Business Context and Reporting Period
This Form 6-K, filed on August 17, 2016, reports on a secondary public offering and primary issuance of Class A subordinate voting shares by Shopify Inc. The filing incorporates an Underwriting Agreement dated August 16, 2016, and related consents. The transaction involves the sale of shares to underwriters led by Morgan Stanley, Credit Suisse, and RBC Dominion Securities, with an expected closing date of August 22, 2016.
Key Financial Metrics and Offering Terms
- Offering Size: 7,500,000 Class A subordinate voting shares (Firm Shares).
- Primary Issuance: 5,000,000 shares issued and sold by Shopify Inc.
- Secondary Sale: 2,500,000 shares sold by existing Selling Shareholders (including Bessemer Venture Partners funds and individual insiders).
- Over-Allotment Option: Underwriters have a 30-day option to purchase up to 1,125,000 additional shares (15% of the firm commitment).
- Public Offering Price: US$38.25 per share.
- Underwriter Purchase Price: US$36.815625 per share.
- Capital Structure (Pre-Offering): 68,691,320 Class A shares and 13,651,901 Class B multiple voting shares outstanding.
- Listing: Shares are listed on the New York Stock Exchange (NYSE) under symbol "SHOP" and the Toronto Stock Exchange (TSX) under symbol "SH".
Material Changes and Proceeds
The filing does not provide comparative revenue, profit, or cash flow metrics for the period. The primary material change is the dilution of existing shareholders due to the issuance of 5,000,000 new shares by the Company. Proceeds from the sale of the 5,000,000 primary shares will be received by Shopify Inc. Proceeds from the sale of the 2,500,000 secondary shares will be received by the Selling Shareholders, not the Company. The filing states there has been no material adverse change in the Company's condition since the date of the prospectus.
Guidance, Outlook, and Risks
- Use of Proceeds: The filing text does not explicitly detail the specific allocation of proceeds for the primary offering, though it references the "application of the proceeds" described in the incorporated Prospectus.
- Lock-Up Agreements: Officers, directors, and Selling Shareholders have entered into lock-up agreements restricting the sale or transfer of Subject Shares for 75 days following the date of the final prospectus.
- Legal and Regulatory Risks: The offering is subject to conditions including the effectiveness of the Registration Statement on Form F-10, receipt of legal opinions, and no material adverse change in the Company's business or financial condition.
- Unusual Items: The transaction includes a significant secondary component (33% of the total offering) where proceeds do not benefit the Company.
Investor Verification Checklist
- Verify the final closing date and whether the over-allotment option was exercised.
- Confirm the exact net proceeds received by Shopify Inc. after deducting underwriting discounts and offering expenses.
- Review the full Prospectus Supplement for the specific "Use of Proceeds" section, which is not detailed in this Underwriting Agreement.
- Check for any subsequent filings regarding the lock-up expiration and potential insider selling pressure after the 75-day period.
- Confirm the updated share count and dilution impact on earnings per share (EPS) post-closing.