Managing Partner, VRS (Valuation & Research Specialists)

VRS (Valuation & Research Specialists)

Managing Partner

Valuation & Research Specialists (VRS) is a boutique financial advisor with more than 17 years of experience in Corporate Valuation and Finance, and a diversified client base including some of the largest Companies in Greece.

Since 2002, VRS has completed more than 200 engagements in the areas of business valuation and financial analysis for more than 100 clients in a wide range of industries.

VRS has been honored to work with small and large private and publicly traded companies in Europe and overseas.

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<h2>Shopify Inc.</h2>
<h3><br>Equity Research Flash Note</h3>
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<p>Corporate &amp; Investment Highlights</p>
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<li>Shopify’s revenues for 2021 increased to $4.6bn recording a major percentage hike of 57.43% compared to revenues of 2020. Similar upward trend was observed in all profitability indicators in 2021 (EBIT, EBT, EATAM). Especially EBT and EATAM rec- orded a huge hike of 1,206.60% and 812.23% accordingly. The COVID-triggered acceleration of ecommerce in the first half of 2021 from lockdowns and government stimulus helped the company to achieve record high profitability. The estimates of reve- nues for 2022 ranges around $5.6bn while for the first three months were $1.2bn.</li>
<li>Shopify derives revenues from subscription solutions and merchant solutions. Subscription solutions revenues are generated through the sale of subscriptions to Shopify’s platform, including variable platform fees, as well as from the sale of themes, apps, and the registration of domain names, and are accounting for an amount of 29% of 2021 total revenues. Merchant solutions reve- nues are mostly generated from payment processing fees and currency conversion fees from Shopify Payments, transaction fees, referral fees from partners, advertising revenue, collaborative warehouse fulfillment solutions, non-cash consideration ob- tained for services rendered as part of strategic partnerships etc. and is the main source of the company’s revenue (nearly 71% in 2021). In 2021 merchant solutions revenues recorded an increase of 62%. This increase was a result of continued momentum in consumer trends following the COVID-triggered acceleration of ecommerce, an increase in the number of merchants using the platform, an increase in currency conversion fees, improved pricing, and an increase in adoption of Shopify Payments by the merchants.</li>
<li>Net profit of 2021 amounted to $2.9bn compared to $0.3bn net profit of 2020. We expect for 2022 EATAM to decrease around $- 2bn taking also into account that for the first three months of 2022 EATAM stood at $-1.5bn, mainly due to the unrealized losses of $1.68 billion that Shopify’s equity investments recorded during the first quarter along with the fact that growth is slowing as it laps the booming revenue expansion from early on in the pandemic, and concerns are mounting that inflation and aggressive U.S. Federal Reserve interest rate hikes could dramatically slow -- or worse, even crash -- the global economy, a situation that will result in increased unexpected costs. For 2023, we expect EATAM to somehow recover, ranging around $-0.5bn.</li>
<li>Capital Expenditures (Capex) amounted to $51mn in 2021, compared to $42mn in 2020. During the first quarter of 2022, Shopify had already spent $16mn, compared to $5mn during the same period last year. Our estimates are that Capex will ramp in 2022 and will range around $200mn, since Shopify is building a U.S. distribution network to store and ship products for its merchant customers. In 2023 and 2024, as management outlines, Capex will reach $1bn, because the company plans to invest heavily in consolidating its fulfillment network into larger, more controlled facilities that will provide for better quality control and eventually operational savings.</li>
<li>Shopify’s EBITDA for 2021 increased to $335mn from $116mn of 2020. In Q1 2022, EBITDA stood at -$81mn, compared to $135mn during the first three months of 2021, due to rising costs. We expect EBITDA to fall around -$324mn in 2021 and rise again at $150mn in 2022.</li>
<li>Debt amounted to $1.56bn as of December 31st, 2021, compared to $903mn in 2020. Specifically, for 2021, the company’s debt was comprised of total finance lease liabilities amounting to $247mn and medium-term convertible bonds, with a total amount of approximately $910mn with a maturity that ranged from 2 to 5 months issued back in 2020. At the first quarter, debt remained around the same levels and is expected remain almost unchanged in 2022.</li>
<li>In May 2022, Shopify reached an agreement to acquire Deliverr, Inc. for $2.1 billion in a cash-and-stock deal, a fulfillment technology provider, to provide simplicity and scale to millions of merchants, and to remove the complexity of fragmented supply chain management. With the addition of Deliverr’s network management software, team of software engineers, operations ex- perts and customer champions with deep domain expertise, and asset-lite network of warehouse, carrier, and last mile partners, Shopify gains visibility and control of movements along the supply chain, empowering merchants to offer and achieve fast deliv- ery promises across channels. By integrating the end-to-end software and logistics platform into the Shopify ecosystem, Shopify will streamline logistics to provide simplicity and scale advantages for merchants. The transaction was expected to close follow- ing a regulatory review.</li>
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Shopify Inc.
 Equity Research Flash Note




Corporate &amp; Investment Highlights





Shopify’s revenues for 2021 increased to $4.6bn recording a major percentage hike of 57.43% compared to revenues of 2020. Similar upward trend was observed in all profitability indicators in 2021 (EBIT, EBT, EATAM). Especially EBT and EATAM rec- orded a huge hike of 1,206.60% and 812.23% accordingly. The COVID-triggered acceleration of ecommerce in the first half of 2021 from lockdowns and government stimulus helped the company to achieve record high profitability. The estimates of reve- nues for 2022 ranges around $5.6bn while for the first three months were $1.2bn.
Shopify derives revenues from subscription solutions and merchant solutions. Subscription solutions revenues are generated through the sale of subscriptions to Shopify’s platform, including variable platform fees, as well as from the sale of themes, apps, and the registration of domain names, and are accounting for an amount of 29% of 2021 total revenues. Merchant solutions reve- nues are mostly generated from payment processing fees and currency conversion fees from Shopify Payments, transaction fees, referral fees from partners, advertising revenue, collaborative warehouse fulfillment solutions, non-cash consideration ob- tained for services rendered as part of strategic partnerships etc. and is the main source of the company’s revenue (nearly 71% in 2021). In 2021 merchant solutions revenues recorded an increase of 62%. This increase was a result of continued momentum in consumer trends following the COVID-triggered acceleration of ecommerce, an increase in the number of merchants using the platform, an increase in currency conversion fees, improved pricing, and an increase in adoption of Shopify Payments by the merchants.
Net profit of 2021 amounted to $2.9bn compared to $0.3bn net profit of 2020. We expect for 2022 EATAM to decrease around $- 2bn taking also into account that for the first three months of 2022 EATAM stood at $-1.5bn, mainly due to the unrealized losses of $1.68 billion that Shopify’s equity investments recorded during the first quarter along with the fact that growth is slowing as it laps the booming revenue expansion from early on in the pandemic, and concerns are mounting that inflation and aggressive U.S. Federal Reserve interest rate hikes could dramatically slow -- or worse, even crash -- the global economy, a situation that will result in increased unexpected costs. For 2023, we expect EATAM to somehow recover, ranging around $-0.5bn.
Capital Expenditures (Capex) amounted to $51mn in 2021, compared to $42mn in 2020. During the first quarter of 2022, Shopify had already spent $16mn, compared to $5mn during the same period last year. Our estimates are that Capex will ramp in 2022 and will range around $200mn, since Shopify is building a U.S. distribution network to store and ship products for its merchant customers. In 2023 and 2024, as management outlines, Capex will reach $1bn, because the company plans to invest heavily in consolidating its fulfillment network into larger, more controlled facilities that will provide for better quality control and eventually operational savings.
Shopify’s EBITDA for 2021 increased to $335mn from $116mn of 2020. In Q1 2022, EBITDA stood at -$81mn, compared to $135mn during the first three months of 2021, due to rising costs. We expect EBITDA to fall around -$324mn in 2021 and rise again at $150mn in 2022.
Debt amounted to $1.56bn as of December 31st, 2021, compared to $903mn in 2020. Specifically, for 2021, the company’s debt was comprised of total finance lease liabilities amounting to $247mn and medium-term convertible bonds, with a total amount of approximately $910mn with a maturity that ranged from 2 to 5 months issued back in 2020. At the first quarter, debt remained around the same levels and is expected remain almost unchanged in 2022.
In May 2022, Shopify reached an agreement to acquire Deliverr, Inc. for $2.1 billion in a cash-and-stock deal, a fulfillment technology provider, to provide simplicity and scale to millions of merchants, and to remove the complexity of fragmented supply chain management. With the addition of Deliverr’s network management software, team of software engineers, operations ex- perts and customer champions with deep domain expertise, and asset-lite network of warehouse, carrier, and last mile partners, Shopify gains visibility and control of movements along the supply chain, empowering merchants to offer and achieve fast deliv- ery promises across channels. By integrating the end-to-end software and logistics platform into the Shopify ecosystem, Shopify will streamline logistics to provide simplicity and scale advantages for merchants. The transaction was expected to close follow- ing a regulatory review.














Canada

Shopify Inc. provides a cloud-based commerce platform. The Company offers a platform for merchants to create an omni-channel experience that helps showcase the merchant's brand. Shopify serves customers in Canada.

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Shopify (SHOP CN)

Shopify Inc - Equity Research Flash Note

Shopify Inc. Equity Research Flash Note Corporate & Investment Highlights Shopify’s revenues for 2021 increased to $4.6bn...

VRS (Valuation & Research Specialists)

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