Shopify files for IPO

Ottawa-based Shopify announced plans to go public on Tuesday, saying it hopes to raise up to $100 million in an initial offering on the New York Stock Exchange.

The e-commerce firm said it will sell subordinated class-A shares and will list on both the New York and Toronto exchanges. The number of shares and price range have yet to be determined.

Shopify said in a statement it plans to list on the New York Stock Exchange as “SHOP” and on the Toronto Stock Exchange as “SH.”

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Morgan Stanley, Credit Suisse and RBC Capital Markets are leading the offering. Pacific Crest Securities, Raymond James & Associates and Canaccord Genuity are acting as co-managers.

Originally launched as an online snowboard store 11 years ago, Shopify was founded in 2006 has grown rapidly over the past decade to become the capital’s biggest tech success story in that time period.

The firm, which employs 632 people according to regulatory documents filed on Tuesday, raised $100 million in venture capital in December 2013 and is considered to be the world’s dominant online storefront platform. Shopify is now valued at more than $1 billion.

Recognized as one of the city’s fastest growing companies by OBJ last year with three-year revenue growth of 335 per cent, Shopify posted revenues of $105 million in 2014. In the first three months of 2015, it earned revenues of $33.7 million, almost double its first-quarter total from the previous year, according to the filing.

Still, the company has yet to turn a profit, posting a loss of $22.3 million last year and $4.5 million in the first three months of 2015. The company said it plans to use some of the capital generated from the IPO to boost its sales and marketing efforts and upgrade its network infrastructure, which could continue to impact the bottom line.

“These increased expenditures will make it harder for us to achieve profitability and we cannot predict if we will achieve profitability in the near term or at all,” Shopify said in the document filed with the U.S. Securities and Exchange Commission.

The company said 162,000 merchants worldwide now use its platform, generating average annual revenue of about $1,000 per client. Shopify said it expects those numbers to continue to grow rapidly.

“We believe that our market will expand as we continue to inspire entrepreneurs to start new businesses and provide the technology that enables them to do so,” the company said. “In addition, we expect our average revenue per merchant to continue to increase as our merchants grow and we further expand our offerings.”

In a letter attached to the filing, Shopify CEO Tobias Lütke said the IPO will help the company maintain its standing as a world e-commerce leader.

“I want Shopify to be a company that sees the next century,” he wrote. “To get us there we not only have to correctly predict future commerce trends and technology, but be the ones that push the entire industry forward.”

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