. |
(a) | In the event of any subdivision, redivision or other similar change in the Shares at any time prior to the termination of an Option into a greater number of Shares, the Corporation shall deliver at the time of any exercise thereafter of an Option such additional number of Shares as would have resulted from such subdivision, redivision |
(b) | In the event of any merger, consolidation, recapitalization or other similar corporate change affecting the Shares at any time prior to the termination of an Option, the Board shall make such adjustments as each deems equitable to the number and kind of shares or other property to be delivered by the Corporation on any exercise thereafter of an Option, the Exercise Price of an Option and any other term of the Option as it deems necessary to prevent the dilution or enlargement of the rights of Participants thereunder. |
(c) | No fractional Shares shall be issued upon the exercise of an Option. If, as a result of any adjustment under this Section 15 a Participant would be entitled to a fractional Share, the Participant shall have the right to acquire only the adjusted number of full Shares and no payment or other adjustment shall be made with respect to the fractional Shares so disregarded. |
(a) | Notwithstanding anything else in this Plan or any Stock Option Plan Agreement, the Board has the right to provide for the conversion or exchange of any outstanding Options into or for options, rights or other securities in any entity participating in or resulting from a Change in Control (as defined below). |
(b) | Upon the Corporation entering into an agreement relating to a transaction which, if completed, would result in a Change in Control, or otherwise becoming aware of a pending Change in Control, the Corporation shall give written notice of the proposed Change in Control to the Option holders, together with a description of the effect of such Change in Control on outstanding Options, not less than seven (7) days prior to the closing of the transaction resulting in the Change in Control. |
(c) | The Board may, in its sole discretion, accelerate the vesting and/or the expiry date of any or all outstanding Options to provide that, notwithstanding the vesting provisions of such Options or any Stock Option Plan Agreement, such designated outstanding Options shall be fully vested and conditionally exercisable upon (or prior to) the completion of the Change in Control provided that the Board shall not, in any case, authorize the exercise of Options pursuant to this Section beyond the expiry date of the Options. If the Board elects to accelerate the vesting and/or the expiry date of the Options, then if any of such Options are not exercised within seven (7) days after the Option holders are given the notice contemplated in Section 16(b) (or such later expiry date as the Board may prescribe), such unexercised Options shall, unless the Board otherwise determines, terminate and expire following the completion of the proposed Change in Control. |
(d) | To the extent that the Change in Control would also result in a capital reorganization, arrangement, amalgamation or reclassification of the share capital of the Corporation and the Board does not accelerate the vesting and/or the expiry date of Options pursuant to Section 16(c), the Corporation shall make adequate provisions to ensure that, upon completion of the proposed Change in Control, the number and kind of shares subject to outstanding Options and/or the Exercise Price per share of Options shall be appropriately adjusted (including by substituting the Options for options to acquire securities in any successor entity to the Corporation) in such manner as the Board considers equitable to prevent substantial dilution or enlargement of the rights granted to Option holders. The Board may make changes to the terms of the Options or the Plan to the extent necessary or desirable to comply with any rules, regulations or policies of any stock exchange on which any securities of the Corporation may be listed following an IPO, provided that the value of previously granted Options and the rights of Option holders are not materially adversely affected by any such changes. |
(e) | Notwithstanding anything else to the contrary herein, in the event of a potential Change in Control, the Board shall have the power, in its sole discretion, to modify the terms of this Plan and/or the Options (including, for greater certainty, to cause the vesting of all unvested Options) to assist the Participants to tender into a take-over bid or other transaction leading to a Change in Control. For greater certainty, in the event of a take-over bid or other transaction leading to a Change in Control, the Board shall have the power, in its sole discretion, to permit Participants to conditionally exercise their Options, such conditional exercise to be conditional upon the take-up by such offeror of the securities tendered to such take-over bid in accordance with the terms of such take-over bid (or the effectiveness of such other transaction leading to a Change in Control). If, however, the potential Change in Control referred to in this Section 16(e) is not completed within the time specified therein (as the same may be extended), then notwithstanding this Section 16(e) or the definition of "Change in Control": (i) any conditional exercise of vested Options shall be deemed to be null, void and of no effect, and such conditionally exercised Options shall for all purposes be deemed not to have been exercised, (ii) Shares which were issued pursuant to exercise of options which vested pursuant to this Section 16 shall be returned by the Participant to the Corporation and reinstated as authorized but unissued Shares, and (iii) the original terms applicable to Options which vested pursuant to this Section 16 shall be reinstated. |
(f) | For purposes of this Agreement, a “Change in Control” means, unless the Board determines otherwise, the happening, in a single transaction or in a series of related transactions, of any of the following events: (i) any transaction (other than a transaction described in clause (iv) below) pursuant to which any person or group of persons acting jointly or in concert acquires the direct or indirect beneficial ownership of securities of the Corporation representing 50% or more of the aggregate voting power of all of the Corporation’s then issued and outstanding securities entitled to vote in the election of directors of the Corporation, other than any such |
(a) | The Board may, in its sole discretion, suspend or terminate the Plan at any time or from time to time and/or amend or revise the terms of the Plan or of any Option granted under the Plan and any Stock Option Plan Agreement relating thereto, subject |
(i) | not adversely alter or impair any Option previously granted except as permitted by the terms of this Plan; |
(ii) | be in compliance with applicable law and subject to any regulatory approvals including, where required, the approval of any exchange upon which the securities of the Corporation are then listed; and |
(iii) | be subject to shareholder approval, where required by law, the requirements of any exchange upon which the securities of the Corporation are then listed or this Plan. |
(b) | If the Plan is terminated, the provisions of the Plan and any administrative guidelines and other rules and regulations adopted by the Board or the Administrators and in force on the date of termination will continue in effect as long as any Option or any rights pursuant thereto remain outstanding and, notwithstanding the termination of the Plan, the Board or the Administrators will remain able to make such amendments to the Plan or the Options as they would have been entitled to make if the Plan were still in effect. |
(c) | Subject to Section 17(a), the Board may from time to time, in its discretion and without the approval of shareholders, make changes to the Plan or any Option that do not require the approval of shareholders under Section 17(d), which may include but are not limited to: |
(i) | any amendment of a "housekeeping" nature, including without limitation those made to clarify the meaning of an existing provision of the Plan, correct or supplement any provision of the Plan that is inconsistent with any other provision of the Plan, correct any grammatical or typographical errors or amend the definitions in the Plan regarding administration of the Plan; |
(ii) | a change to the vesting provisions of the Plan and any Option; |
(iii) | a change to the provisions governing assignability and the effect of termination of a Participant's employment, contract or office; |
(iv) | the addition of a form of financial assistance and any amendment to a financial assistance provision which is adopted; |
(v) | a change to advance the date on which any Option may be exercised under the Plan; |
(vi) | a change to the definition of Participants; |
(vii) | the addition of a deferred or performance share unit or any other provision which results in Participants receiving securities while no cash consideration is received by the Corporation; and |
(viii) | an amendment of the Plan or an Option as necessary to comply with applicable law or the requirements of any exchange upon which the securities of the Corporation are then listed or any other regulatory body having authority over the Corporation, the Plan, the Participants or the shareholders of the Corporation. |
(d) | Shareholder approval is required for the following amendments to the Plan: |
(i) | any increase in the maximum number of Shares that may be issuable from treasury pursuant to Options granted under the Plan, other than an adjustment pursuant to Section 15; |
(ii) | any reduction in the Exercise Price of an Option after the Option has been granted or any cancellation of such Option and the substitution of that Option with a new Option with a reduced Exercise Price, except in the case of an adjustment pursuant to Section 15; |
(iii) | any extension of the maximum expiry date of an Option, except in case of an extension due to a black-out period; |
(iv) | any amendment to Section 17(c) or Section 17(d). |
(a) | The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the Shares or Subordinate Voting Shares, as applicable, with respect to which Incentive Stock Options granted under the Plan and all other option plans of the Corporation, any Parent Corporation and any Subsidiary Corporation that become exercisable for the first time by any one Participant during any calendar year shall not exceed $100,000. |
(b) | In the case of an Incentive Stock Option granted to a Ten Percent Stockholder: (i) the Exercise Price of such Option shall not be less than 110% of the Fair Market Value of a Share on the date of grant of such Incentive Stock Option; and (ii) the term of the Option shall not exceed five years from the date of grant of such Incentive Stock Option. For purposes of the above calculation, if the Fair Market Value is in United States dollars and the Exercise Price is in Canadian dollars, or vice versa, |
(c) | “Fair Market Value” per Share or Subordinate Voting Share, as applicable, as of a particular date shall mean: |
(i) | the closing price per Share or Subordinate Voting Share, as applicable, on a national securities exchange or on the New York Stock Exchange for the last preceding date on which there was a sale of Shares or Subordinate Voting Shares, as applicable, on such exchange; |
(ii) | if the Shares or Subordinate Voting Shares, as applicable, are then traded on any other over-the-counter market, the average of the closing bid and ask prices for the Shares or Subordinate Voting Shares, as applicable, in such over-the-counter market for the last preceding date on which there was a sale of Shares or Subordinate Voting Shares, as applicable, in such market, or |
(iii) | if the Shares or Subordinate Voting Shares, as applicable, are not then listed on a national securities exchange or traded in an over-the-counter market, such value as the Board or Administrator in its or their discretion may determine. |
(d) | “Parent Corporation” means any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation if, at the time of granting an Option, each of such corporations (other than the Corporation) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. |
(e) | “Subsidiary Corporation” means any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation if, at the time of granting an Option, each of such corporations (other than the last corporation in an unbroken chain) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. |
(f) | “Ten Percent Stockholder” means a Participant who, at the time an Incentive Stock Option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation or of its Parent or Subsidiary Corporations (as determined in accordance with Section 424(d) of the Code). |
(g) | Only common law employees of the Corporation or its subsidiaries are eligible to receive Incentive Stock Options. |
1. | Pursuant to the Plan, the Corporation hereby grants non-assignable, non-transferable options (collectively, the “Options”) to acquire _______________ Shares (as defined in the Plan) at an exercise price of $[ ] per Share (the “Exercise Price”) and agrees to issue Shares to the Participant in accordance with the terms of the Plan upon the due exercise of the Options. |
2. | The Options will vest and be exercisable as follows: |
Fraction of Total Number of Shares that may be Purchased | Exercise Period |
3. | The exercise of the Options granted hereby, issuance of Shares and ownership of the Shares are subject to the terms and conditions of the Plan (all of which are incorporated into and form part of this Stock Option Plan Agreement) and this Stock Option Plan Agreement. |
4. | The Participant hereby acknowledges that the Corporation may, as a condition to the exercise of the Options, require that the Participant execute and deliver a voting trust agreement in a form acceptable to the Board relating to the Shares so issued and sign certain other agreements as may be required by the Board in its sole discretion, including the Corporation’s coattail agreements relating to its Shares. |
5. | Nothing in the Plan or in this Stock Option Plan Agreement will affect the Corporation’s right, or that of an affiliated corporation, to terminate the employment of, term of office of, or consulting agreement or arrangement with a Participant at any time for any reason whatsoever. Upon such termination, a Participant’s rights to exercise Options will be subject to restrictions and time limits for the exercise of Options. Complete details of such restrictions are set out in the Plan, and in particular in Section 8 thereof. |
6. | Each notice relating to the Option, including the exercise thereof, must be in writing. All notices to the Corporation must be delivered personally or by prepaid registered mail and must be addressed to the secretary of the Corporation. All notices to the Participant will be addressed to the principal address of the Participant on file with the Corporation. Either the Corporation or the Participant may designate a different address by written notice to the other. Such notices are deemed to be received, if delivered personally, on the date of delivery, and if sent by prepaid, registered mail, on the fifth business day following the date of mailing. Any notice given by either the Participant or the Corporation is not binding on the recipient thereof until received. |
(a) | any rule, regulation or determination, including the interpretation by the Board or the Administrators of the Plan, the Option granted hereunder and the exercise thereof, is final and conclusive for all purposes and binding on all persons including the Corporation and the Participant; and |
(b) | the grant of the Option does not affect in any way the right of the Corporation or any affiliated corporation to terminate the employment of the Participant. |
8. | This Stock Option Plan Agreement shall be binding upon and enure to the benefit of the Corporation, its successors and assigns and the Participant and the legal representative of the Participant’s estate and any other person who acquires Shares by bequest or inheritance. |
9. | By executing this Stock Option Plan Agreement, the Participant confirms and acknowledges that the Participant has not been induced to enter into this agreement or acquire any Options by expectation of employment or continued employment with the Corporation or its subsidiaries. |
10. | This Stock Option Plan Agreement has been made in and is to be construed under and in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. |
11. | This Agreement is drawn up in English at the request of all parties. Les parties aux présentes ont expressément convenu que ce contrat soit rédigé en anglais. |
SHOPIFY INC. Per: | ||
Authorized Signatory | ||
SIGNED, SEALED AND DELIVERED in the presence of (Witness) | ) ) ) ) | (Signature of Participant) |
(a) | The undersigned hereby elects to purchase ________________ Shares (as defined in the Fourth Amended and Restated Incentive Stock Option Plan of the Corporation dated the lth day of l, 2015 (the “Plan”) pursuant to the terms of the stock option plan agreement dated ___________ (the “Option Agreement”) between the undersigned and the Corporation, and tenders herewith payment in full of the purchase price thereof. The undersigned acknowledges that the issuance of Shares upon this exercise is conditional upon the undersigned becoming a party to any existing shareholders’ agreement and/or any other agreement or voting trust as may be required by the Board, in its sole discretion, and the undersigned hereby agrees to execute and be bound by any such agreements at the request of the Board. The undersigned acknowledges that the Corporation will not issue such shares until such applicable withholdings are received by the Corporation in accordance with Section 22 of the Plan. |
(b) | Please issue a certificate or certificates representing the Shares in the name of the undersigned, whose address is as follows: |
(a) | The undersigned hereby surrenders ________________ Options (as defined in the Fourth Amended and Restated Incentive Stock Option Plan of the Corporation dated the lth day of l, 2015 (the “Plan”) pursuant to the terms of the stock option plan agreement dated ___________ (the “Option Agreement”) between the undersigned and the Corporation, in exchange for Shares (as defined in the Plan), as calculated in accordance with Section 13 of the Plan. The undersigned acknowledges that the issuance of Shares upon this surrender is conditional upon the undersigned becoming a party to any existing shareholders’ agreement and/or any other agreement or voting trust as may be required by the Board, in its sole discretion, and the undersigned hereby agrees to execute and be bound by any such agreements at the request of the Board. |
(b) | Please issue a certificate or certificates representing the Shares in the name of ____________________________________. |
(a) | “Affiliate” or “Affiliated” means, with respect to any specified Person, any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person (for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise); |
(b) | “Annual Board Retainer” means the annual retainer paid by the Corporation to a director in a Fiscal Year for service on the Board, together with Board committee fees, attendance fees and additional fees and retainers to committee chairs; |
(c) | “Applicable Withholding Taxes” has the meaning given to that term in Section 2.6(1); |
(d) | “Authorized Leave” means any leave of absence (paid or unpaid) approved in writing by the Corporation for a period of more than four (4) weeks that occurs while an RSU Participant continues to be employed as a full-time employee by the Corporation or retained as a full-time Consultant by the Corporation and includes any parental leave, short term disability, or other bona fide paid or unpaid leave of absence or sabbatical period; |
(e) | “Award Date” means the date(s) during the Fiscal Year on which the Annual Board Retainer is awarded; |
(f) | “Board” means the board of directors of the Corporation as constituted from time to time, or a committee thereof to which authority has been delegated by the board of directors with respect to any particular functions of the board of directors, as set forth herein; |
(g) | “Business Day” means a day, other than a Saturday or Sunday, on which banking institutions in Ottawa, Ontario are not authorized or obligated by law to close; |
(h) | “Cash Equivalent” means the amount of money expressed in U.S. dollars equal to the Market Value multiplied by the number of vested Units in the Participant’s notional account, net of any Applicable Withholding Taxes, on the PSU Settlement Date, RSU Settlement Date or DSU Termination Date, as applicable; |
(i) | “Change of Control” means, unless the Board determines otherwise, the happening, in a single transaction or in a series of related transactions, of any of the following events: |
(i) | any transaction (other than a transaction described in clause (ii) below) pursuant to which any person or group of persons acting jointly or in concert acquires the direct or indirect beneficial ownership of securities of the Corporation representing 50% or more of the aggregate voting power of all of the Corporation’s then issued and outstanding securities entitled to vote in the election of directors of the Corporation, other than any such acquisition that occurs (A) upon the exercise or settlement of options or other securities granted by the Corporation under any of the Corporation’s equity incentive plans, or (B) as a result of the conversion of Multiple Voting Shares into Shares; |
(ii) | there is consummated an arrangement, amalgamation, merger, consolidation or similar transaction involving (directly or indirectly) the Corporation and, immediately after the consummation of such arrangement, amalgamation, merger, consolidation or similar transaction, the shareholders of the Corporation immediately prior thereto do not beneficially own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving or resulting entity in such amalgamation, merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving or resulting entity in such arrangement, amalgamation merger, consolidation or similar transaction, in each case in substantially the same proportions as their beneficial ownership of the outstanding voting securities of the Corporation immediately prior to such transaction; |
(iii) | the sale, lease, exchange, license or other disposition of all or substantially all of the Corporation’s assets to a person other than a person that was an Affiliate of the Corporation at the time of such sale, lease, exchange, license or other disposition, other than a sale, lease, exchange, license or other disposition to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are beneficially owned by shareholders of the Corporation in substantially the same proportions as their beneficial ownership of the outstanding voting securities of the Corporation immediately prior to such sale, lease, exchange, license or other disposition; |
(iv) | the passing of a resolution by the Board or Shareholders to substantially liquidate the assets of the Corporation or wind up the Corporation’s business or significantly rearrange its affairs in one or more transactions or series of transactions or the commencement of proceedings for such a liquidation, winding-up or re-arrangement (except where such re-arrangement is part of a bona fide reorganization of the Corporation in circumstances where the business of the Corporation is continued and the shareholdings remain substantially the same following the re-arrangement); or |
(v) | individuals who, on the Effective Date, are members of the Board (the ”Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board. |
(j) | “Consultant” has the meaning ascribed to that term in National Instrument 45-106 of the Canadian Securities Administrators; |
(k) | “Corporation” means Shopify Inc. and its respective successors and assigns; |
(l) | “Date of Grant” means the date on which a particular Unit is granted by the Board as evidenced by the Grant Agreement pursuant to which the applicable Unit was granted; |
(m) | “Deferred Share Unit” or “DSU” means a unit designated as a Deferred Share Unit representing the right to receive one Share or the Cash Equivalent in accordance with the terms set forth in the Plan; |
(n) | “DSU Participant” means a director of the Corporation (who for greater certainty may also be an employee, if applicable) who has been designated by the Corporation for participation in the Plan and who has agreed to participate in the Plan and to whom Deferred Share Units have or will be granted thereunder; |
(o) | “DSU Payment Date” means, with respect to a Deferred Share Unit granted to a DSU Participant, no later than December 31 of the Fiscal Year following the Fiscal Year in which the DSU Termination Date occurred; |
(p) | “DSU Settlement Notice” means a notice, in the form contained in Schedule “F” attached hereto, by a DSU Participant to the Corporation electing the desired form of settlement of Deferred Share Units; |
(q) | “DSU Termination Date” of a DSU Participant means, the day that the DSU Participant ceases to be a director and, if applicable, an employee of the Corporation for any reason including, without limiting the generality of the foregoing, as a result of retirement, death, voluntary or involuntary termination without cause, or Incapacity; |
(r) | “Effective Date” has the meaning ascribed thereto in Section 2.5; |
(s) | “Elected Amount” has the meaning ascribed thereto in Section 5.3(1); |
(t) | “Election Notice” has the meaning ascribed thereto in Section 5.3(1); |
(u) | “Eligible Person” means any director, officer, employee or Consultant of the Corporation or any of its Affiliates and any such person’s personal holding company, as designated by the Board in a resolution; |
(v) | “Expire” means, with respect to a Unit, the termination of such Unit, on the occurrence of which such Unit is void, incapable of settlement, and of no value whatsoever; and Expires and Expired have a similar meaning; |
(w) | “Fiscal Year” means the fiscal year of the Corporation, which as of the Effective Date is the annual period commencing January 1 and ending the following December 31; |
(x) | “Grant Agreement” means an agreement between the Corporation and a Participant under which a Unit is granted, substantially in the form attached hereto as Schedule “A” in reference to RSUs, |
(y) | “Incapacity” means the permanent and total incapacity of a Participant as determined in accordance with procedures established by the Board for purposes of this Plan; |
(z) | “Incumbent Board” has the meaning given to that term in Section 1.1(i)(v); |
(aa) | “ITA” means the Income Tax Act (Canada), and the regulations thereunder; |
(bb) | “Legacy Option Plan” means the Corporation’s Fourth Amended and Restated Incentive Stock Option Plan, as may be amended from time to time; |
(cc) | “Market Value” means, on any particular day, the volume weighted average trading price of a Share on the New York Stock Exchange for the five (5) preceding days on which the Shares were traded, or on any other stock exchange as selected by the Board for these purposes. In the event that such Shares are not listed and posted for trading on any stock exchange, the Market Value shall be the fair market value of such Shares as determined by the Board in its sole and absolute discretion; |
(dd) | “Multiple Voting Shares” means the Class B multiple voting shares in the capital of the Corporation; |
(ee) | “Participant” means an RSU Participant, or a DSU Participant, or a PSU Participant, as applicable; |
(ff) | “Performance Criteria” shall mean criteria, if any, established by the Board which, without limitation, may include criteria based on the financial performance of the Corporation and/or an Affiliate; |
(gg) | “Performance Share Unit” or “PSU” means a unit granted or credited to a PSU Participant’s notional account pursuant to the terms of this Plan that, subject to the provisions hereof, entitles a PSU Participant to receive one Share or the Cash Equivalent in accordance with the terms set forth in the Plan; |
(hh) | “Plan” means this Long Term Incentive Plan, as amended from time to time; |
(ii) | “PSU Participant” means an Eligible Person who has been designated by the Corporation for participation in the Plan and who has agreed to participate in the Plan and to whom a Performance Share Unit has been granted or will be granted thereunder; |
(jj) | “PSU Settlement Date” has the meaning given to that term in Section 7.1(1); |
(kk) | “PSU Settlement Notice” means a notice, in the form contained in Schedule “H” attached hereto, by a PSU Participant to the Corporation electing the desired form of settlement of vested Performance Share Units; |
(ll) | “PSU Termination Date” means the date on which a PSU Participant ceases to be an Eligible Person as a result of a termination of employment or retention with the Corporation or an Affiliate |
(mm) | “PSU Vesting Date” means the date or dates determined in accordance with the terms of the Grant Agreement entered into in respect of such Performance Share Units (as described in Section 6.4), on and after which a particular Performance Share Unit will be settled, subject to amendment or acceleration from time to time in accordance with the terms hereof; |
(nn) | “Restricted Share Unit” or “RSU” means a unit granted or credited to an RSU Participant’s notional account pursuant to the terms of this Plan that, subject to the provisions hereof, entitles an RSU Participant to receive one Share or the Cash Equivalent in accordance with the terms set forth in the Plan; |
(oo) | “RSU Participant” means an Eligible Person who has been designated by the Corporation for participation in the Plan and who has agreed to participate in the Plan and to whom a Restricted Share Unit has been granted or will be granted thereunder; |
(pp) | “RSU Settlement Date” has the meaning ascribed thereto in Section 4.1(1); |
(qq) | “RSU Settlement Notice” means a notice, in the form contained in Schedule “B” attached hereto, by an RSU Participant to the Corporation electing the desired form of settlement of vested Restricted Share Units; |
(rr) | “RSU Termination Date” means the date on which an RSU Participant ceases to be an Eligible Person as a result of a termination of employment or retention with the Corporation or an Affiliate for any reason, including death, retirement, or resignation with or without cause. For the purposes of the Plan, an RSU Participant’s employment or retention with the Corporation or an Affiliate shall be considered to have terminated effective on the last day of the RSU Participant’s actual and active employment or retention with the Corporation or Affiliate, whether such day is selected by agreement with the individual, or unilaterally by the RSU Participant or the Corporation or Affiliate, and whether with or without advance notice to the RSU Participant. For the avoidance of doubt, no period of notice or pay in lieu of notice that is given or that ought to have been given under applicable law in respect of such termination of employment or retention that follows or is in respect of a period after the RSU Participant’s last day of actual and active employment or retention shall be considered as extending the RSU Participant’s period of employment or retention for the purposes of determining his or her entitlement under the Plan; |
(ss) | “RSU Vesting Date” means the date or dates determined in accordance with the terms of the Grant Agreement entered into in respect of such Restricted Share Units (as described in |
(tt) | “Share” means a Class A subordinate voting share in the capital of the Corporation; |
(uu) | “Share Compensation Arrangement” means any stock option, stock option plan, employee stock purchase plan, long-term incentive plan or any other compensation or incentive mechanism of the Corporation involving the issuance or potential issuance of securities of the Corporation from treasury, including without limitation a Share purchase from treasury which is financially assisted by the Corporation by way of a loan, guarantee or otherwise, but does not include any such arrangement which does not involve the issuance from treasury or potential issuance from treasury of securities of the Corporation; |
(vv) | “Shareholders” means holders of Shares or Multiple Voting Shares; |
(ww) | “Stock Exchange” means the TSX or, if the Shares are not listed or posted for trading on the TSX but are listed and posted for trading on another stock exchange, the stock exchange on which the Shares are listed or posted for trading; |
(xx) | “Stock Option Plan” means the Corporation’s Stock Option Plan, as may be amended from time to time; |
(yy) | “Termination Notice” has the meaning ascribed thereto in Section 5.4(1); |
(zz) | “TSX” means the Toronto Stock Exchange; and |
([[) | “Units” means DSUs, PSUs and RSUs, as applicable. |
Section 1.2 | Interpretation |
(1) | Whenever the Board is to exercise discretion or authority in the administration of the terms and conditions of this Plan, the term “discretion” or “authority” means the sole and absolute discretion of the Board. |
(2) | In the Plan, words importing the singular shall include the plural and vice versa and words importing any gender include any other gender. |
(3) | Unless otherwise specified in the Participant’s Grant Agreement, all references to money amounts are to United States currency. |
(4) | As used herein, the terms “Article” and “Section” mean and refer to the specified Article and Section of this Plan, respectively. |
(5) | The words “including” and “includes” mean “including (or includes) without limitation”. |
(6) | The Board shall administer this Plan. Nothing contained herein shall prevent the Board from adopting other or additional Share Compensation Arrangements or other compensation arrangements. |
(7) | Subject to the terms and conditions set forth herein, the Board has the authority: (i) to grant Restricted Share Units to RSU Participants; (ii) to grant Deferred Share Units to DSU Participants; (iii) to grant Performance Share Units to PSU Participants; (iv) to determine the terms, including the limitations, restrictions, vesting period, Performance Criteria and conditions (including any Performance Criteria), if any, of such grants; (v) to interpret this Plan and all agreements entered into hereunder; (vi) to adopt, amend and rescind such administrative guidelines and other rules relating to this Plan as it may from time to time deem advisable; and (vii) to make all other determinations and to take all other actions in connection with the implementation and administration of this Plan as it may deem necessary or advisable. The Board’s guidelines, rules, interpretations, and determinations shall be conclusive and binding upon the Corporation, its subsidiaries, and all RSU Participants, DSU Participants, PSU Participants, Eligible Persons and their legal, personal representatives and beneficiaries. |
(8) | Notwithstanding the foregoing or any other provision contained herein, the Board shall have the right to delegate the administration and operation of this Plan, in whole or in part, to a committee thereof. For greater certainty, any such delegation by the Board may be revoked at any time at the Board’s sole discretion. |
(9) | No member of the Board or any person acting pursuant to authority delegated by it hereunder shall be liable for any action or determination in connection with the Plan made or taken in good faith, and each member of the Board and each such person shall be entitled to indemnification by the Corporation with respect to any such action or determination. |
(10) | The Board may adopt such rules or regulations and vary the terms of this Plan and any grant hereunder as it considers necessary to address tax or other requirements of any applicable non-Canadian jurisdiction. Without limiting the generality of the foregoing, if any provision of this Plan contravenes Section 409A (“Section 409A”) of the U.S. Internal Revenue Code of 1986, as amended, the Board may, in its sole discretion and without the participant's consent, modify such provision to: (i) comply with, or avoid being subject to, Section 409A, or to avoid incurring taxes, interest or penalties under Section 409A, or otherwise; and/or (ii) maintain, to the maximum extent practicable, the original intent and economic benefit to the Participant of the applicable provision without materially increasing the cost to the Corporation and contravening Section 409A. |
(11) | The Plan shall not in any way fetter, limit, obligate, restrict or constrain the Board with regard to the allotment or issue of any Shares or any other securities in the capital of the Corporation other than as specifically provided for in the Plan. |
(1) | Subject to the provisions of this Plan, the Board may grant Units to Participants upon the terms, conditions and limitations set forth herein and such other terms, conditions and limitations permitted by and not inconsistent with this Plan as the Board may determine, provided that: |
(a) | The maximum number of Shares reserved for issuance, in the aggregate, under this Plan and the Stock Option Plan shall initially be equal to 2,500,000 Shares plus the number of Shares equal to the number of Multiple Voting Shares subject to the Legacy Option Plan’s available reserve as of the Effective Date. The number of Shares available for issuance, in the aggregate, under |
(b) | The number of Shares subject to any grants of Units (or portions thereof) that (i) Expire or are forfeited, surrendered, cancelled or otherwise terminated prior to the delivery of the Shares pursuant to a grant of Units or (ii) are settled in cash in lieu of settlement in Shares shall, in each case, automatically become available to be made and subject to new grants under this Plan. In addition, if an option under the Stock Option Plan or the Legacy Option Plan expires, is forfeited, or is cancelled for any reason, the Shares subject to that option or the number of Shares equal to the number of Multiple Voting Shares subject to that legacy option, as applicable, shall be available for grants under this Plan, subject to any required prior approval by the Stock Exchange. |
(1) | The Board may, in its sole discretion, suspend or terminate the Plan at any time or from time to time and/or amend or revise the terms of the Plan or of any Unit granted under the Plan and any Grant Agreement relating thereto provided that such suspension, termination, amendment, or revision shall: |
(a) | not adversely alter or impair any Unit previously granted except as permitted by the terms of this Plan; |
(b) | be in compliance with applicable law and subject to any regulatory approvals including, where required, the approval of the Stock Exchange; and |
(c) | be subject to Shareholder approval, where required by law, the requirements of the Stock Exchange or this Plan. |
(2) | If the Plan is terminated, the provisions of the Plan and any administrative guidelines and other rules and regulations adopted by the Board and in force with respect to outstanding Units will continue in effect as long as any such Unit or any rights pursuant thereto remain outstanding and, notwithstanding the termination of the Plan, the Board will remain able to make such interpretations and amendments to the Plan or the Units as they would have been entitled to make if the Plan were still in effect. |
(3) | Subject to Section 2.3(1), the Board may from time to time, in its discretion and without the approval of Shareholders or Participants, make changes to the Plan or any Unit that do not require the approval of Shareholders under Section 2.3(4), which may include but are not limited to: |
(a) | any amendment of a “housekeeping” nature, including without limitation those made to clarify the meaning of an existing provision of the Plan, correct or supplement any provision of the Plan that is inconsistent with any other provision of the Plan, correct any grammatical or typographical errors or amend the definitions in the Plan regarding administration of the Plan; |
(b) | changes that alter, extend or accelerate the terms of vesting or settlement applicable to any Units; |
(c) | any amendment to the Plan respecting administration and eligibility for participation under the Plan; and |
(d) | an amendment of the Plan or a Unit as necessary to comply with applicable law or the requirements of the Stock Exchange or any other regulatory body having authority over the Corporation, the Plan, the Participants or the Shareholders. |
(4) | Shareholder approval is required for the following amendments to the Plan: |
(a) | any increase in the maximum number of Shares that may be issuable from treasury pursuant to Units granted under the Plan (as set out in Section 2.2), other than an adjustment pursuant to Section 2.15. |
(b) | any amendment to Section 2.3(3) and this Section 2.3(4). |
(5) | No such amendment to the Plan shall cause the Plan in respect of Restricted Share Units or Performance Share Units to cease to be a plan described in section 7 of the ITA or any successor to such provision. |
(6) | No such amendment to the Plan shall cause the Plan in respect of Deferred Share Units to cease to be a plan described in regulation 6801(d) of the ITA or any successor to such provision. |
(1) | The administration of the Plan (including any amendments thereto), the terms of the grant of any Unit under the Plan, the grant of Units, and the Corporation’s obligation to issue Shares or deliver a Cash Equivalent shall be subject to all applicable federal, provincial, state and foreign laws, rules and regulations, the rules and regulations of the Stock Exchange and any other stock exchange on which the Shares are listed or posted for trading, and to such approvals by any regulatory or governmental agency as may, in the opinion of counsel to the Corporation, be required. The Corporation shall not be obliged by any provision of the Plan or the grant of any Unit hereunder to issue Shares or deliver a Cash Equivalent in violation of such laws, rules and regulations or any condition of such approvals. |
(2) | No Unit shall be granted, and no Shares shall be issued hereunder, where such grant or issue would require registration of the Plan or of Shares under the securities laws of any foreign jurisdiction (other than the United States), and any purported grant of any Unit or purported issue of Shares hereunder in violation of this provision shall be void. |
(3) | The Corporation shall have no obligation to issue any Shares pursuant to this Plan unless upon official notice of issuance such Shares shall have been duly listed with the Stock Exchange (and any other stock exchange on which the Shares are listed or posted for trading). Shares issued to Participants pursuant to the settlement of Units may be subject to limitations on sale or resale under applicable securities laws. |
(4) | Should the Board, in its sole and absolute discretion and subject to Section 2.3(5) and Section 2.3(6), determine that it is not desirable or feasible to provide for the settlement of Restricted Share Units, Deferred Share Units or Performance Share Units, as applicable, including by reason of any such laws, regulations, rules, orders or requirements, it shall notify the Participants of such determination and on receipt of such notice each Participant shall have the option of electing that such settlement obligations |
(1) | Notwithstanding any other provision contained herein, and together with Section 2.6(3) the Corporation or the relevant Affiliate, as applicable, shall be entitled to withhold from any amount payable to a Participant, either under this Plan or otherwise, such amounts as may be necessary so as to ensure that the Corporation or the relevant Affiliate is in compliance with all applicable withholding tax or other source deduction liabilities relating to the settlement of such Units (the “Applicable Withholding Taxes”). |
(2) | It is the responsibility of the Participant to complete and file any tax returns which may be required within the periods specified in applicable laws as a result of the Participant’s participation in the Plan. The Corporation shall not be held responsible for any tax consequences to a Participant as a result of the Participant’s participation in the Plan and the Participant shall indemnify and save harmless the Corporation from and against any and all loss, liability, damage, penalty or expense (including legal expense), which may be asserted against the Corporation or which the Corporation may suffer or incur arising out of, resulting from, or relating in any manner whatsoever to any tax liability in connection therewith. |
(3) | For greater certainty, unless not required under the ITA or any other applicable law, no cash payment will be made nor will Shares be issued until: |
(a) | an amount sufficient to cover the Applicable Withholding Taxes payable on the settlement of Units has been received by the Corporation (or withheld by the Corporation from the Cash Equivalent and/or cash payment noted above if applicable); |
(b) | the Participant undertakes to arrange for such number of Shares to be sold as is necessary to raise an amount equal to the Applicable Withholding Taxes, and to cause the proceeds from the sale of such Shares to be delivered to the Corporation; or |
(c) | the Participant elects to settle for cash such number of Units as is necessary to raise funds sufficient to cover the Applicable Withholding Taxes with such amount being withheld by the Corporation. |
(d) | the Participant to whom the Units were granted; |
(e) | with the Corporation’s prior written approval and subject to such conditions as the Corporation may stipulate, such Participant’s family or any registered retirement savings plans or registered retirement income funds of which the Participant is and remains the annuitant; |
(f) | upon the Participant’s death, by the legal representative of the Participant’s estate; or |
(g) | upon the Participant’s Incapacity, the legal representative having authority to deal with the property of the Participant; |
(1) | No Participant has any claim or right to be granted a Unit (including, without limitation, a Unit granted in substitution for any Unit that has expired pursuant to the terms of this Plan), and the granting of any Unit does not and is not to be construed as giving a Participant a right to continued employment or to remain a Consultant, director, officer or employee, as the case may be, of the Corporation or an Affiliate of the Corporation. Nothing contained in this Plan or in any Unit granted under this Plan shall interfere in any way with the rights of the Corporation or an Affiliate of the Corporation in connection with the employment, retention or termination of any such person. |
(2) | No Participant has any rights or privileges as a Shareholder of the Corporation in respect of Shares that are issuable upon the settlement of a Unit pursuant to the terms of this Plan until the allotment and issuance to the Participant of certificates representing such Shares or the entry of such Participant’s name on the share register of the Corporation as the holder of Shares, and that person becomes the holder of record of those Shares. The Participant or the Participant’s legal representative shall not, by reason of the grant of any Unit, be considered to be a Shareholder of the Corporation until a Unit has been duly settled and Shares have been issued in respect thereof. |
(3) | Units shall be credited to an unfunded notional bookkeeping account established and maintained by the Corporation in the name of each Participant. Notwithstanding any other provision of the Plan to the contrary, a Unit shall not be considered or construed as an actual investment in Shares. Participants shall have no legal or equitable rights, claims, or interest in any specific property or assets of the Corporation or any Affiliate. No assets of the Corporation or any Affiliate shall be held in any way as collateral security for the fulfillment of the obligations of the Corporation or any Affiliate under this Plan. Any and all of the Corporation’s or any Affiliate’s assets shall be, and remain, the general unrestricted assets of the Corporation or Affiliate. |
(4) | The Corporation’s or any of its Affiliate’s obligation under this Plan shall be merely that of an unfunded and unsecured promise of the Corporation or such Affiliate to pay money in the future, and the rights of Participants shall be no greater than those of unsecured general creditors. |
(5) | The Corporation makes no representation or warranty as to the future Market Value of the Shares or with respect to any income tax matters affecting the Participant resulting from the grant or settlement of a Unit or transactions in the Shares. With respect to any fluctuations in the Market Value of Shares, neither the Corporation, nor any of its directors, officers, employees, Shareholders or agents shall be liable for anything done or omitted to be done by such person or any other person with respect to the price, time, quantity or other conditions and circumstances of the issuance of Shares hereunder, or in any other manner related to the Plan. For greater certainty, no amount will be paid to, or in respect of, a Participant under |
Section 2.16 | Cancellation of Units. |
(2) | Subject to the provisions of this Plan, the Board may grant Restricted Share Units to any Eligible Person upon the terms, conditions and limitations set forth herein and such other terms, conditions and limitations permitted by and not inconsistent with this Plan as the Board may determine. |
(3) | The grant of a Restricted Share Unit shall be evidenced by a Grant Agreement, signed on behalf of the Corporation. |
(4) | The Corporation shall maintain a notional account for each RSU Participant, in which shall be recorded the number of vested and unvested Restricted Share Units granted or credited to such Participant. |
(5) | The grant of a Restricted Share Unit to an RSU Participant, or the settlement of a Restricted Share Unit, under the Plan shall neither entitle such RSU Participant to receive nor preclude such RSU Participant from receiving subsequently granted Restricted Share Units. |
Section 3.2 | Equivalence. |
(1) | 1/3 of the Restricted Share Units granted pursuant to Section 3.1 shall vest on the first (1st) anniversary of the Date of Grant; |
(2) | 1/3 of the Restricted Share Units granted pursuant to Section 3.1 shall vest on the second (2nd) anniversary of the Date of Grant; |
(3) | 1/3 of the Restricted Share Units granted pursuant to Section 3.1 shall vest on the third (3rd) anniversary of the Date of Grant; and |
(4) | all Restricted Share Units credited pursuant to Section 2.14 shall vest simultaneously with the Restricted Share Units to which they relate, provided the Participant is continuously employed by or in service with the Corporation, or any of its Affiliates, from the Date of Grant until such Vesting Date, |
(7) | Except as otherwise provided in an RSU Participant’s Grant Agreement or any other provision of this Plan: |
(a) | all of the vested Restricted Share Units covered by a particular grant and the related Restricted Share Units credited pursuant to Section 3.3 may be settled on the first Business Day following their RSU Vesting Date (the “RSU Settlement Date”); |
(b) | an RSU Participant is entitled to deliver to the Corporation, on or before the RSU Settlement Date, an RSU Settlement Notice in respect of any or all vested Restricted Share Units held by the RSU Participant; |
(c) | in the RSU Settlement Notice, the RSU Participant will elect, in the RSU Participant’s sole discretion, including with respect to any fractional RSUs, to settle vested Restricted Share Units for their Cash Equivalent (determined in accordance with Section 4.2(1)), Shares (determined in accordance with Section 4.2(2)) or a combination thereof. |
(8) | Subject to Section 4.1(3), settlement of Restricted Share Units shall take place promptly following the RSU Settlement Date and take the form set out in the RSU Settlement Notice through: |
(a) | in the case of settlement of Restricted Share Units for their Cash Equivalent, delivery of a cheque to the RSU Participant representing the Cash Equivalent; |
(b) | in the case of settlement of Restricted Share Units for Shares, delivery of a share certificate to the RSU Participant or the entry of the Participant’s name on the share register for the Shares; or |
(c) | in the case of settlement of Restricted Share Units for a combination of Shares and the Cash Equivalent, a combination of (a) and (b) above. |
(9) | If an RSU Settlement Notice is not received by the Corporation on or before the RSU Settlement Date, settlement shall take the form of Shares issued from treasury as set out in Section 4.2(2). |
(10) | Notwithstanding any other provision of this Plan, in the event that an RSU Settlement Date falls during a black-out period or other trading restriction imposed by the Corporation and an RSU Participant has not delivered an RSU Settlement Notice, then such RSU Settlement Date shall be automatically extended to the tenth (10th) Business Day following the date that such black-out period or other trading restriction is lifted, terminated or removed. |
Section 4.2 | Determination of Amounts. |
(5) | Cash Equivalent of Restricted Share Units. For purposes of determining the Cash Equivalent of Restricted Share Units to be made pursuant to Section 4.1(2)(a) or Section 4.1(2)(c), such calculation will be made on the RSU Settlement Date based on the Market Value on the RSU Settlement Date multiplied by the number of vested Restricted Share Units in the Participant’s Restricted Share Unit notional account which the Participant desires to settle in cash pursuant to the RSU Settlement Notice. |
(6) | Payment in Shares; Issuance of Shares from Treasury. For the purposes of determining the number of Shares from treasury to be issued and delivered to an RSU Participant upon settlement of Restricted Share Units pursuant to Section 4.1(2)(b) or Section 4.1(2)(c), such calculation will be made on the RSU Settlement Date based on the whole number of Shares equal to the whole number of vested Restricted Share Units then recorded in the Participant’s Restricted Share Unit notional account which the Participant desires to settle pursuant to the RSU Settlement Notice. Shares issued from treasury will be issued in consideration for the past services of the RSU Participant to the Corporation and the entitlement of the RSU Participant under this Plan shall be satisfied in full by such issuance of Shares. If applicable, the Corporation shall also make a cash payment to the RSU Participant with respect to the value of fractional Restricted Share Units standing to the RSU Participant’s credit after the maximum number of whole |
(5) | Except as the Board may otherwise determine or unless otherwise provided in the RSU Participant’s Grant Agreement and regardless of any adverse or potentially adverse tax or other consequences resulting from the following: |
(d) | if an RSU Participant ceases to be an Eligible Person as a result of such RSU Participant’s termination for cause or resignation without good reason, any unvested Restricted Share Units held by such RSU Participant shall Expire on the RSU Termination Date and be of no further force or effect whatsoever and such Participant shall no longer be eligible for a grant of RSUs; and |
(e) | if an RSU Participant ceases to be Eligible Person as a result of such RSU Participant’s retirement with the concurrence of the Board, as a result of the Participant’s dismissal without cause or resignation for good reason, or as a result of such RSU Participant’s death or physical or psychological Incapacity, any unvested Restricted Share Units held by such RSU Participant shall vest on the RSU Termination Date. |
(7) | Subject to this Article 5, the Board may recommend the grant of, from time to time, Deferred Share Units to a DSU Participant. |
(8) | The grant of a Deferred Share Unit shall be evidenced by a Grant Agreement, signed on behalf of the Corporation. |
(9) | The Corporation shall maintain a notional account for each DSU Participant, in which shall be recorded the number of Deferred Share Units granted or credited to such Participant. |
(10) | The grant of a Deferred Share Unit to a DSU Participant, or the settlement of a Deferred Share Unit, under the Plan shall neither entitle such DSU Participant to receive nor preclude such DSU Participant from receiving subsequently granted Deferred Share Units. |
Section 5.2 | Equivalence. |
(4) | Subject to Board approval, a DSU Participant may elect by filing an election notice in the form of Schedule “C” attached hereto (the “Election Notice”), once each Fiscal Year, to be paid up to one hundred percent (100%) of his or her Annual Board Retainer in the form of Deferred Share Units (the “Elected Amount”), with the balance being paid in cash in accordance with the Corporation’s regular practices of paying such cash compensation. In the case of an existing DSU Participant, the election must be completed, signed |
(5) | The Election Notice shall, subject to any minimum amount that may be required by the Board, from time to time, designate the percentage of the Annual Board Retainer for the applicable Fiscal Year that is to be deferred into Deferred Share Units, with the remaining percentage to be paid in cash in accordance with the Corporation’s regular practices of paying such cash compensation. |
(6) | In the absence of a designation to the contrary (including delivery of an Election Notice by a DSU Participant requesting that a greater or lesser percentage of his or her Annual Board Retainer be payable in the form of Deferred Share Units relative to the percentage previously elected by such DSU Participant), the DSU Participant’s Election Notice shall remain in effect unless otherwise terminated. |
Section 5.4 | Termination Right. |
(1) | Each DSU Participant is entitled to terminate his or her participation in the Plan by filing with the Chief Financial Officer of the Corporation, or such other officer of the Corporation designated by the Board, a notice electing to terminate the receipt of additional Deferred Share Units in the form of Schedule “E” attached hereto (“Termination Notice”). |
(2) | Such Termination Notice shall be effective as of the date received by the Corporation. |
(3) | Thereafter, any portion of such DSU Participant’s Annual Board Retainer payable, and subject to comply with Section 5.3, all subsequent Annual Board Retainers shall be paid in cash in accordance with the Corporation’s regular practices of paying such cash compensation. |
(4) | For greater certainty, to the extent a DSU Participant terminates his or her participation in the Plan, he or she shall not be entitled to become a DSU Participant again until the Fiscal Year following the Fiscal Year in which the Termination Notice becomes effective. |
Section 5.5 | Calculation. |
(2) | The number of Deferred Share Units (including fractional Deferred Share Units) granted at any particular time pursuant to this Plan will be calculated by: |
(f) | in the case of an Elected Amount, by dividing (i) the dollar amount of the Elected Amount allocated to the DSU Participant by (ii) the Market Value of a Share on the applicable Award Date; or |
(g) | in the case of a grant of Deferred Share Units pursuant to Section 5.1, by dividing (i) the dollar amount of such grant by (ii) the Market Value of a Share on the Date of Grant. |
(6) | All Deferred Share Units recorded in a DSU Participant’s Deferred Share Unit notional account shall vest on the DSU Termination Date, unless otherwise determined by the Board at its sole discretion and in compliance with Section 2.3(6), subject to a determination of the Board made in accordance with Article 6. |
(7) | DSU Participants will not have any right to receive any benefit under the Plan in respect of a Deferred Share Unit until the DSU Termination Date. |
(1) | Subject to Section 5.7(2), the DSU Participant (or where the DSU Participant has died, a dependant or relation of the DSU Participant or the legal representative of the DSU Participant) will deliver to the Corporation a DSU Settlement Notice, in the DSU Participant’s sole discretion, to elect to settle all Deferred Share Units in such DSU Participant’s notional account for their Cash Equivalent (determined in accordance with Section 5.8(1)), Shares (determined in accordance with Section 5.8(2)) or a combination thereof. |
(2) | If such DSU Settlement Notice is not received by the Corporation within 30 days prior to the DSU Payment Date, settlement shall take the form of the Cash Equivalent determined in accordance with Section 5.8(1), among other provisions of this Plan. |
(3) | Settlement of Deferred Share Units shall take place on the DSU Payment Date and in the form set out in the DSU Settlement Notice through: |
(a) | in the case of settlement of Deferred Share Units for their Cash Equivalent, delivery of a cheque to the Participant, a dependant or relation of the Participant or the Participant’s duly authorized legal representative, as the case may be, representing the Cash Equivalent; |
(b) | in the case of settlement of Deferred Share Units for Shares, delivery of a share certificate to the Participant, a dependant or relation of the Participant or the Participant’s duly authorized legal representative, as the case may, or the entry of the Participant’s name on the share register for the Shares; or |
(c) | in the case of settlement of Deferred Share Units for a combination of Shares and the Cash Equivalent, a combination of (a) and (b) above. |
Section 5.8 | Determination of Amounts. |
(1) | Cash Equivalent of Deferred Share Units. For purposes of determining the Cash Equivalent of Deferred Share Units, such calculation will be made based on the Market Value on the DSU Termination Date multiplied by the number of Deferred Share Units in the Participant’s Deferred Share Unit notional account as of the DSU Termination Date. |
(2) | Payment in Shares; Issuance of Shares from Treasury. For the purposes of determining the number of Shares to be issued from treasury and delivered to a DSU Participant upon settlement of Deferred Share Units, such calculation will be made on the DSU Termination Date, or if the DSU Termination Date is not a Business Day, on the next such Business Day, based on the whole number of Shares equal to the whole number of Deferred Share Units then recorded in the Participant’s Deferred Share Unit notional account. Shares issued from treasury will be issued in consideration for the past services of the DSU Participant to the Corporation and the entitlement of the DSU Participant under this Plan shall be satisfied in full by such issuance of Shares. If applicable, the Corporation shall also make a cash payment to the DSU Participant with respect to the value of fractional Deferred Share Units standing to the DSU Participant’s credit after the maximum number of whole Shares have been issued by the Corporation, calculated by multiplying (i) the number of such fractional Deferred Share Units by (ii) the Market Value on the DSU Termination Date. |
(6) | Subject to the provisions of this Plan, the Board may grant Performance Share Units to any Eligible Person upon the terms, conditions and limitations set forth herein and such other terms, conditions and limitations permitted by and not inconsistent with this Plan as the Board may determine. |
(7) | The grant of a Performance Share Unit shall be evidenced by a Grant Agreement, signed on behalf of the Corporation. |
(8) | The Corporation shall maintain a notional account for each PSU Participant, in which shall be recorded the number of vested and unvested Performance Share Units granted or credited to such Participant. |
(9) | The grant of a Performance Share Unit to a PSU Participant, or the settlement of a Performance Share Unit, under the Plan shall neither entitle such PSU Participant to receive nor preclude such PSU Participant from receiving subsequently granted Performance Share Units. |
(7) | Except as otherwise provided in a PSU Participant’s Grant Agreement or any other provision of this Plan: |
(d) | all of the vested Performance Share Units covered by a particular grant and the related Performance Share Units credited pursuant to Section 6.2 may be settled on the first Business Day following their PSU Vesting Date (the “PSU Settlement Date”); |
(e) | a PSU Participant shall become entitled to deliver to the Corporation, on or before the PSU Settlement Date, a PSU Settlement Notice in respect of any or all vested Performance Share Units held by the PSU Participant; and |
(f) | in the PSU Settlement Notice, the PSU Participant will elect, in the PSU Participant’s sole discretion, including with respect to any fractional PSUs, to settle vested Performance Share Units for their Cash Equivalent (determined in accordance with Section 7.2(1)), Shares (determined in accordance with Section 7.2(2)) or a combination thereof. |
(8) | Subject to Section 7.1(3), settlement of Performance Share Units shall take the form set out in the PSU Settlement Notice through delivery of: |
(a) | in the case of settlement of Performance Share Units for their Cash Equivalent, a cheque to the PSU Participant representing the Cash Equivalent; |
(b) | in the case of settlement of Performance Share Units for Shares, delivery of a share certificate to the PSU Participant or the entry of the Participant’s name on the share register for the Shares; or |
(c) | in the case of settlement of Performance Share Units for a combination of Shares and the Cash Equivalent, a combination of (a) and (b) above. |
(9) | If a PSU Settlement Notice is not received by the Corporation on or before the PSU Settlement Date, settlement shall take the form of Shares issued from treasury as set out in Section 7.2(2). |
(10) | Notwithstanding any other provision of this Plan, in the event that a PSU Settlement Date falls during a black-out period or other trading restriction imposed by the Corporation and a PSU Participant has not delivered a PSU Settlement Notice, then such PSU Settlement Date shall be automatically extended to the tenth (10th) Business Day following the date that such black-out period or other trading restriction is lifted, terminated or removed. |
Section 7.2 | Determination of Amounts. |
(5) | Cash Equivalent of Performance Share Units. For purposes of determining the Cash Equivalent of Performance Share Units to be made pursuant to Section 7.1(2)(a) or Section 7.1(2)(c), such calculation will be made on the PSU Settlement Date based on the Market Value on the PSU Settlement Date multiplied by the number of vested Performance Share Units in the Participant’s Performance Share Unit notional account which the Participant desires to settle in cash pursuant to the PSU Settlement Notice. |
(6) | Payment in Shares; Issuance of Shares from Treasury. For the purposes of determining the number of Shares from treasury to be issued and delivered to a PSU Participant upon settlement of Performance Share Units pursuant to Section 7.1(2)(b) or Section 7.1(2)(c), such calculation will be made on the PSU Settlement Date based on the whole number of Shares equal to the whole number of vested Performance Share Units then recorded in the Participant’s Performance Share Unit notional account which the Participant desires to settle pursuant to the PSU Settlement Notice. Shares issued from treasury will be issued in consideration for the past services of the PSU Participant to the Corporation and the entitlement of the PSU Participant under this Plan shall be satisfied in full by such issuance of Shares. If applicable, the Corporation shall also make a cash payment to the PSU Participant with respect to the value of fractional Performance Share Units standing to the PSU Participant’s credit after the maximum number of whole Shares have been issued by the Corporation, calculated by multiplying (i) the number of such fractional Performance Share Units by (ii) the Market Value on the PSU Settlement Date. |
Section 8.1 | Conversion or Exchange of Units. |
Section 8.2 | Notice to Participants. |
Section 8.3 | Acceleration of Vesting. |
1. | Restricted Share Units. The Corporation hereby grants to the Participant, as of _____________, 20____, subject to the terms and conditions hereinafter set forth, _____ Restricted Share Units (the “Restricted Share Units”), vesting in accordance with the terms of this Grant Agreement and in accordance with the Plan. |
2. | Vesting of the Restricted Share Units. Subject to the vesting restrictions in Section 3 (if any), the Restricted Share Units shall vest according to the following table: |
3. | Subject to Plan. This Restricted Share Units shall be subject in all respects to the provisions of the Plan, the terms and conditions of which are hereby expressly incorporated by reference, as same |
4. | Shareholder Rights. A Participant shall have no rights whatsoever as a shareholder in respect of any of the Restricted Share Units. |
5. | Transfer of Restricted Share Unit. The Restricted Share Units granted pursuant to this Agreement shall not be assignable or transferable by the Participant, except in accordance with the Plan. |
6. | Notice. Any notice required or permitted to be given hereunder shall be given in accordance with, and subject to, the provisions of the Plan. |
7. | Governing Law. This Agreement and the Restricted Share Units shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. |
8. | French Language. The parties agree that this Agreement as well as all documents relating thereto be drawn up in the English language only. Les parties seront censes avoir requis que cette contrat de meme que tous les documents s’y rattachant soient rediges en anglais seulement. |
Date | Participant’s Signature |
(Print name) |
(a) | I have received and reviewed a copy of the terms of the Plan and have reviewed, considered and agreed to be bound by the terms of this Election Notice and the Plan. |
(b) | I have requested and am satisfied that the Plan and the foregoing be drawn up in the English language. Le soussigné reconnaît qu’il a exigé que le Régime et ce qui précède soient rédigés et exécutés en anglais et s’en déclare satisfait. |
(c) | I recognize that when Deferred Share Units are settled in accordance with the terms of the Plan, income tax and other withholdings as required will arise at that time. Upon settlement of the Deferred Share Units, the Corporation will make or arrange with me to make all appropriate withholdings as required by law at that time. |
(d) | The value of Deferred Share Units is based on the value of the Shares of the Corporation and therefore is not guaranteed. |
Your Award | The Corporation hereby grants to you ________ Deferred Share Units. |
Date | Participant’s Signature |
(Print name) |
1. | Performance Share Units. The Corporation hereby grants to the Participant, as of _____________, 20____, subject to the terms and conditions hereinafter set forth, _____ Performance Share Units (the “Performance Share Units”), exercisable in accordance with the terms of this Grant Agreement and in accordance with the Plan. |
2. | Vesting of the Performance Share Units. Vesting of Performance Share Units is subject to the following Performance Criteria: |
3. | Subject to Plan. This Performance Share Units shall be subject in all respects to the provisions of the Plan, the terms and conditions of which are hereby expressly incorporated by reference, as same |
4. | Shareholder Rights. A Participant shall have no rights whatsoever as a shareholder in respect of any of the Performance Share Units. |
5. | Transfer of Performance Share Unit. The Performance Share Units granted pursuant to this Agreement shall not be assignable or transferable by the Participant, except in accordance with the Plan. |
6. | Notice. Any notice required or permitted to be given hereunder shall be given in accordance with, and subject to, the provisions of the Plan. |
7. | Governing Law. This Agreement and the Performance Share Units shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. |
8. | French Language. The parties agree that this Agreement as well as all documents relating thereto be drawn up in the English language only. Les parties seront censes avoir requis que cette contrat de meme que tous les documents s’y rattachant soient rediges en anglais seulement. |
Date | Participant’s Signature |
(Print name) |
1. | I have reviewed this annual report on Form 20-F of Shopify Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c. | Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and |
5. | The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting. |
1. | I have reviewed this annual report on Form 20-F of Shopify Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c. | Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and |
5. | The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting. |
• | the size of our addressable markets and our ability to serve those markets; |
• | the achievement of advances in and expansion of our platform and our solutions; |
• | our ability to predict future commerce trends and technology; |
• | the intended growth of our business and making investments to drive future growth; |
• | our ability to reach economies of scale; |
• | the growth of our merchants’ revenues; |
• | the growth of our third-party ecosystem, including formation of strategic partnerships; |
• | potential selective acquisitions and investments; |
• | the expansion of our platform into new markets; |
• | fluctuations in our future gross margin percentages; and |
• | our expectations on future incurred costs. |
• | our ability to generate revenue while controlling our costs and expenses; |
• | our ability to manage our growth effectively; |
• | the absence of material adverse changes in our industry or the global economy; |
• | trends in our industry and markets; |
• | our ability to maintain good business relationships with our merchants, vendors and partners; |
• | our ability to develop solutions that keep pace with the changes in technology, evolving industry standards, changes to the regulatory environment, new product introductions by competitors and changing merchant preferences and requirements; |
• | our ability to protect our intellectual property rights; |
• | our continued compliance with third-party license terms and the non-infringement of third-party intellectual property rights; |
• | our ability to manage and integrate acquisitions; |
• | our ability to retain key personnel; and |
• | our ability to raise sufficient debt or equity financing to support our continued growth. |
• | our rapid growth may not be sustainable and depends on our ability to attract new merchants, retain existing merchants and increase sales to both new and existing merchants; |
• | our business could be harmed if we fail to manage our growth effectively; |
• | we have a history of losses and we may be unable to achieve profitability; |
• | our limited operating history in a new and developing market makes it difficult to evaluate our current business and future prospects and may increase the risk that we will not be successful; |
• | if we fail to improve and enhance the functionality, performance, reliability, design, security and scalability of our platform in a manner that responds to our merchants’ evolving needs, our business may be adversely affected; |
• | a denial of service attack or security breach could delay or interrupt service to our merchants and their customers, harm our reputation or subject us to significant liability; |
• | payment transactions on Shopify Payments may subject us to regulatory requirements and other risks that could be costly and difficult to comply with or that could harm our business; |
• | we rely on a single supplier to provide the technology we offer through Shopify Payments; |
• | if the security of personally identifiable information we store relating to merchants and their customers is breached or otherwise subjected to unauthorized access, our reputation may be harmed and we may be exposed to liability; |
• | if our software contains serious errors or defects, we may lose revenue and market acceptance and may incur costs to defend or settle claims with our merchants; |
• | exchange rate fluctuations may negatively affect our results of operations; |
• | we may be unable to achieve or maintain data transmission capacity; |
• | our growth depends in part on the success of our strategic relationships with third parties; |
• | if we fail to maintain a consistently high level of customer service, our brand, business and financial results may be harmed; |
• | we use a limited number of data centers and any disruption of service at our data facilities could harm our business; |
• | if our solutions do not operate as effectively when accessed through mobile devices, our merchants and their customers may not be satisfied with our solutions; |
• | changes to technologies used in our platform or new versions or upgrades of operating systems and internet browsers could adversely impact the process by which merchants and customers interface with our platform; |
• | the impact of worldwide economic conditions, including the resulting effect on spending by SMBs, may adversely affect our business, operating results and financial condition; |
• | we may be subject to claims by third-parties of intellectual property infringement; |
• | we may be unable to obtain, maintain and protect our intellectual property rights and proprietary information or prevent third-parties from making unauthorized use of our technology; |
• | our use of “open source” software could negatively affect our ability to sell our solutions and subject us to possible litigation; |
• | 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 and 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; |
• | if we fail to effectively maintain, promote and enhance our brand, our business and competitive advantage may be harmed; |
• | if we are unable to hire, retain and motivate qualified personnel, our business will suffer; |
• | we are dependent on the continued services and performance of our senior management and other key employees, the loss of any of whom could adversely affect our business, operating results and financial condition; |
• | activities of merchants or the content of their shops could damage our brand, subject us to liability and harm our business and financial results; |
• | our operating results are subject to seasonal fluctuations; |
• | our business is susceptible to risks associated with international sales and the use of our platform in various countries; |
• | if third-party apps and themes change such that we do not or cannot maintain the compatibility of our platform with these apps and themes, or if we fail to provide third-party apps and themes that our merchants desire to add to their shops, demand for our platform could decline; |
• | we rely on computer hardware, purchased or leased, and software licensed from and services rendered by third-parties in order to provide our solutions and run our business, sometimes by a single-source supplier; |
• | we may not be able to compete successfully against current and future competitors; |
• | we do not have the history with our solutions or pricing models necessary to accurately predict optimal pricing necessary to attract new merchants and retain existing merchants; |
• | we have in the past made and in the future may make acquisitions and investments that could divert management’s attention, result in operating difficulties and dilution to our shareholders and otherwise disrupt our operations and adversely affect our business, operating results or financial position; |
• | provisions of our debt instruments may restrict our ability to pursue our business strategies; |
• | we may need to raise additional funds to pursue our growth strategy or continue our operations, and we may be unable to raise capital when needed or on acceptable terms; |
• | unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition; |
• | new tax laws could be enacted or existing laws could be applied to us or our merchants, which could increase the costs of our solutions and adversely impact our business; |
• | if we are required to collect state and local business taxes and sales and use taxes in additional jurisdictions, we might be subject to tax liability for past sales; |
• | we may not be able to use a significant portion of our tax carryforwards which could adversely affect our profitability; |
• | we are dependent upon consumers’ and merchants’ willingness to use the internet for commerce; |
• | we may face challenges in expanding into new geographic regions; and |
• | our reported financial results may be materially and adversely affected by changes in accounting priciniples generally accepted in the United States. |
Year ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(in thousands, except percentages) | |||||||||||
Monthly Recurring Revenue | $ | 11,335 | $ | 6,573 | $ | 3,819 | |||||
Gross Merchandise Volume | $ | 7,706,661 | $ | 3,763,838 | $ | 1,616,301 | |||||
Monthly Billing Retention Rate | over 100.0% | over 100.0% | over 100.0% |
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(in thousands, except share and per share data) | |||||||||||
Revenues: | |||||||||||
Subscription solutions | $ | 111,979 | $ | 66,668 | $ | 38,339 | |||||
Merchant solutions | 93,254 | 38,350 | 11,913 | ||||||||
205,233 | 105,018 | 50,252 | |||||||||
Cost of revenues(1): | |||||||||||
Subscription solutions | 24,531 | 16,790 | 8,504 | ||||||||
Merchant solutions | 69,631 | 26,433 | 5,009 | ||||||||
94,162 | 43,223 | 13,513 | |||||||||
Gross profit | 111,071 | 61,795 | 36,739 | ||||||||
Operating expenses: | |||||||||||
Sales and marketing(1) | 70,374 | 45,929 | 23,351 | ||||||||
Research and development(1)(2) | 39,722 | 25,915 | 13,682 | ||||||||
General and administrative(1)(3) | 18,731 | 11,566 | 3,975 | ||||||||
128,827 | 83,410 | 41,008 | |||||||||
Loss from operations | (17,756 | ) | (21,615 | ) | (4,269 | ) | |||||
Other income (expense) | (1,034 | ) | (696 | ) | (568 | ) | |||||
Net loss and comprehensive loss | $ | (18,790 | ) | $ | (22,311 | ) | $ | (4,837 | ) | ||
Net loss per share—basic and diluted(4) | $ | (0.30 | ) | $ | (0.57 | ) | $ | (0.13 | ) | ||
Weighted average shares used to compute net loss per share attributable to shareholders | 61,716,065 | 38,940,252 | 37,248,710 |
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(in thousands) | |||||||||||
Cost of revenues | $ | 345 | $ | 259 | $ | 113 | |||||
Sales and marketing | 1,351 | 696 | 354 | ||||||||
Research and development | 6,373 | 2,776 | 1,152 | ||||||||
General and administrative | 2,419 | 712 | 147 | ||||||||
$ | 10,488 | $ | 4,443 | $ | 1,766 |
Years ended December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Revenues | ||||||||
Subscription solutions | 54.6 | % | 63.5 | % | 76.3 | % | ||
Merchant solutions | 45.4 | % | 36.5 | % | 23.7 | % | ||
100.0 | % | 100.0 | % | 100.0 | % | |||
Cost of revenues | ||||||||
Subscription solutions | 12.0 | % | 16.0 | % | 16.9 | % | ||
Merchant solutions | 33.9 | % | 25.2 | % | 10.0 | % | ||
45.9 | % | 41.2 | % | 26.9 | % | |||
Gross profit | 54.1 | % | 58.8 | % | 73.1 | % | ||
Operating expenses | ||||||||
Sales and marketing | 34.3 | % | 43.7 | % | 46.5 | % | ||
Research and development | 19.4 | % | 24.7 | % | 27.2 | % | ||
General and administrative | 9.1 | % | 11.0 | % | 7.9 | % | ||
Total operating expenses | 62.8 | % | 79.4 | % | 81.6 | % | ||
Loss from operations | (8.7 | )% | (20.6 | )% | (8.5 | )% | ||
Other income (expenses) | (0.5 | )% | (0.7 | )% | (1.1 | )% | ||
Net loss and comprehensive loss | (9.2 | )% | (21.2 | )% | (9.6 | )% |
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(in thousands) | |||||||||||
Revenues: | |||||||||||
Canada | $ | 14,691 | $ | 7,729 | $ | 4,101 | |||||
United States | 144,748 | 72,149 | 31,743 | ||||||||
United Kingdom | 15,436 | 7,912 | 4,517 | ||||||||
Australia | 10,531 | 6,420 | 3,807 | ||||||||
Rest of World | 19,827 | 10,808 | 6,084 | ||||||||
Total Revenues | $ | 205,233 | $ | 105,018 | $ | 50,252 |
Years ended December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Revenues: | ||||||||
Canada | 7.2 | % | 7.4 | % | 8.2 | % | ||
United States | 70.5 | % | 68.7 | % | 63.2 | % | ||
United Kingdom | 7.5 | % | 7.5 | % | 9.0 | % | ||
Australia | 5.1 | % | 6.1 | % | 7.6 | % | ||
Rest of World | 9.7 | % | 10.3 | % | 12.0 | % | ||
Total Revenues | 100.0 | % | 100.0 | % | 100.0 | % |
Years ended December 31, | 2015 vs 2014 | 2014 vs 2013 | |||||||||||||||
2015 | 2014 | 2013 | % Change | % Change | |||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Revenues: | |||||||||||||||||
Subscription solutions | $ | 111,979 | $ | 66,668 | $ | 38,339 | 68.0 | % | 73.9 | % | |||||||
Merchant solutions | 93,254 | 38,350 | 11,913 | 143.2 | % | 221.9 | % | ||||||||||
$ | 205,233 | $ | 105,018 | $ | 50,252 | 95.4 | % | 109.0 | % | ||||||||
Percentage of revenues: | |||||||||||||||||
Subscription solutions | 54.6 | % | 63.5 | % | 76.3 | % | |||||||||||
Merchant solutions | 45.4 | % | 36.5 | % | 23.7 | % | |||||||||||
Total revenues | 100.0 | % | 100.0 | % | 100.0 | % |
Years ended December 31, | 2015 vs 2014 | 2014 vs 2013 | |||||||||||||||
2015 | 2014 | 2013 | % Change | % Change | |||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Cost of revenues: | |||||||||||||||||
Cost of subscription solutions | $ | 24,531 | $ | 16,790 | $ | 8,504 | 46.1 | % | 97.4 | % | |||||||
Cost of merchant solutions | 69,631 | 26,433 | 5,009 | 163.4 | % | 427.7 | % | ||||||||||
Total cost of revenues | $ | 94,162 | $ | 43,223 | $ | 13,513 | 117.9 | % | 219.9 | % | |||||||
Percentage of revenues: | |||||||||||||||||
Cost of subscription solutions | 12.0 | % | 16.0 | % | 16.9 | % | |||||||||||
Cost of merchant solutions | 33.9 | % | 25.2 | % | 10.0 | % | |||||||||||
45.9 | % | 41.2 | % | 26.9 | % |
Years ended December 31, | 2015 vs 2014 | 2014 vs 2013 | |||||||||||||||
2015 | 2014 | 2013 | % Change | % Change | |||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Gross profit | $ | 111,071 | $ | 61,795 | $ | 36,739 | 79.7 | % | 68.2 | % | |||||||
Percentage of total revenues | 54.1 | % | 58.8 | % | 73.1 | % |
Years ended December 31, | 2015 vs 2014 | 2014 vs 2013 | |||||||||||||||
2015 | 2014 | 2013 | % Change | % Change | |||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Sales and marketing | $ | 70,374 | $ | 45,929 | $ | 23,351 | 53.2 | % | 96.7 | % | |||||||
Percentage of total revenues | 34.3 | % | 43.7 | % | 46.5 | % |
Years ended December 31, | 2015 vs 2014 | 2014 vs 2013 | |||||||||||||||
2015 | 2014 | 2013 | % Change | % Change | |||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Research and development | $ | 39,722 | $ | 25,915 | $ | 13,682 | 53.3 | % | 89.4 | % | |||||||
Percentage of total revenues | 19.4 | % | 24.7 | % | 27.2 | % |
Years ended December 31, | 2015 vs 2014 | 2014 vs 2013 | |||||||||||||||
2015 | 2014 | 2013 | % Change | % Change | |||||||||||||
(in thousands, except percentages) | |||||||||||||||||
General and administrative | $ | 18,731 | $ | 11,566 | $ | 3,975 | 61.9 | % | 191.0 | % | |||||||
Percentage of total revenues | 9.1 | % | 11.0 | % | 7.9 | % |
Years ended December 31, | 2015 vs 2014 | 2014 vs 2013 | |||||||||||||
2015 | 2014 | 2013 | % Change | % Change | |||||||||||
(in thousands, except percentages) | |||||||||||||||
Other income (expenses), net | $ | (1,034 | ) | $ | (696 | ) | $ | (568 | ) | * | * |
* | Not a meaningful comparison |
Years ended December 31, | 2015 vs 2014 | 2014 vs 2013 | |||||||||||||
2015 | 2014 | 2013 | % Change | % Change | |||||||||||
(in thousands, except share and per share data) | |||||||||||||||
Net loss and comprehensive loss | $ | (18,790 | ) | $ | (22,311 | ) | $ | (4,837 | ) | * | * | ||||
Basic and diluted net loss per share attributable to common shareholders | $ | (0.30 | ) | $ | (0.57 | ) | $ | (0.13 | ) | ||||||
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders | 61,716,065 | 38,940,252 | 37,248,710 |
* | Not a meaningful comparison |
Three months ended December 31, | |||||||
2015 | 2014 | ||||||
(in thousands, except share and per share data) | |||||||
Revenues: | |||||||
Subscription solutions | $ | 34,608 | $ | 20,358 | |||
Merchant solutions | 35,565 | 14,824 | |||||
70,173 | 35,182 | ||||||
Cost of revenues(1): | |||||||
Subscription solutions | 7,662 | 5,049 | |||||
Merchant solutions | 27,001 | 10,520 | |||||
34,663 | 15,569 | ||||||
Gross profit | 35,510 | 19,613 | |||||
Operating expenses: | |||||||
Sales and marketing(1) | 22,527 | 12,209 | |||||
Research and development(1)(2) | 13,541 | 6,619 | |||||
General and administrative(1)(3) | 5,961 | 5,280 | |||||
42,029 | 24,108 | ||||||
Loss from operations | (6,519 | ) | (4,495 | ) | |||
Other income (expense) | 212 | (303 | ) | ||||
Net loss and comprehensive loss | $ | (6,307 | ) | $ | (4,798 | ) | |
Net loss per share—basic and diluted(4) | $ | (0.08 | ) | $ | (0.12 | ) | |
Weighted average shares used to compute net loss per share attributable to shareholders | 77,996,629 | 39,207,199 |
Three months ended December 31, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Cost of revenues | $ | 147 | $ | 100 | |||
Sales and marketing | 670 | 245 | |||||
Research and development | 3,520 | 766 | |||||
General and administrative | 872 | 365 | |||||
$ | 5,209 | $ | 1,476 |
Three months ended December 31, | 2015 vs 2014 | |||||||||
2015 | 2014 | % Change | ||||||||
(in thousands, except percentages) | ||||||||||
Revenues: | ||||||||||
Subscription solutions | $ | 34,608 | $ | 20,358 | 70.0 | % | ||||
Merchant solutions | 35,565 | 14,824 | 139.9 | % | ||||||
$ | 70,173 | $ | 35,182 | 99.5 | % | |||||
Percentage of revenues: | ||||||||||
Subscription solutions | 49.3 | % | 57.9 | % | ||||||
Merchant solutions | 50.7 | % | 42.1 | % | ||||||
Total revenues | 100.0 | % | 100.0 | % |
Three months ended December 31, | 2015 vs 2014 | |||||||||
2015 | 2014 | % Change | ||||||||
(in thousands, except percentages) | ||||||||||
Cost of revenues: | ||||||||||
Cost of subscription solutions | $ | 7,662 | $ | 5,049 | 51.8 | % | ||||
Cost of merchant solutions | 27,001 | 10,520 | 156.7 | % | ||||||
Total cost of revenues | $ | 34,663 | $ | 15,569 | 122.6 | % | ||||
Percentage of revenues: | ||||||||||
Cost of subscription solutions | 10.9 | % | 14.4 | % | ||||||
Cost of merchant solutions | 38.5 | % | 29.9 | % | ||||||
49.4 | % | 44.3 | % |
Three months ended December 31, | 2015 vs 2014 | |||||||||
2015 | 2014 | % Change | ||||||||
(in thousands, except percentages) | ||||||||||
Gross profit | $ | 35,510 | $ | 19,613 | 81.1 | % | ||||
Percentage of total revenues | 50.6 | % | 55.7 | % |
Three months ended December 31, | 2015 vs 2014 | |||||||||
2015 | 2014 | % Change | ||||||||
(in thousands, except percentages) | ||||||||||
Sales and marketing | $ | 22,527 | $ | 12,209 | 84.5 | % | ||||
Percentage of total revenues | 32.1 | % | 34.7 | % |
Three months ended December 31, | 2015 vs 2014 | |||||||||
2015 | 2014 | % Change | ||||||||
(in thousands, except percentages) | ||||||||||
Research and development | $ | 13,541 | $ | 6,619 | 104.6 | % | ||||
Percentage of total revenues | 19.3 | % | 18.8 | % |
Three months ended December 31, | 2015 vs 2014 | |||||||||
2015 | 2014 | % Change | ||||||||
(in thousands, except percentages) | ||||||||||
General and administrative | $ | 5,961 | $ | 5,280 | 12.9 | % | ||||
Percentage of total revenues | 8.5 | % | 15.0 | % |
Three months ended December 31, | 2015 vs 2014 | ||||||||
2015 | 2014 | % Change | |||||||
(in thousands, except percentages) | |||||||||
Other income (expenses), net | $ | 212 | $ | (303 | ) | * |
* | Not a meaningful comparison |
Three months ended December 31, | 2015 vs 2014 | ||||||||
2015 | 2014 | % Change | |||||||
(in thousands, except share and per share data) | |||||||||
Net loss and comprehensive loss | $ | (6,307 | ) | $ | (4,798 | ) | * | ||
Basic and diluted net loss per share attributable to common shareholders | $ | (0.08 | ) | $ | (0.12 | ) | |||
Weighted average shares used to compute basic and diluted net loss per share attributable to shareholders | 77,996,629 | 39,207,199 |
Three Months Ended | |||||||||||||||||||||||||||||||
Dec 31, 2015 | Sep 30, 2015 | June 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | ||||||||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Subscription solutions | $ | 34,608 | $ | 29,560 | $ | 25,459 | $ | 22,352 | $ | 20,358 | $ | 17,690 | $ | 15,567 | $ | 13,053 | |||||||||||||||
Merchant solutions | 35,565 | 23,226 | 19,467 | 14,996 | 14,824 | 9,656 | 8,113 | 5,757 | |||||||||||||||||||||||
70,173 | 52,786 | 44,926 | 37,348 | 35,182 | 27,346 | 23,680 | 18,810 | ||||||||||||||||||||||||
Cost of revenues: (1) | |||||||||||||||||||||||||||||||
Subscription solutions | 7,662 | 6,414 | 5,422 | 5,033 | 5,049 | 4,615 | 3,842 | 3,284 | |||||||||||||||||||||||
Merchant solutions | 27,001 | 17,629 | 14,252 | 10,749 | 10,520 | 6,492 | 5,523 | 3,898 | |||||||||||||||||||||||
34,663 | 24,043 | 19,674 | 15,782 | 15,569 | 11,107 | 9,365 | 7,182 | ||||||||||||||||||||||||
Gross profit | 35,510 | 28,743 | 25,252 | 21,566 | 19,613 | 16,239 | 14,315 | 11,628 | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||
Sales and marketing(1) | 22,527 | 18,216 | 16,091 | 13,540 | 12,209 | 11,433 | 12,569 | 9,718 | |||||||||||||||||||||||
Research and development(1)(2) | 13,541 | 10,068 | 8,800 | 7,313 | 6,619 | 6,563 | 6,647 | 6,086 | |||||||||||||||||||||||
General and administrative(1)(3) | 5,961 | 4,759 | 3,822 | 4,189 | 5,280 | 2,352 | 2,138 | 1,796 | |||||||||||||||||||||||
42,029 | 33,043 | 28,713 | 25,042 | 24,108 | 20,348 | 21,354 | 17,600 | ||||||||||||||||||||||||
Loss from operations | (6,519 | ) | (4,300 | ) | (3,461 | ) | (3,476 | ) | (4,495 | ) | (4,109 | ) | (7,039 | ) | (5,972 | ) | |||||||||||||||
Other income (expense) | 212 | (357 | ) | 165 | (1,054 | ) | (303 | ) | (159 | ) | 159 | (393 | ) | ||||||||||||||||||
Net loss and comprehensive loss | $ | (6,307 | ) | $ | (4,657 | ) | $ | (3,296 | ) | $ | (4,530 | ) | $ | (4,798 | ) | $ | (4,268 | ) | $ | (6,880 | ) | $ | (6,365 | ) | |||||||
Net loss per share—basic and diluted(4) | $ | (0.08 | ) | $ | (0.06 | ) | $ | (0.06 | ) | $ | (0.12 | ) | $ | (0.12 | ) | $ | (0.11 | ) | $ | (0.18 | ) | $ | (0.16 | ) |
Three Months Ended | |||||||||||||||||||||||||||||||
Dec 31, 2015 | Sep 30, 2015 | June 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | ||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||
Cost of revenues | $ | 147 | $ | 67 | $ | 72 | $ | 59 | $ | 100 | $ | 54 | $ | 65 | $ | 40 | |||||||||||||||
Sales and marketing | 670 | 325 | 182 | 174 | 245 | 161 | 157 | 133 | |||||||||||||||||||||||
Research and development | 3,520 | 1,248 | 826 | 779 | 767 | 512 | 628 | 869 | |||||||||||||||||||||||
General and administrative | 872 | 628 | 491 | 428 | 365 | 156 | 118 | 73 | |||||||||||||||||||||||
$ | 5,209 | $ | 2,268 | $ | 1,571 | $ | 1,440 | $ | 1,477 | $ | 883 | $ | 968 | $ | 1,115 |
Three Months Ended | |||||||||||||||||||||||||||||||
Dec 31, 2015 | Sep 30, 2015 | June 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | ||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||
Refundable tax credits | $ | 535 | $ | 223 | $ | — | $ | 300 | $ | 575 | $ | 240 | $ | 240 | $ | 240 |
Three Months Ended | |||||||||||||||||||||||||||||||
Dec 31, 2015 | Sep 30, 2015 | June 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | ||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||
Sales and use tax expense | $ | — | $ | — | $ | — | $ | 566 | $ | 2,182 | $ | — | $ | — | $ | — |
Three Months Ended | |||||||||||||||||||||||
Dec 31, 2015 | Sep 30, 2015 | June 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | ||||||||||||||||
Revenues | |||||||||||||||||||||||
Subscription solutions | 49.3 | % | 56.0 | % | 56.7 | % | 59.8 | % | 57.9 | % | 64.7 | % | 65.7 | % | 69.4 | % | |||||||
Merchant solutions | 50.7 | % | 44.0 | % | 43.3 | % | 40.2 | % | 42.1 | % | 35.3 | % | 34.3 | % | 30.6 | % | |||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of revenues | |||||||||||||||||||||||
Subscription solutions | 10.9 | % | 12.2 | % | 12.1 | % | 13.5 | % | 14.4 | % | 16.9 | % | 16.2 | % | 17.5 | % | |||||||
Merchant solutions | 38.5 | % | 33.4 | % | 31.7 | % | 28.8 | % | 29.9 | % | 23.7 | % | 23.3 | % | 20.7 | % | |||||||
49.4 | % | 45.5 | % | 43.8 | % | 42.3 | % | 44.3 | % | 40.6 | % | 39.5 | % | 38.2 | % | ||||||||
Gross profit | 50.6 | % | 54.5 | % | 56.2 | % | 57.7 | % | 55.7 | % | 59.4 | % | 60.5 | % | 61.8 | % | |||||||
Operating expenses: | |||||||||||||||||||||||
Sales and marketing | 32.1 | % | 34.5 | % | 35.8 | % | 36.3 | % | 34.7 | % | 41.8 | % | 53.1 | % | 51.7 | % | |||||||
Research and development | 19.3 | % | 19.1 | % | 19.6 | % | 19.6 | % | 18.8 | % | 24.0 | % | 28.1 | % | 32.4 | % | |||||||
General and administrative | 8.5 | % | 9.0 | % | 8.5 | % | 11.2 | % | 15.0 | % | 8.6 | % | 9.0 | % | 9.5 | % | |||||||
59.9 | % | 62.6 | % | 63.9 | % | 67.1 | % | 68.5 | % | 74.4 | % | 90.2 | % | 93.6 | % | ||||||||
Loss from operations | (9.3 | )% | (8.1 | )% | (7.7 | )% | (9.3 | )% | (12.8 | )% | (15.0 | )% | (29.7 | )% | (31.7 | )% | |||||||
Other income (expense) | 0.3 | % | (0.7 | )% | 0.4 | % | (2.8 | )% | (0.9 | )% | (0.6 | )% | 0.7 | % | (2.1 | )% | |||||||
Net loss and comprehensive loss | (9.0 | )% | (8.8 | )% | (7.3 | )% | (12.1 | )% | (13.6 | )% | (15.6 | )% | (29.1 | )% | (33.8 | )% |
Years ended | |||||||||||
December 31, 2015 | December 31, 2014 | December 31, 2013 | |||||||||
(in thousands) | |||||||||||
Cash, cash equivalents and marketable securities | $ | 190,173 | $ | 59,662 | $ | 83,529 | |||||
Total assets | 243,712 | 95,193 | 95,788 | ||||||||
Total liabilities | 48,395 | 27,461 | 10,407 |
Twelve Months Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Cash, cash equivalents and marketable securities (end of period) | $ | 190,173 | $ | 59,662 | $ | 83,529 | |||||
Net cash provided by (used in): | |||||||||||
Operating activities | $ | 15,756 | $ | (801 | ) | $ | 1,396 | ||||
Investing activities | (83,840 | ) | (40,366 | ) | (5,332 | ) | |||||
Financing activities | 137,855 | 140 | 70,053 | ||||||||
Effect of foreign exchange on cash and cash equivalents | (1,654 | ) | (549 | ) | (243 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 68,117 | (41,576 | ) | 65,874 | |||||||
Change in marketable securities | 62,394 | 17,709 | — | ||||||||
Net increase (decrease) in cash, cash equivalents and marketable securities | $ | 130,511 | $ | (23,867 | ) | $ | 65,874 |
Payments Due by Period | |||||||||||||||||||
Less Than 1 Year | 1 to 3 Years | 3 to 5 Years | More Than 5 Years | Total | |||||||||||||||
(in thousands) | |||||||||||||||||||
Bank indebtedness | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Operating lease obligations(1) | 5,804 | 15,716 | 16,028 | 42,594 | 80,142 | ||||||||||||||
Total contractual obligations | $ | 5,804 | $ | 15,716 | $ | 16,028 | $ | 42,594 | $ | 80,142 |
Year Ended December 31, | ||||||
2015 | 2014 | 2013 | ||||
Volatility | 64.3% | 62.4% | 73.9% | |||
Risk-free rate | 1.62% | 1.82% | 1.67% | |||
Dividend yield | Nil | Nil | Nil | |||
Average expected life | 5.26 | 5.73 | 6.06 |
• | Fair Value of Common Stock. Prior to our initial public offering in May 2015, our board of directors, with input from management, exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of our common stock as of the date of each option grant. Valuations of our stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountant Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Since our initial public offering, we have used the Volume Weighted Average Price for our common stock as reported on the New York Stock Exchange. |
• | Expected Term. We determine the expected term based on the average period the stock options are expected to remain outstanding. We base the expected term assumptions on our historical stock behavior combined with estimates of post-vesting holding period. |
• | Expected Volatility. We determine the price volatility factor based on the historical volatility of publicly traded industry peers. To determine our peer group of companies, we consider public companies in the technology industry and select those that are similar to us in size, stage of life cycle, and financial leverage. We intend to continue to consistently apply this methodology using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. |
• | Risk-Free Interest Rate. We base the risk-free interest rate used in the Black-Scholes valuation model on the yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term of the stock options for each stock option group. |
• | Expected Dividend. We have not paid and do not anticipate paying any cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero in the option pricing model. |
• | Forfeiture. We estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. We estimate the forfeiture rate based on historical experience. To the extent our actual forfeiture rate is different from our estimate, stock-based compensation expense is adjusted accordingly. |
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Document and Entity Information - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Feb. 09, 2016 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | SHOPIFY INC. | |
Entity Central Index Key | 0001594805 | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | FY | |
Document Type | 20-F | |
Document Period End Date | Dec. 31, 2015 | |
Amendment Flag | false | |
Class A Subordinate Voting | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 57,338,837 | |
Class B Multiple Voting | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 23,002,175 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Preferred shares authorized (in shares) | 0 | 27,159,277 |
Preferred shares issued (in shares) | 0 | 27,159,277 |
Preferred shares outstanding (in shares) | 0 | 27,159,277 |
Preferred shares aggregate liquidation preference amount | $ 0 | $ 87,500 |
Common shares issued (in shares) | 0 | 39,310,446 |
Common shares outstanding (in shares) | 0 | 39,310,446 |
Class A Subordinate Voting | ||
Common shares issued (in shares) | 56,877,089 | 0 |
Common shares outstanding (in shares) | 56,877,089 | 0 |
Class B Multiple Voting | ||
Common shares issued (in shares) | 23,212,769 | 0 |
Common shares outstanding (in shares) | 23,212,769 | 0 |
Consolidated Statements of Operations and Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Income Statement [Abstract] | |||
Refundable research tax credits | $ 1,058 | $ 1,295 | $ 891 |
Comprehensive loss | $ (18,790) | $ (22,311) | $ (4,837) |
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) $ in Thousands |
12 Months Ended |
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Dec. 31, 2015
USD ($)
| |
Common Stock | |
Stock issuance cost | $ 14,259 |
Nature of Business |
12 Months Ended |
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Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Nature of Business Shopify Inc. (“Shopify” or “the Company”) was incorporated as a Canadian corporation on September 28, 2004. The Company’s mission is to make commerce better for everyone. The Company provides the leading cloud-based, multi-channel commerce platform designed for small and medium-sized businesses. Using a single interface, the Company’s merchants can design, set up and manage their business across multiple sales channels, including web and mobile storefronts, social media storefronts and physical retail locations. The Company’s platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, ship orders, build customer relationships and leverage analytics and reporting. The Company’s platform is engineered to enterprise-level standards and functionality while designed for simplicity and ease-of-use. The Company’s headquarters and principal place of business are in Ottawa, Canada. Initial Public Offering In May 2015, the Company completed its initial public offering, or IPO, in which it issued and sold 8,855,000 Class A subordinate voting shares at a public offering price of $17.00 per share (including the 1,155,000 Class A subordinate voting shares purchased by the underwriters pursuant to the exercise of the over-allotment option). The Company received net proceeds of $136,251 after deducting underwriting discounts and commissions of $10,537 and other offering expenses of $3,747. Immediately prior to consummation of the IPO, all of the then-outstanding common shares were redesignated as an aggregate of 39,780,952 Class B multiple voting shares, and upon consummation of the IPO, all of the then-outstanding convertible preferred stock automatically converted into an aggregate of 27,159,277 Class B multiple voting shares. |
Basis of Presentation and Consolidation |
12 Months Ended |
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Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation These consolidated financial statements include the accounts of the Company and its directly and indirectly wholly owned subsidiaries: Shopify Payments (Canada) Inc., incorporated in Canada; Shopify (Ireland) Limited., incorporated in Ireland; Shopify (Australia) Pty Ltd., incorporated in Australia; and the following United States subsidiaries each incorporated in Delaware: Shopify Payments (USA) Inc., Shopify Data Processing (USA) Inc., Shopify LLC and Shopify Holdings (USA) Inc. On February 19, 2015 the Company dissolved and wound up two inactive shell subsidiaries, Jet Cooper Ltd., incorporated in Canada; and Atatomic Inc., incorporated in Canada. The wind-up had no accounting impact on the consolidated financial statements. All intercompany accounts and transactions have been eliminated upon consolidation. These consolidated financial statements of the Company have been presented in United States dollars (USD) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), including the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding financial reporting. |
Significant Accounting Policies |
12 Months Ended |
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Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements, in accordance with U.S. GAAP, requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items that are subject to estimation and assumptions include: estimates related to contingencies and refundable tax credits; chargebacks on Shopify Payments transactions that are unrecoverable from merchants; recoverability of deferred tax assets; fair values of assets and liabilities acquired in business combinations; capitalization of software development costs; estimated useful lives of property and equipment and intangible assets; estimates relating to the recoverability of lease inducements; and assumptions used when employing the Black-Scholes valuation model to estimate the fair value of common shares and stock-based awards. Actual results may differ from the estimates made by management. Segment Information The Company’s “chief operating decision maker” is the Chief Executive Officer. The Chief Executive Officer reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluation of financial performance. Accordingly, the Company has determined that it operates as a single operating and reportable segment. Revenue Recognition The Company’s sources of revenue consist of subscription solutions and merchant solutions. Arrangements with merchants do not provide the merchants with the right to take possession of the software supporting the Company’s hosting platform at any time and are therefore accounted for as service contracts. The Company’s subscription service contracts do not provide for refunds or any other rights of return to merchants in the event of cancellations. The Company recognizes revenue when all of the following criteria are met: •There is persuasive evidence of an arrangement; •The services have been or are being provided to the merchant; •The amount of fees to be paid by the merchant is fixed or determinable; and •The collection is reasonably assured. The Company follows the guidance provided in ASC 605-45, Principal Agent Considerations for determining whether the Company should recognize revenue based on the gross amount billed to a merchant or the net amount retained. This determination is a matter of judgment that depends on the facts and circumstances of each arrangement. The Company recognizes revenue from Shopify Shipping and the sales of Apps on a net basis as it has been determined that the Company is the agent in the arrangement with merchants. All other revenue is reported on a gross basis, as the Company has determined it is the principal in the arrangement, in that it is the primary obligor for providing services and assumes the risk of any loss or changes in costs. Sales taxes collected from merchants and remitted to government authorities are excluded from revenue. Our arrangements can include multiple elements, which may consist of some or all of our subscription solutions. When multiple-element arrangements exist, we evaluate whether these individual deliverables should be accounted for as separate units of accounting or one single unit of accounting. In order to treat deliverables in a multiple-element arrangement as separate units of accounting, the delivered item or items must have standalone value upon delivery. A delivered item has standalone value to the customer when either (1) any vendor sells that item separately or (2) the customer could resell that item on a standalone basis. Each of our subscription solutions have standalone value, as the solutions are sold separately. Accordingly, we consider the separate units of accounting in our multiple deliverable arrangements to be the subscription fees, themes, apps and domain names. When multiple deliverables included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on their relative selling price. Multiple-element arrangement accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (VSOE) of selling price, based on the price at which the item is regularly sold by the vendor on a standalone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence (TPE) of selling price is used to establish the selling price if it exists. We have not established VSOE for our subscription solutions due to lack of pricing consistency, the introduction of new services and other factors. We have also concluded that third-party evidence of selling price is not a practical alternative due to differences in our service offerings compared to other parties and the availability of relevant third-party pricing information. Accordingly, we use our best estimate of selling price (BESP) to determine the relative selling price for our subscription solutions. We determined BESP by considering our overall pricing objectives and market conditions. Significant pricing practices taken into consideration for our subscription solutions include discounting practices, the size and volume of our transactions, the customer demographic, the geographic area where services are sold, price lists, our go-to-market strategy, historical standalone sales and contract prices. The determination of BESP is made through consultation with and approval by our management, taking into consideration our go-to-market strategy. As our go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes in relative selling prices. Subscription Solutions Subscription revenue is recognized on a rateable basis over the contractual term. The terms range from monthly, annual or multi-year subscription terms. Revenue recognition begins on the date that the Company’s service is made available to the merchant. Payments received in advance of services being rendered are recorded as deferred revenue and recognized on a rateable basis over the requisite service period. The Company earns revenue based on the services it delivers either directly to its merchants or indirectly through resellers. The Company also sells separately priced Themes and Apps to merchants for which revenue is recognized at the time of the sale. The right to use domain names is also sold separately and is recognized on a rateable basis over the contractual term, which is generally an annual term. Revenue from Themes, as well as Apps and Domains have been classified within Subscription solutions on the basis that they are typically sold at the time the merchant enters into the subscription services arrangement or because they are charged on a recurring basis. Merchant Solutions The Company generates the majority of its merchant solutions revenue from fees that it charges merchants on their customer orders processed through Shopify Payments. The Company also derives merchants solutions revenue relating to Shopify Shipping, other transaction services and referral fees, as well as from the sale of Point-of-Sale (POS) hardware. For the sale of POS hardware, revenue is recognized when title passes to the merchant, in accordance with the shipping terms. Revenues earned from Shopify Payments, Shopify Shipping, other transaction services, and referral fees are recognized at the time of the transaction. Cost of Revenues The Company’s cost of revenues consists of payments for Themes and Domain registration, credit card fees, hosting infrastructure costs, an allocation of costs incurred by both the operations and support functions, and amortization of capitalized software development costs. In addition, included in the cost of merchant solutions are costs associated with credit card processing and chargebacks related to Shopify Payments and the cost of POS hardware. Software Development Costs Research and development costs are generally expensed as incurred. These costs primarily consist of personnel and related expenses, contractor and consultant fees, stock-based compensation, and corporate overhead allocations, including depreciation. The Company capitalizes certain development costs incurred in connection with its internal use software. These capitalized costs are related to the development of its software platform that is hosted by the Company and accessed by its merchants on a subscription basis as well as material internal infrastructure software. Costs incurred in the preliminary stages of development are expensed as incurred. The Company capitalizes all direct and incremental costs incurred during the application phase, until such time when the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional features and functionality. Capitalized costs are recorded as part of Intangible assets in the consolidated balance sheets and are amortized on a straight-line basis over their estimated useful lives of three years. Maintenance costs are expensed as incurred. Advertising Costs Advertising costs are expensed as incurred. Advertising costs included in sales and marketing expenses during the years ended December 31, 2015, 2014, and 2013 were $45,445, $31,093, and $14,447 respectively. Operating Leases The total payments and costs associated with operating leases, including leases that contain lease inducements and uneven payments, are aggregated and amortized on a straight-line basis over the initial lease term of each respective agreement. Foreign Currency Transactions The functional and reporting currency of the Company and its subsidiaries is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are re-measured to United States dollars using the exchange rates at the consolidated balance sheet dates. Non-monetary assets and liabilities denominated in foreign currencies are measured in United States dollars using historical exchange rates. Revenues and expenses are measured using the actual exchange rates prevailing on the dates of the transactions. Gains and losses resulting from re-measurement are recorded in the Company’s Consolidated Statements of Operations and Comprehensive Loss as Foreign exchange gain (loss). Cash and Cash Equivalents The Company considers all short term highly liquid investments purchased with original maturities at their acquisition date of three months or less to be cash equivalents. Marketable Securities The Company’s marketable securities consist of U.S federal agency bonds, corporate bonds and commercial paper, and mature within 12 months from the date of purchase. Marketable securities are classified as held-to-maturity at the time of purchase and this classification is re-evaluated as of each consolidated balance sheet date. Held-to-maturity securities represent those securities that the Company has both the intent and ability to hold to maturity and are carried at amortized cost, which approximates their fair market value. Interest on these securities, as well as amortization/accretion of premiums/discounts, are included in interest income. All investments are assessed as to whether any unrealized loss positions are other than temporarily impaired. Impairments are considered other than temporary if they are related to deterioration in credit risk or if it is likely the Company will sell the securities before the recovery of their cost basis. Realized gains and losses and declines in value determined to be other than temporary are determined based on the specific identification method and are reported in Other income (expenses) in the Consolidated Statements of Operations and Comprehensive Loss. Derivatives The Company may hold foreign exchange forward contracts to mitigate the risk of future foreign exchange rate volatility related to future Canadian dollar denominated costs and current and future obligations. The Company recognizes these derivative financial instruments as either assets or liabilities and measures them at fair value. The Company has elected not to apply hedge accounting, therefore changes in the fair value of these derivative instruments will affect their consolidated balance sheet amounts and the resulting gain or loss will be reflected as Foreign exchange gains (losses) in the Consolidated Statements of Operations and Comprehensive Loss. Concentration of Credit Risk The Company’s cash and cash equivalents, marketable securities, trade and other receivables, and foreign exchange forward contracts subject the Company to concentrations of credit risk. Management mitigates this risk associated with cash and cash equivalents by making deposits and entering into foreign exchange forward contracts only with large Canadian, Irish, Australian and United States banks and financial institutions that are considered to be highly credit worthy. Management mitigates the risks associated with marketable securities by adhering to its investment policy, which stipulates minimum rating requirements, maximum investment exposures and maximum maturities. Due to the Company’s diversified merchant base, there is no particular concentration of credit risk related to the Company’s trade receivables. Trade and other receivables are monitored on an ongoing basis to ensure timely collection of amounts. There are no receivables from individual merchants accounting for 10% or more of revenues or receivables. Interest Rate Risk Certain of the Company’s cash equivalents and marketable securities earn interest. The Company’s trade and other receivables, accounts payable and accrued liabilities and lease liabilities do not bear interest. The Company is not exposed to material interest rate risk. Foreign Exchange Risk The Company’s exposure to foreign exchange risk is primarily related to fluctuations between the Canadian dollar and the United States dollar. The Company is exposed to foreign exchange fluctuations on the revaluation of foreign currency assets and liabilities. The Company may use foreign exchange derivative products to manage the impact of foreign exchange fluctuations. By their nature, derivative financial instruments involve risk, including the credit risk of non-performance by counter parties. Fair Value Measurements The carrying amounts for cash and cash equivalents, marketable securities, trade receivables, other receivables, trade accounts payable and accruals, and employee related accruals approximate fair value due to the short-term maturities of these instruments. The Company measures the fair value of its financial assets and liabilities using a fair value hierarchy. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value. Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Property and Equipment Property and equipment is stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Computer equipment is depreciated over three years while office furniture and equipment are depreciated over four years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of their associated leases, which range from three to thirteen years. The carrying values of property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. The determination of whether any impairment exists includes a comparison of estimated undiscounted future cash flows anticipated to be generated over the remaining life of the asset to the net carrying value of the asset. If the estimated undiscounted future cash flows associated with the asset are less than the carrying value, an impairment loss will be recorded based on the estimated fair value. Intangible Assets Intangible assets are stated at cost, less accumulated amortization. Amortization is calculated using the straight-line method over the estimated useful lives of the related assets. Purchased software, other intangible assets, and capitalized software development costs are amortized into cost of revenues over a three year period. The carrying values of intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. The determination of whether any impairment exists includes a comparison of estimated undiscounted future cash flows anticipated to be generated over the remaining life of the asset to the net carrying value of the asset. If the estimated undiscounted future cash flows associated with the asset are less than the carrying value, an impairment loss will be recorded based on the estimated fair value. Goodwill Goodwill represents the excess of the purchase price over the estimated fair value of net assets of a business acquired in a business combination. Goodwill is not amortized, but instead tested for impairment at least annually in the fourth quarter of each year. Should certain events or indicators of impairment occur between annual impairment tests, the Company will perform the impairment test as those events or indicators occur. Examples of such events or circumstances include the following: a significant decline in the Company’s expected future cash flows; a sustained, significant decline in the Company’s fair value; a significant adverse change in the business climate; and slower growth rates. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. The qualitative assessment considers the following factors: macroeconomic conditions, industry and market considerations, cost factors, overall company financial performance, events affecting the reporting units, and changes in the Company’s fair value. If the reporting unit does not pass the qualitative assessment, the Company carries out a two-step test for impairment of goodwill. The first step of the test compares the fair value of the reporting unit with the carrying value of its net assets. If the fair value of the reporting unit is greater than its carrying value, no impairment results. If the fair value of the reporting unit is less than its carrying value, the Company performs the second step of the test for impairment of goodwill. During the second step of the test, the Company compares the implied fair value of the reporting unit’s goodwill with the carrying value of that goodwill. If the implied fair value of goodwill is less than the carrying value, an impairment charge would be recorded in the Consolidated Statements of Operations and Comprehensive Loss. The Company has one reporting unit and evaluates goodwill for impairment at the entity level. Income Taxes Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not to be realized. The Company evaluates tax positions taken or expected to be taken in the course of preparing tax returns to determine whether the tax positions have met a “more-likely-than-not” threshold of being sustained by the applicable tax authority. Tax benefits related to tax positions not deemed to meet the “more-likely-than-not” threshold are not permitted to be recognized in the consolidated financial statements. The Company classifies accrued interest and penalties related to liabilities for income taxes in income tax expense. Refundable Tax Credits Tax credits related to Scientific Research and Experimental Development (SR&ED) expenditures are accounted for using the flow-through method. Refundable tax credits are accounted for, in the period in which the related expenditures are incurred, as a direct reduction of research and development or capitalized costs. Non-refundable tax credits, which may only be used to reduce future taxes otherwise payable, are recorded as an income tax recovery in the period in which their realization is considered more likely than not. Stock-Based Compensation The accounting for stock-based awards is based on the fair value of the award measured at the grant date. Accordingly, stock-based compensation cost is recognized in the Consolidated Statements of Operations and Comprehensive Loss as an operating expense over the requisite service period. The fair value of stock options is determined using the Black-Scholes option-pricing model, single option approach. An estimate of forfeitures is applied when determining compensation expense. The Company determines the fair value of stock option awards on the date of grant using assumptions regarding expected term, share price volatility over the expected term of the awards, risk-free interest rate, and dividend rate. All shares issued under the Legacy Option Plan and Stock Option Plan are from treasury. The fair value of restricted share units ("RSU's") is measured using the fair value of the Company's shares as if the RSU's were vested and issued on the grant date. An estimate of forfeitures is applied when determining compensation expense. All shares issued under the Long Term Incentive Plan are from treasury. In connection with prior period business acquisitions, the Company has also issued restricted shares. The restricted shares vest evenly, on a month-by-month basis and are contingent on future services being provided. As a result, the restricted shares are considered post business combination services and are accounted for as compensation expense and not as part of purchase accounting. The fair value of the restricted shares is derived from the fair value of the Company’s common shares, which was determined by an independent valuation firm, based on input, feedback and review by the Company’s management, at or around the same time as the related transactions and in combination with other available market data. Earnings Per Share Basic earnings per share are calculated by dividing net earnings attributable to common equity holders of the Company by the weighted average number of common stock outstanding during the year. Diluted earnings per share are calculated by dividing net earnings attributable to common equity holders of the Company by the weighted average number of common stock outstanding during the year, plus the effect of dilutive potential common stock outstanding during the year. This method requires that diluted earnings per share be calculated (using the treasury stock method) as if all dilutive potential common stock had been exercised at the latest of the beginning of the year or on the date of issuance, as the case may be, and that the funds obtained thereby (plus an amount equivalent to the unamortized portion of related stock-based compensation costs) be used to purchase common stock of the Company at the average fair value of the common stock during the year. Recent Accounting Pronouncements Not Yet Adopted In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-9 “Revenue from Contracts with Customers.” The new accounting standards update requires an entity to apply a five step model to recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, as well as a cohesive set of disclosure requirements that would result in an entity providing comprehensive information about the nature, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In August 2015 the Financial Accounting Standards Board issued ASU No. 2015-14, which deferred the effective date for all entities by one year. The standard becomes effective for reporting periods beginning after December 15, 2017. Early adoption is permitted starting January 1, 2017. The Company is currently assessing the impact of these standards. In February 2015, the Financial Accounting Standards Board issued ASU No. 2015-02 “Consolidations (Topic 810)—Amendments to the Consolidation Analysis”. The new standard makes amendments to the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. Under this analysis, limited partnerships and other similar entities will be considered a variable-interest entity (“VIE”) unless the limited partners hold substantive kick-out rights or participating rights. The standard is effective for annual periods beginning after December 15, 2015. The Company is currently assessing the impact of these amendments. In April 2015, the Financial Accounting Standards Board issued ASU No. 2015-05, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. The amendment is effective for interim and annual periods beginning after December 15, 2015 with early adoption permitted. The Company is currently assessing the impact of this new standard. In May 2015, the Financial Accounting Standards Board issued ASU 2015-07, “Disclosures for Investments in Certain Entities That Calculate Net Asset Value Per Share (or Its Equivalent)”, which amends ASC 820, Fair Value Measurement. The standard removes the requirement to categorize within the fair value hierarchy investments for which fair value is measured using the net asset value per share practical expedient and removes certain related disclosure requirements. The standard will be effective for the Company’s fiscal year beginning January 1, 2016. The Company is currently assessing the impact of this new standard. In November 2015, the Financial Accounting Standards Board issued ASU 2015-17, "Income Taxes (Topic 740)", which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. The standard will be effective for the Company’s fiscal year beginning January 1, 2016. The Company is currently assessing the impact of this new standard. |
Cash and Cash Equivalents |
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Dec. 31, 2015 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents As of December 31, 2015 and 2014, the Company’s cash and cash equivalents balance of $110,070 and $41,953, respectively, included $80,914 and $36,065, respectively, of money market funds and term deposits that bear interest at rates ranging from 0.01% to 1%. As of December 31, 2015, the Company had $1,000 CAD of restricted cash which was pledged as collateral against the Company's leases (December 31, 2014 - $1,050 CAD). |
Financial Instruments |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments As of December 31, 2015, the Company’s financial instruments, measured at fair value on a recurring and non-recurring basis, were as follows:
All cash equivalents and marketable securities mature within one year of the consolidated balance sheet date. As at December 31, 2015 the Company did not have any outstanding foreign exchange forward contracts. As of December 31, 2014, the Company’s financial instruments, measured at fair value on a recurring and non-recurring basis, were as follows:
As at December 31, 2014 the Company held foreign exchange forward contracts to convert USD into CAD to fund a portion of its operations. The fair value of foreign exchange forward contracts and corporate bonds was based upon Level 2 inputs, which included period-end mid-market quotations for each underlying contract as calculated by the financial institution with which the Company has transacted. The quotations are based on bid/ask quotations and represent the discounted future settlement amounts based on current market rates. There were no transfers between Levels 1, 2 and 3 during the years ended December 31, 2015 and 2014. |
Trade and Other Receivables |
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Trade and Other Receivables | Trade and Other Receivables
Unbilled revenues represent amounts not yet billed to merchants related to transaction fee charges, up to the consolidated balance sheet date. |
Other Current Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Assets | Other Current Assets
As of December 31, 2015, the Company did not hold any foreign exchange forward contracts to convert USD into CAD. As of December 31, 2014, the Company held foreign exchange forward contracts to convert $6,000 USD into $6,974 CAD at exchange rates ranging from 1.1618 to 1.1630. These contracts expired between January 12, 2015 and March 11, 2015 and the fair value of these contracts as of December 31, 2014 was an asset of $7. During the years ended December 31, 2015, 2014, and 2013, the use of foreign exchange forward contracts resulted in net foreign exchange losses of nil, $368 and $489, respectively. |
Property and Equipment |
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Property and Equipment | Property and Equipment
The following table illustrates the classification of depreciation in the Consolidated Statements of Operations and Comprehensive Loss.
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets
Internal software development costs of $2,313, $1,269 and $656 were capitalized during the years ended December 31, 2015, 2014 and 2013, respectively, and are included in Intangible assets in the accompanying Consolidated Balance Sheets. Amortization expense related to the capitalized internally developed software was $698, for the year ended December 31, 2015 and is included in Cost of revenues and General and administrative expense. Amortization expense related to the capitalized internally developed software was $330 and $115 for the years ended 2014 and 2013, respectively, and is included in Cost of revenues in the accompanying Consolidated Statements of Operations and Comprehensive Loss. The following table illustrates the classification of amortization expense related to Intangible assets in the Consolidated Statements of Operations and Comprehensive Loss.
Estimated future amortization expense related to intangible assets, as at December 31, 2015 is as follows.
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Accounts Payable and Accrued Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities
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Lease Incentives |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Lease Incentives | Lease Incentives The Company leases space for its offices. The Company’s principal lease is for its head office, which is located at 150 Elgin Street in Ottawa, Canada. This lease covers a period of twelve years, ten months that began on March 1, 2014. The lease includes an option to renew for a further five years. The Company received leasehold incentives in the form of rent-free periods and fit-up allowances. The lease agreement also includes scheduled rent increases that are not dependent on future events and therefore the lease payments are being accounted for on a straight-line basis over the entire term of the lease. The Company also maintains offices in Toronto, Montreal and Kitchener-Waterloo. In all locations, the Company received leasehold incentives in the form of rent-free periods and fit-up allowances. The lease agreements also include scheduled rent increases that are not dependent on future events and therefore the lease payments are being accounted for on a straight-line basis over the entire term of the lease. The following table represents the details of the Company’s lease incentives balance as of December 31, 2015 and 2014.
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Credit Facilities |
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Debt Disclosure [Abstract] | |
Credit Facilities | Credit Facilities In 2011, the Company established a revolving line of credit with the Royal Bank of Canada. The credit facility is renewable annually for borrowing of up to $1,500 CAD. The line is collateralized by cash and cash equivalents and its interest rate is tied to the Bank of Canada prime lending rate plus 0.3% (3.0% as of December 31, 2015 and 3.3% as of December 31, 2014). As of December 31, 2015 the Company had drawn nil under the facility. As of December 31, 2015, $1,000 CAD under the facility was pledged as collateral for a letter of credit. In March 2015, the Company entered into a credit facility with Silicon Valley Bank, which provides for a $25,000 revolving line of credit bearing interest at the U.S. prime rate, as published by the Wall Street Journal plus or minus 25 basis points per annum. As at December 31, 2015 the effective rate was 3.25%. The credit facility has a maturity date of March 11, 2016, and is collateralized by substantially all of the Company’s assets, including the stock of its subsidiaries named in the agreement as guarantors, but excluding the Company’s intellectual property, which is subject to a negative pledge. As of December 31, 2015, no amounts have been drawn under this credit facility and the Company is in compliance with all of the covenants contained therein. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company leases space for its offices in Ottawa, Toronto and Kitchener-Waterloo, Ontario, Canada and Montreal, Quebec, Canada. In the years ended December 31, 2015, 2014, and 2013 rent expense totalled $6,446, $4,547 and $1,178, respectively. Amounts of minimum future annual rental payments under non-cancellable operating leases in each of the next five years and thereafter are as follows:
Litigation and Loss Contingencies The Company accrues estimates for loss contingencies when losses are probable and reasonably estimable. From time to time, the Company may become a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labour and employment claims and threatened claims, breach of contract claims, tax and other matters. The Company currently has no material pending litigation or claims. The Company is not aware of any litigation matters or loss contingencies that would be expected to have a material adverse effect on the business, consolidated financial position, results of operation, or cash flows. |
Shareholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity Convertible Preferred Shares Upon the completion of the Company’s IPO, all of the then outstanding convertible preferred shares were converted into 27,159,277 Class B multiple voting shares. Common Stock Authorized Immediately prior to the completion of the Company’s IPO, all of the then outstanding 39,780,952 common shares were redesignated as Class B multiple voting shares. The Company is authorized to issue an unlimited number of Class A subordinate voting shares and an unlimited number of Class B multiple voting shares. The Class A subordinate voting shares have one vote per share and the Class B multiple voting shares have 10 votes per share. The Class A subordinate voting shares are not convertible into any other class of shares, including Class B multiple voting shares. The Class B multiple voting shares are convertible into Class A subordinate voting shares on a one-for-one basis at the option of the holder. In addition, Class B multiple voting shares will automatically convert into Class A subordinate voting shares in certain other circumstances. In connection with historical acquisitions, the Company has also issued restricted shares. The restricted shares vest evenly, on a month-by-month basis, and are contingent on future services being provided. Preferred Shares The Company is authorized to issue an unlimited number of preferred shares issuable in series. Each series of preferred shares shall consist of such number of shares and having such rights, privileges, restrictions and conditions as may be determined by the Company’s Board of Directors prior to the issuance thereof. Holders of preferred shares, except as otherwise provided in the terms specific to a series of preferred shares or as required by law, will not be entitled to vote at meetings of holders of shares. Stock-Based Compensation In 2008, the Board of Directors adopted and the Company’s shareholders approved the Legacy Stock Option Plan (“the Legacy Option Plan”). Under the Legacy Option Plan, the Board of Directors was authorized to grant options to purchase common shares to both employees and non-employees. The Compensation Committee, or in their absence, the Board of Directors, was given the authority to set the exercise prices of all options granted based upon not less than the fair market value of the common shares of the Company on the date of grant. In October 2010, an amendment was made to the Legacy Option Plan to set all future option grants, unless otherwise specified by the Board of Directors at the time of grant, on a vesting schedule over four years with 25% vesting after one year and the remainder vesting 1/48 each month thereafter. In April 2013, an amendment was made to the Legacy Option Plan to provide that the term of the options shall be exercisable until the tenth anniversary of their grant date. In December 2013 the Board of Directors approved a modification to the Legacy Option Plan which allowed for uniform vesting at 1/48 each month starting immediately in the first month after an option grant for any grant issued to employees subsequent to their initial grant. At that time, the Board of Directors also approved a modification that changed the initial vesting commencement date from three months following the employment or engagement start date to the actual employment or engagement start date. Immediately prior to the completion of the Company’s IPO, a total of 14,982,341 options were outstanding under the Legacy Option Plan, and, in connection with the closing of the offering, each such option became exercisable for one Class B multiple voting share. Following the closing of the Company’s IPO, no further awards were made under the Legacy Option Plan. The Company’s Board of Directors and shareholders approved a new stock option plan (“Stock Option Plan”) as well as a long-term incentive plan (“LTIP”), each of which became effective on May 27, 2015. The Stock Option Plan allows for the grant of options to the Company’s officers, directors, employees and consultants. All options granted under the Stock Option Plan will have an exercise price determined and approved by the Company’s Board of Directors at the time of grant, which shall not be less than the market price of the Class A subordinate voting shares at such time. For purposes of the Stock Option Plan, the market price of the Class A subordinate voting shares shall be the volume weighted average trading price of the Class A subordinate voting shares on the NYSE for the five trading days ending on the last trading day before the day on which the option is granted. Options granted under the Stock Option Plan are exercisable for Class A subordinate voting shares. Both the vesting period and term of the options in the Stock Option Plan are determined by the Board of Directors at the time of grant. The LTIP provides for the grant of share units, or LTIP Units, consisting of restricted share units (“RSU”), performance share units (“PSU”), and deferred share units (“DSU”). Each LTIP Unit represents the right to receive one Class A subordinate voting share in accordance with the terms of the LTIP. Unless otherwise approved by the Board of Directors, RSUs will vest as to 1/3 each on the first, second and third anniversary dates of the date of grant. A PSU participant’s grant agreement will describe the performance criteria established by the Company’s Board of Directors that must be achieved for PSUs to vest to the PSU participant, provided the participant is continuously employed by or in the Company’s service or the service or employment of any of the Company’s affiliates from the date of grant until such PSU vesting date. DSUs will be granted solely to directors of the Company, at their option, in lieu of their Board retainer fees. DSUs will vest upon a director ceasing to act as a director. As at the consolidated balance sheet date there have been nil PSUs or DSUs granted. The maximum number of Class A subordinate voting shares reserved for issuance, in the aggregate, under the Company's Stock Option Plan and the LTIP was initially equal to 3,743,692 Class A subordinate voting shares. The number of Class A subordinate voting shares available for issuance, in the aggregate, under the Stock Option Plan and the LTIP will be automatically increased on January 1st of each year, beginning on January 1, 2016 and ending on January 1, 2026, in an amount equal to 5% of the aggregate number of outstanding Class A subordinate voting shares and Class B multiple voting shares on December 31st of the preceding calendar year. As at January 1, 2016 there were 6,786,124 shares reserved for issuance under the Company's Stock Option Plan and LTIP. The following table summarizes the stock option and RSU award activities under the Company's share-based compensation plans for the years ended December 31, 2015, 2014, and 2013:
(1) As at December 31, 2015 10,519,901 of the outstanding stock options were granted under the Company's Legacy Option Plan and are exercisable for Class B multiple voting shares, and 684,125 of the outstanding stock options were granted under the Company's Stock Option Plan and are exercisable for Class A subordinate voting shares. (2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the assessed fair value of the common stock as of December 31, 2014 and the closing market price of our common stock as of December 31, 2015. As of December 31, 2015, and 2014, there was $34,572 and $16,574, respectively, of remaining unamortized compensation cost related to unvested stock options and RSUs granted to the Company’s employees. This cost will be recognized over an estimated weighted-average remaining period of 3.22 years. Total unamortized compensation cost will be adjusted for future changes in estimated forfeitures. Share-Based Compensation Expense All share-based awards are measured based on the grant date fair value of the awards and recognized in the Consolidated Statements of Operations and Comprehensive Loss over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). The Company estimates the fair value of stock options granted using the Black-Scholes option valuation model, which requires assumptions, including the fair value of our underlying common stock, expected term, expected volatility, risk-free interest rate and dividend yield of the Company's common stock. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, share-based compensation expense could be materially different in the future. These assumptions are estimated as follows:
The assumptions used to estimate the fair value of stock options granted to employees are as follows:
In addition to the assumptions used in the Black-Scholes option valuation model, the Company must also estimate a forfeiture rate to calculate the share-based compensation expense for our awards. The Company's forfeiture rate is based on an analysis of its actual forfeitures. The Company will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover, and other factors. Changes in the estimated forfeiture rate can have a significant impact on share-based compensation expense as the cumulative effect of adjusting the rate is recognized in the period the forfeiture estimate is changed. If a revised forfeiture rate is higher/lower than the previously estimated forfeiture rate, an adjustment is made that will result in an increase/decrease to the share-based compensation expense recognized in the consolidated financial statements. The following table illustrates the classification of stock-based compensation in the Consolidated Statements of Operations and Comprehensive Loss, which includes both stock-based compensation and restricted share-based compensation expense.
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Earnings per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | Earnings per Share The Company applies the two-class method to calculate its basic and diluted net loss per share as both classes of its voting shares are participating securities with equal participation rights and are entitled to receive dividends on a share for share basis. The following table summarizes the reconciliation of the basic weighted average number of shares outstanding and the diluted weighted average number of shares outstanding.
In the years ended December 31, 2015, 2014, and 2013 the Company was in a loss position and therefore diluted loss per share is equal to basic loss per share. |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The reconciliation of the expected provision for income tax recovery/expense to the actual provision for income tax recovery/expense reported in the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2015, 2014, and 2013 is as follows.
During the years ended December 31, 2015, 2014, and 2013, the loss before income taxes includes foreign income (loss) of $234, $14, and ($14), respectively. The significant components of the Company’s deferred income tax assets and liabilities as of December 31, 2015 and 2014 are as follows.
The Company has determined that it is not more likely than not that it will realize any of its deferred tax assets, and therefore a full valuation allowance has been established against the total deferred tax assets. The Company does not have any unrecognized tax benefits. The Company's accounting policy is to recognize interest and penalties related to uncertain tax positions as a component of income tax expense. In the years ended December 31, 2015, 2014, and 2013, there was no interest or penalties related to uncertain tax positions. The Company and its Canadian subsidiaries file federal and provincial income tax returns in Canada. The Company and its U.S. subsidiaries file federal and state income tax returns in the U.S. and its other foreign subsidiaries file income tax returns in their respective foreign jurisdictions. The Company remains subject to audit by the relevant tax authorities for the years ended 2010 through 2015. The Company estimates SR&ED expenditures and claims investment tax credits for income tax purposes based on management’s interpretation of the applicable legislation in the Income Tax Act (“the Act”) and related provincial legislation. These claims are subject to audit by the tax authorities. In the opinion of management, the treatment of research and development expenditures for income tax purposes is appropriate. Any difference between recorded refundable tax credits and amounts ultimately received is recorded when the amount becomes known. As of December 31, 2015 and 2014, the Company had unused non-capital tax losses of approximately $14,264 and $13,475 respectively, a SR&ED expenditure pool totaling $6,364 and $3,673 respectively, and investment tax credits of $1,486 and $532 respectively, that are due to expire as follows.
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Supplemental Cash Flow Information Items |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information Items | Supplemental Cash Flow Information Items The following table presents the changes in non-cash working capital items.
The following table provides supplemental disclosure of non-cash investing and financing activities.
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Geographical Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographical Information | Geographical Information The following table presents total external revenues by geographic location, based on the location of the Company’s merchants.
The following table presents the total net book value the Company’s long-lived assets by geographic location.
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Acquisitions |
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Business Combinations [Abstract] | |
Acquisitions | Acquisitions 2013 Acquisition On July 31, 2013 the Company acquired 100% of the shares of two companies which were commonly owned, Jet Cooper Ltd., a design studio focused on user experience and website design, and Atatomic Inc., a firm of mobile application developers, in a combined purchase transaction for total consideration on closing of $1,232, consisting of cash in the amount of $828 and 96,479 common shares with a fair value of $404 determined at the date of acquisition. The acquisition also established an escrow agreement upon which additional cash payments of C$468 were restricted and 289,435 of additional common shares were transferred to an escrow agent. The restrictions on the cash were lifted on July 31, 2014. The restricted common shares vest evenly, on a month-by-month basis over a period of three years ending on July 31, 2016. Both the cash payment and restricted common shares are contingent on the sellers’ continued employment and were therefore considered post business combination services and are accounted for as compensation expense and not part of purchase accounting. During the years ended December 31, 2015, 2014, and 2013, nil, C$280 and C$188, respectively, of the restricted cash was released from escrow and 82,697 shares with a fair value of $345, 118,301 shares with a fair value of $493, and 40,200 restricted shares with a fair value of $168, respectively, were earned and have been recognized as compensation expense in the Consolidated Statements of Operations. The Company did not complete any acquisitions during the years ended December 31, 2015 and December 31, 2014. |
Comparative Figures |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Comparative Figures | Comparative Figures Certain comparative figures have been reclassified in order to conform to the current year presentation. |
Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Basis of Accounting | These consolidated financial statements of the Company have been presented in United States dollars (USD) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), including the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding financial reporting. |
Use of Estimates | The preparation of consolidated financial statements, in accordance with U.S. GAAP, requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items that are subject to estimation and assumptions include: estimates related to contingencies and refundable tax credits; chargebacks on Shopify Payments transactions that are unrecoverable from merchants; recoverability of deferred tax assets; fair values of assets and liabilities acquired in business combinations; capitalization of software development costs; estimated useful lives of property and equipment and intangible assets; estimates relating to the recoverability of lease inducements; and assumptions used when employing the Black-Scholes valuation model to estimate the fair value of common shares and stock-based awards. Actual results may differ from the estimates made by management. |
Segment Information | The Company’s “chief operating decision maker” is the Chief Executive Officer. The Chief Executive Officer reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluation of financial performance. Accordingly, the Company has determined that it operates as a single operating and reportable segment. |
Revenue Recognition, Subscription Solutions, and Merchant Solutions | The Company’s sources of revenue consist of subscription solutions and merchant solutions. Arrangements with merchants do not provide the merchants with the right to take possession of the software supporting the Company’s hosting platform at any time and are therefore accounted for as service contracts. The Company’s subscription service contracts do not provide for refunds or any other rights of return to merchants in the event of cancellations. The Company recognizes revenue when all of the following criteria are met: •There is persuasive evidence of an arrangement; •The services have been or are being provided to the merchant; •The amount of fees to be paid by the merchant is fixed or determinable; and •The collection is reasonably assured. The Company follows the guidance provided in ASC 605-45, Principal Agent Considerations for determining whether the Company should recognize revenue based on the gross amount billed to a merchant or the net amount retained. This determination is a matter of judgment that depends on the facts and circumstances of each arrangement. The Company recognizes revenue from Shopify Shipping and the sales of Apps on a net basis as it has been determined that the Company is the agent in the arrangement with merchants. All other revenue is reported on a gross basis, as the Company has determined it is the principal in the arrangement, in that it is the primary obligor for providing services and assumes the risk of any loss or changes in costs. Sales taxes collected from merchants and remitted to government authorities are excluded from revenue. Our arrangements can include multiple elements, which may consist of some or all of our subscription solutions. When multiple-element arrangements exist, we evaluate whether these individual deliverables should be accounted for as separate units of accounting or one single unit of accounting. In order to treat deliverables in a multiple-element arrangement as separate units of accounting, the delivered item or items must have standalone value upon delivery. A delivered item has standalone value to the customer when either (1) any vendor sells that item separately or (2) the customer could resell that item on a standalone basis. Each of our subscription solutions have standalone value, as the solutions are sold separately. Accordingly, we consider the separate units of accounting in our multiple deliverable arrangements to be the subscription fees, themes, apps and domain names. When multiple deliverables included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on their relative selling price. Multiple-element arrangement accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (VSOE) of selling price, based on the price at which the item is regularly sold by the vendor on a standalone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence (TPE) of selling price is used to establish the selling price if it exists. We have not established VSOE for our subscription solutions due to lack of pricing consistency, the introduction of new services and other factors. We have also concluded that third-party evidence of selling price is not a practical alternative due to differences in our service offerings compared to other parties and the availability of relevant third-party pricing information. Accordingly, we use our best estimate of selling price (BESP) to determine the relative selling price for our subscription solutions. We determined BESP by considering our overall pricing objectives and market conditions. Significant pricing practices taken into consideration for our subscription solutions include discounting practices, the size and volume of our transactions, the customer demographic, the geographic area where services are sold, price lists, our go-to-market strategy, historical standalone sales and contract prices. The determination of BESP is made through consultation with and approval by our management, taking into consideration our go-to-market strategy. As our go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes in relative selling prices. Subscription Solutions Subscription revenue is recognized on a rateable basis over the contractual term. The terms range from monthly, annual or multi-year subscription terms. Revenue recognition begins on the date that the Company’s service is made available to the merchant. Payments received in advance of services being rendered are recorded as deferred revenue and recognized on a rateable basis over the requisite service period. The Company earns revenue based on the services it delivers either directly to its merchants or indirectly through resellers. The Company also sells separately priced Themes and Apps to merchants for which revenue is recognized at the time of the sale. The right to use domain names is also sold separately and is recognized on a rateable basis over the contractual term, which is generally an annual term. Revenue from Themes, as well as Apps and Domains have been classified within Subscription solutions on the basis that they are typically sold at the time the merchant enters into the subscription services arrangement or because they are charged on a recurring basis. Merchant Solutions The Company generates the majority of its merchant solutions revenue from fees that it charges merchants on their customer orders processed through Shopify Payments. The Company also derives merchants solutions revenue relating to Shopify Shipping, other transaction services and referral fees, as well as from the sale of Point-of-Sale (POS) hardware. For the sale of POS hardware, revenue is recognized when title passes to the merchant, in accordance with the shipping terms. Revenues earned from Shopify Payments, Shopify Shipping, other transaction services, and referral fees are recognized at the time of the transaction. |
Cost of Revenues | The Company’s cost of revenues consists of payments for Themes and Domain registration, credit card fees, hosting infrastructure costs, an allocation of costs incurred by both the operations and support functions, and amortization of capitalized software development costs. In addition, included in the cost of merchant solutions are costs associated with credit card processing and chargebacks related to Shopify Payments and the cost of POS hardware. |
Software Development Costs | Research and development costs are generally expensed as incurred. These costs primarily consist of personnel and related expenses, contractor and consultant fees, stock-based compensation, and corporate overhead allocations, including depreciation. The Company capitalizes certain development costs incurred in connection with its internal use software. These capitalized costs are related to the development of its software platform that is hosted by the Company and accessed by its merchants on a subscription basis as well as material internal infrastructure software. Costs incurred in the preliminary stages of development are expensed as incurred. The Company capitalizes all direct and incremental costs incurred during the application phase, until such time when the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional features and functionality. Capitalized costs are recorded as part of Intangible assets in the consolidated balance sheets and are amortized on a straight-line basis over their estimated useful lives of three years. Maintenance costs are expensed as incurred. |
Advertising Costs | Advertising costs are expensed as incurred. |
Operating Leases | The total payments and costs associated with operating leases, including leases that contain lease inducements and uneven payments, are aggregated and amortized on a straight-line basis over the initial lease term of each respective agreement. |
Foreign Currency Transactions | The functional and reporting currency of the Company and its subsidiaries is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are re-measured to United States dollars using the exchange rates at the consolidated balance sheet dates. Non-monetary assets and liabilities denominated in foreign currencies are measured in United States dollars using historical exchange rates. Revenues and expenses are measured using the actual exchange rates prevailing on the dates of the transactions. Gains and losses resulting from re-measurement are recorded in the Company’s Consolidated Statements of Operations and Comprehensive Loss as Foreign exchange gain (loss). |
Cash and Cash Equivalents | The Company considers all short term highly liquid investments purchased with original maturities at their acquisition date of three months or less to be cash equivalents. |
Marketable Securities | The Company’s marketable securities consist of U.S federal agency bonds, corporate bonds and commercial paper, and mature within 12 months from the date of purchase. Marketable securities are classified as held-to-maturity at the time of purchase and this classification is re-evaluated as of each consolidated balance sheet date. Held-to-maturity securities represent those securities that the Company has both the intent and ability to hold to maturity and are carried at amortized cost, which approximates their fair market value. Interest on these securities, as well as amortization/accretion of premiums/discounts, are included in interest income. All investments are assessed as to whether any unrealized loss positions are other than temporarily impaired. Impairments are considered other than temporary if they are related to deterioration in credit risk or if it is likely the Company will sell the securities before the recovery of their cost basis. Realized gains and losses and declines in value determined to be other than temporary are determined based on the specific identification method and are reported in Other income (expenses) in the Consolidated Statements of Operations and Comprehensive Loss. |
Derivatives | The Company may hold foreign exchange forward contracts to mitigate the risk of future foreign exchange rate volatility related to future Canadian dollar denominated costs and current and future obligations. The Company recognizes these derivative financial instruments as either assets or liabilities and measures them at fair value. The Company has elected not to apply hedge accounting, therefore changes in the fair value of these derivative instruments will affect their consolidated balance sheet amounts and the resulting gain or loss will be reflected as Foreign exchange gains (losses) in the Consolidated Statements of Operations and Comprehensive Loss. |
Concentration of Credit Risk | The Company’s cash and cash equivalents, marketable securities, trade and other receivables, and foreign exchange forward contracts subject the Company to concentrations of credit risk. Management mitigates this risk associated with cash and cash equivalents by making deposits and entering into foreign exchange forward contracts only with large Canadian, Irish, Australian and United States banks and financial institutions that are considered to be highly credit worthy. Management mitigates the risks associated with marketable securities by adhering to its investment policy, which stipulates minimum rating requirements, maximum investment exposures and maximum maturities. Due to the Company’s diversified merchant base, there is no particular concentration of credit risk related to the Company’s trade receivables. Trade and other receivables are monitored on an ongoing basis to ensure timely collection of amounts. There are no receivables from individual merchants accounting for 10% or more of revenues or receivables. |
Interest Rate Risk | Certain of the Company’s cash equivalents and marketable securities earn interest. The Company’s trade and other receivables, accounts payable and accrued liabilities and lease liabilities do not bear interest. The Company is not exposed to material interest rate risk. |
Foreign Exchange Risk | The Company’s exposure to foreign exchange risk is primarily related to fluctuations between the Canadian dollar and the United States dollar. The Company is exposed to foreign exchange fluctuations on the revaluation of foreign currency assets and liabilities. The Company may use foreign exchange derivative products to manage the impact of foreign exchange fluctuations. By their nature, derivative financial instruments involve risk, including the credit risk of non-performance by counter parties. |
Fair Value Measurements | The carrying amounts for cash and cash equivalents, marketable securities, trade receivables, other receivables, trade accounts payable and accruals, and employee related accruals approximate fair value due to the short-term maturities of these instruments. The Company measures the fair value of its financial assets and liabilities using a fair value hierarchy. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value. Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
Property and Equipment | Property and equipment is stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Computer equipment is depreciated over three years while office furniture and equipment are depreciated over four years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of their associated leases, which range from three to thirteen years. The carrying values of property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. The determination of whether any impairment exists includes a comparison of estimated undiscounted future cash flows anticipated to be generated over the remaining life of the asset to the net carrying value of the asset. If the estimated undiscounted future cash flows associated with the asset are less than the carrying value, an impairment loss will be recorded based on the estimated fair value. |
Intangible Assets | Intangible assets are stated at cost, less accumulated amortization. Amortization is calculated using the straight-line method over the estimated useful lives of the related assets. Purchased software, other intangible assets, and capitalized software development costs are amortized into cost of revenues over a three year period. The carrying values of intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. The determination of whether any impairment exists includes a comparison of estimated undiscounted future cash flows anticipated to be generated over the remaining life of the asset to the net carrying value of the asset. If the estimated undiscounted future cash flows associated with the asset are less than the carrying value, an impairment loss will be recorded based on the estimated fair value. |
Goodwill | Goodwill represents the excess of the purchase price over the estimated fair value of net assets of a business acquired in a business combination. Goodwill is not amortized, but instead tested for impairment at least annually in the fourth quarter of each year. Should certain events or indicators of impairment occur between annual impairment tests, the Company will perform the impairment test as those events or indicators occur. Examples of such events or circumstances include the following: a significant decline in the Company’s expected future cash flows; a sustained, significant decline in the Company’s fair value; a significant adverse change in the business climate; and slower growth rates. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. The qualitative assessment considers the following factors: macroeconomic conditions, industry and market considerations, cost factors, overall company financial performance, events affecting the reporting units, and changes in the Company’s fair value. If the reporting unit does not pass the qualitative assessment, the Company carries out a two-step test for impairment of goodwill. The first step of the test compares the fair value of the reporting unit with the carrying value of its net assets. If the fair value of the reporting unit is greater than its carrying value, no impairment results. If the fair value of the reporting unit is less than its carrying value, the Company performs the second step of the test for impairment of goodwill. During the second step of the test, the Company compares the implied fair value of the reporting unit’s goodwill with the carrying value of that goodwill. If the implied fair value of goodwill is less than the carrying value, an impairment charge would be recorded in the Consolidated Statements of Operations and Comprehensive Loss. The Company has one reporting unit and evaluates goodwill for impairment at the entity level. |
Income Taxes | Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not to be realized. The Company evaluates tax positions taken or expected to be taken in the course of preparing tax returns to determine whether the tax positions have met a “more-likely-than-not” threshold of being sustained by the applicable tax authority. Tax benefits related to tax positions not deemed to meet the “more-likely-than-not” threshold are not permitted to be recognized in the consolidated financial statements. The Company classifies accrued interest and penalties related to liabilities for income taxes in income tax expense. |
Refundable Tax Credits | Tax credits related to Scientific Research and Experimental Development (SR&ED) expenditures are accounted for using the flow-through method. Refundable tax credits are accounted for, in the period in which the related expenditures are incurred, as a direct reduction of research and development or capitalized costs. Non-refundable tax credits, which may only be used to reduce future taxes otherwise payable, are recorded as an income tax recovery in the period in which their realization is considered more likely than not. |
Stock-Based Compensation | The accounting for stock-based awards is based on the fair value of the award measured at the grant date. Accordingly, stock-based compensation cost is recognized in the Consolidated Statements of Operations and Comprehensive Loss as an operating expense over the requisite service period. The fair value of stock options is determined using the Black-Scholes option-pricing model, single option approach. An estimate of forfeitures is applied when determining compensation expense. The Company determines the fair value of stock option awards on the date of grant using assumptions regarding expected term, share price volatility over the expected term of the awards, risk-free interest rate, and dividend rate. All shares issued under the Legacy Option Plan and Stock Option Plan are from treasury. The fair value of restricted share units ("RSU's") is measured using the fair value of the Company's shares as if the RSU's were vested and issued on the grant date. An estimate of forfeitures is applied when determining compensation expense. All shares issued under the Long Term Incentive Plan are from treasury. In connection with prior period business acquisitions, the Company has also issued restricted shares. The restricted shares vest evenly, on a month-by-month basis and are contingent on future services being provided. As a result, the restricted shares are considered post business combination services and are accounted for as compensation expense and not as part of purchase accounting. The fair value of the restricted shares is derived from the fair value of the Company’s common shares, which was determined by an independent valuation firm, based on input, feedback and review by the Company’s management, at or around the same time as the related transactions and in combination with other available market data. |
Earnings Per Share | Basic earnings per share are calculated by dividing net earnings attributable to common equity holders of the Company by the weighted average number of common stock outstanding during the year. Diluted earnings per share are calculated by dividing net earnings attributable to common equity holders of the Company by the weighted average number of common stock outstanding during the year, plus the effect of dilutive potential common stock outstanding during the year. This method requires that diluted earnings per share be calculated (using the treasury stock method) as if all dilutive potential common stock had been exercised at the latest of the beginning of the year or on the date of issuance, as the case may be, and that the funds obtained thereby (plus an amount equivalent to the unamortized portion of related stock-based compensation costs) be used to purchase common stock of the Company at the average fair value of the common stock during the year. |
Recent Accounting Pronouncements Not Yet Adopted | In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-9 “Revenue from Contracts with Customers.” The new accounting standards update requires an entity to apply a five step model to recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, as well as a cohesive set of disclosure requirements that would result in an entity providing comprehensive information about the nature, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In August 2015 the Financial Accounting Standards Board issued ASU No. 2015-14, which deferred the effective date for all entities by one year. The standard becomes effective for reporting periods beginning after December 15, 2017. Early adoption is permitted starting January 1, 2017. The Company is currently assessing the impact of these standards. In February 2015, the Financial Accounting Standards Board issued ASU No. 2015-02 “Consolidations (Topic 810)—Amendments to the Consolidation Analysis”. The new standard makes amendments to the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. Under this analysis, limited partnerships and other similar entities will be considered a variable-interest entity (“VIE”) unless the limited partners hold substantive kick-out rights or participating rights. The standard is effective for annual periods beginning after December 15, 2015. The Company is currently assessing the impact of these amendments. In April 2015, the Financial Accounting Standards Board issued ASU No. 2015-05, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. The amendment is effective for interim and annual periods beginning after December 15, 2015 with early adoption permitted. The Company is currently assessing the impact of this new standard. In May 2015, the Financial Accounting Standards Board issued ASU 2015-07, “Disclosures for Investments in Certain Entities That Calculate Net Asset Value Per Share (or Its Equivalent)”, which amends ASC 820, Fair Value Measurement. The standard removes the requirement to categorize within the fair value hierarchy investments for which fair value is measured using the net asset value per share practical expedient and removes certain related disclosure requirements. The standard will be effective for the Company’s fiscal year beginning January 1, 2016. The Company is currently assessing the impact of this new standard. In November 2015, the Financial Accounting Standards Board issued ASU 2015-17, "Income Taxes (Topic 740)", which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. The standard will be effective for the Company’s fiscal year beginning January 1, 2016. The Company is currently assessing the impact of this new standard. |
Comparative Figures | Certain comparative figures have been reclassified in order to conform to the current year presentation. |
Financial Instruments (Tables) |
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Schedule of Financial Instruments, Measured at Fair Value on a Recurring and Non-recurring Basis | As of December 31, 2014, the Company’s financial instruments, measured at fair value on a recurring and non-recurring basis, were as follows:
As of December 31, 2015, the Company’s financial instruments, measured at fair value on a recurring and non-recurring basis, were as follows:
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Trade and Other Receivables (Tables) |
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Schedule of Trade and Other Receivables |
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Other Current Assets (Tables) |
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Schedule of Other Current Assets |
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Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment, and Classification of Depreciation |
The following table illustrates the classification of depreciation in the Consolidated Statements of Operations and Comprehensive Loss.
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Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets |
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Classification of Amortization Expense Related to Intangible Assets | The following table illustrates the classification of amortization expense related to Intangible assets in the Consolidated Statements of Operations and Comprehensive Loss.
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Estimated Future Amortization Expense Related to Intangible Assets | Estimated future amortization expense related to intangible assets, as at December 31, 2015 is as follows.
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Accounts Payable and Accrued Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable and Accrued Liabilities |
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Lease Incentives (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Incentives | The following table represents the details of the Company’s lease incentives balance as of December 31, 2015 and 2014.
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Minimum Future Annual Rental Payments Under Non-cancellable Operating Leases | Amounts of minimum future annual rental payments under non-cancellable operating leases in each of the next five years and thereafter are as follows:
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Shareholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Stock Option and RSU Award Activities | The following table summarizes the stock option and RSU award activities under the Company's share-based compensation plans for the years ended December 31, 2015, 2014, and 2013:
(1) As at December 31, 2015 10,519,901 of the outstanding stock options were granted under the Company's Legacy Option Plan and are exercisable for Class B multiple voting shares, and 684,125 of the outstanding stock options were granted under the Company's Stock Option Plan and are exercisable for Class A subordinate voting shares. (2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the assessed fair value of the common stock as of December 31, 2014 and the closing market price of our common stock as of December 31, 2015. |
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Schedule of Assumptions Used to Estimate the Fair Value of Stock Options | The assumptions used to estimate the fair value of stock options granted to employees are as follows:
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Schedule of Classification of Stock-based Compensation | The following table illustrates the classification of stock-based compensation in the Consolidated Statements of Operations and Comprehensive Loss, which includes both stock-based compensation and restricted share-based compensation expense.
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Earnings per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Reconciliation of the Basic and Diluted Weighted Average Number of Shares Outstanding | The following table summarizes the reconciliation of the basic weighted average number of shares outstanding and the diluted weighted average number of shares outstanding.
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the reconciliation of the basic weighted average number of shares outstanding and the diluted weighted average number of shares outstanding.
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the Expected Provision for Income Tax Recovery/Expense to the Actual Provision for Income Tax Recovery/Expense | The reconciliation of the expected provision for income tax recovery/expense to the actual provision for income tax recovery/expense reported in the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2015, 2014, and 2013 is as follows.
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Significant Components of Future Income Tax Assets and Liabilities | The significant components of the Company’s deferred income tax assets and liabilities as of December 31, 2015 and 2014 are as follows.
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Schedule of Expiration Dates of Investment Tax Credits | As of December 31, 2015 and 2014, the Company had unused non-capital tax losses of approximately $14,264 and $13,475 respectively, a SR&ED expenditure pool totaling $6,364 and $3,673 respectively, and investment tax credits of $1,486 and $532 respectively, that are due to expire as follows.
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Summary of Operating Loss Carryforwards | As of December 31, 2015 and 2014, the Company had unused non-capital tax losses of approximately $14,264 and $13,475 respectively, a SR&ED expenditure pool totaling $6,364 and $3,673 respectively, and investment tax credits of $1,486 and $532 respectively, that are due to expire as follows.
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Supplemental Cash Flow Information Items (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Non-cash Working Capital, Investing, and Financing Items | The following table presents the changes in non-cash working capital items.
The following table provides supplemental disclosure of non-cash investing and financing activities.
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Geographical Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue by Geographic Location | The following table presents total external revenues by geographic location, based on the location of the Company’s merchants.
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Long-lived Assets by Geographic Location | The following table presents the total net book value the Company’s long-lived assets by geographic location.
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Basis of Presentation and Consolidation (Details) |
Feb. 19, 2015
subsidiary
|
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of inactive shell subsidiaries dissolved | 2 |
Significant Accounting Policies - Segment Information (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015
segment
| |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
Significant Accounting Policies - Software Development Costs (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Software development costs | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 3 years |
Significant Accounting Policies - Advertising Costs (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Accounting Policies [Abstract] | |||
Advertising costs | $ 45,445 | $ 31,093 | $ 14,447 |
Significant Accounting Policies - Property and Equipment (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Computer equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Office furniture and equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life | 4 years |
Leasehold improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 13 years |
Significant Accounting Policies - Intangible Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Purchased software | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 3 years |
Other Intangible Assets | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 3 years |
Software development costs | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 3 years |
Significant Accounting Policies - Goodwill (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015
reporting_unit
| |
Accounting Policies [Abstract] | |
Number of reporting units | 1 |
Cash and Cash Equivalents (Details) CAD in Thousands, $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2015
CAD
|
Dec. 31, 2014
CAD
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
Dec. 31, 2012
USD ($)
|
|
Cash and Cash Equivalents [Line Items] | ||||||
Cash and cash equivalents | $ 110,070 | $ 41,953 | $ 83,529 | $ 17,655 | ||
Restricted cash | CAD | CAD 1,000 | CAD 1,050 | ||||
Money Market Funds and Term Deposits | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Cash and cash equivalents | $ 80,914 | $ 36,065 | ||||
Money Market Funds and Term Deposits | Minimum | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Interest rates | 0.01% | 0.01% | ||||
Money Market Funds and Term Deposits | Maximum | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Interest rates | 1.00% | 1.00% |
Trade and Other Receivables (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade and other receivables | $ 6,089 | $ 7,227 |
Trade receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade and other receivables | 1,701 | 838 |
Leasehold incentives receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade and other receivables | 1,554 | 3,158 |
Unbilled revenues | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade and other receivables | 1,075 | 704 |
Refundable tax credits | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade and other receivables | 754 | 1,959 |
Sales tax receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade and other receivables | 572 | 499 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade and other receivables | $ 433 | $ 69 |
Other Current Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 3,264 | $ 1,023 |
POS hardware | 1,550 | 290 |
Deposits | 1,389 | 175 |
Foreign exchange forward contracts | 0 | 7 |
Other current assets | $ 6,203 | $ 1,495 |
Intangible Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Cost | $ 8,446 | $ 3,821 | |
Accumulated amortization | 2,620 | 1,113 | |
Net book value | 5,826 | 2,708 | |
Amortization expense | 1,511 | 674 | $ 278 |
Software development costs | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cost | 4,238 | 1,925 | |
Accumulated amortization | 1,143 | 445 | |
Net book value | 3,095 | 1,480 | |
Intangible assets acquired | 2,313 | 1,269 | 656 |
Amortization expense | 698 | 330 | $ 115 |
Purchased software | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cost | 3,668 | 1,806 | |
Accumulated amortization | 1,242 | 588 | |
Net book value | 2,426 | 1,218 | |
Domain names | |||
Finite-Lived Intangible Assets [Line Items] | |||
Cost | 540 | 90 | |
Accumulated amortization | 235 | 80 | |
Net book value | $ 305 | $ 10 |
Intangible Assets - Classification of Amortization Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 1,511 | $ 674 | $ 278 |
Cost of revenues | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 750 | 608 | 240 |
Sales and marketing | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 186 | 33 | 32 |
Research and development | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 465 | 20 | 5 |
General and administrative | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 110 | $ 13 | $ 1 |
Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2016 | $ 2,288 | |
2017 | 2,215 | |
2018 | 1,192 | |
2019 | 131 | |
Net book value | $ 5,826 | $ 2,708 |
Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Payables and Accruals [Abstract] | ||
Trade accounts payable and trade accruals | $ 18,453 | $ 8,186 |
Other payables and accrued liabilities | 1,697 | 1,607 |
Accrued payroll taxes related to exercised stock options | 1,584 | 0 |
Employee related accruals | 1,150 | 539 |
Accrued sales tax | 805 | 2,182 |
Accounts payable and accrued liabilities | $ 23,689 | $ 12,514 |
Lease Incentives (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Operating Leased Assets [Line Items] | ||
Lease incentives | $ 11,177 | $ 7,536 |
Other lease liabilities | 142 | 242 |
Total lease incentives | 11,319 | 7,778 |
Less: current portion | 822 | 485 |
Long-term portion | $ 10,497 | $ 7,293 |
Ottawa Office | ||
Operating Leased Assets [Line Items] | ||
Lease term | 12 years 10 months | |
Lease renewal term | 5 years |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $ 6,446 | $ 4,547 | $ 1,178 |
Minimum Future Annual Rental Payments Under Non-cancellable Operating Leases | |||
2016 | 5,804 | ||
2017 | 7,809 | ||
2018 | 7,907 | ||
2019 | 7,958 | ||
2020 | 8,070 | ||
Thereafter | 42,594 | ||
Total future minimum lease payments | $ 80,142 |
Shareholders' Equity (Details) |
1 Months Ended | 12 Months Ended |
---|---|---|
May. 31, 2015
shares
|
Dec. 31, 2015
vote
shares
|
|
Class A Subordinate Voting | ||
Class of Stock [Line Items] | ||
Voting rights (in votes per share) | vote | 1 | |
Class B Multiple Voting | ||
Class of Stock [Line Items] | ||
Shares issued upon redesignation of common stock | 39,780,952 | |
Voting rights (in votes per share) | vote | 10 | |
Voting shares convertible (per share) | 1 | |
Common Stock | ||
Class of Stock [Line Items] | ||
Shares issued upon conversion of convertible preferred stock | 27,159,277 | |
Common Stock | IPO | Class B Multiple Voting | ||
Class of Stock [Line Items] | ||
Shares issued upon conversion of convertible preferred stock | 27,159,277 |
Shareholders' Equity - Fair Value Assumptions of Stock Options (Details) - Stock options |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 64.30% | 62.40% | 73.90% |
Risk free interest rate | 1.62% | 1.82% | 1.67% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Average expected life | 5 years 3 months 4 days | 5 years 8 months 23 days | 6 years 22 days |
Shareholders' Equity - Classification of Stock-based Compensation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 8,158 | $ 4,443 | $ 1,766 |
Cost of revenues | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | 282 | 259 | 113 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | 1,099 | 696 | 354 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | 4,509 | 2,776 | 1,152 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 2,268 | $ 712 | $ 147 |
Income Taxes - Provision for Income Tax Recovery/Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||
Earnings (loss) before income taxes | $ (18,790) | $ (22,311) | $ (4,837) |
Expected income tax expense (recovery) at Canadian statutory income tax rate of 26.51% (2014-26.51%) | (4,980) | (5,915) | (1,282) |
Permanent differences | 1,333 | 1,203 | 435 |
Share issuance costs | (3,734) | 0 | 0 |
Effect of change in tax rates | 0 | 0 | (163) |
Utilization of tax credits | 0 | 0 | (93) |
Other | (8) | (43) | 0 |
Foreign rate differential | (44) | (3) | (2) |
Increase (decrease) in valuation allowance | 7,433 | 4,758 | 1,105 |
Provision for income tax (recovery) expense | 0 | 0 | 0 |
Foreign income (loss) | $ 234 | $ 14 | $ (14) |
Canada Revenue Agency | |||
Operating Loss Carryforwards [Line Items] | |||
Canadian statutory income tax rate | 26.51% | 26.51% |
Income Taxes - Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred tax assets | ||
Temporary differences on capital and intangible assets | $ 415 | $ 606 |
Tax loss carryforwards | 3,799 | 3,415 |
SR&ED expenditure carryforwards | 1,687 | 974 |
Share issue costs | 3,345 | 39 |
Investment tax credits | 1,253 | 497 |
Lease accruals and other provisions | 4,316 | 1,664 |
Total deferred tax assets | 14,815 | 7,195 |
Valuation allowance | (14,011) | (6,578) |
Total deferred tax asset | 804 | 617 |
Deferred tax liabilities | ||
Capitalized software development costs | (804) | (380) |
Investment tax credits used or refunded | 0 | (237) |
Total deferred tax liabilities | (804) | (617) |
Net deferred tax asset | $ 0 | $ 0 |
Supplemental Cash Flow Information Items - Changes in Non-cash Working Capital (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Supplemental Cash Flow Elements [Abstract] | |||
Trade and other receivables | $ 1,176 | $ (3,930) | $ (1,196) |
Other current assets | (4,708) | (414) | (725) |
Accounts payable and accrued liabilities | 11,097 | 6,010 | 2,314 |
Change in non-cash working capital items | $ 7,565 | $ 1,666 | $ 393 |
Supplemental Cash Flow Information Items - Changes in Non-cash Investing and Financing Activities (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Supplemental Cash Flow Elements [Abstract] | |||
Acquired property and equipment remaining unpaid | $ 1,295 | $ 853 | $ 0 |
Acquired intangibles assets remaining unpaid | 0 | 250 | 0 |
Capitalized stock-based compensation | 362 | 79 | 26 |
Non-cash acquisitions of businesses | $ 0 | $ 0 | $ 404 |
Geographical Information - Long-lived Assets (Details) - Geographic Concentration Risk - Net Assets, Geographic Area - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 33,048 | $ 21,728 |
Long-lived assets (as a percent) | 100.00% | 100.00% |
Canada | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 25,886 | $ 17,758 |
Long-lived assets (as a percent) | 78.30% | 81.70% |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 7,162 | $ 3,970 |
Long-lived assets (as a percent) | 21.70% | 18.30% |
Acquisitions (Details) - Jet Cooper Ltd. and Atatomic Inc. $ in Thousands |
Jul. 31, 2013
USD ($)
company
shares
|
---|---|
Business Acquisition [Line Items] | |
Percentage of company acquired | 100.00% |
Number of companies acquired | company | 2 |
Consideration Transferred | |
Total consideration transferred | $ 1,232 |
Cash | $ 828 |
Common stock (in shares) | shares | 96,479 |
Common stock, amount | $ 404 |
Acquisitions - Escrow Agreement (Details) - Jet Cooper Ltd. and Atatomic Inc. - Sellers' Continued Employment Agreement $ in Thousands |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Jul. 31, 2013
CAD
shares
|
Dec. 31, 2015
CAD
shares
|
Dec. 31, 2015
USD ($)
shares
|
Dec. 31, 2014
CAD
shares
|
Dec. 31, 2014
USD ($)
shares
|
Dec. 31, 2013
CAD
shares
|
Dec. 31, 2013
USD ($)
shares
|
|
Business Acquisition, Contingent Consideration [Line Items] | |||||||
Restricted cash transferred to escrow | CAD | CAD 468,000 | ||||||
Restricted cash released from escrow | CAD | CAD 0 | CAD 280,000 | CAD 188,000 | ||||
Restricted shares | |||||||
Business Acquisition, Contingent Consideration [Line Items] | |||||||
Restricted shares transferred to escrow (in shares) | shares | 289,435 | ||||||
Share vesting period | 3 years | ||||||
Restricted shares released from escrow (in shares) | shares | 82,697 | 82,697 | 118,301 | 118,301 | 40,200 | 40,200 | |
Restricted shares released from escrow, fair value amount | $ | $ 345 | $ 493 | $ 168 |
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