Shopify Capital Issued $60.4M in Merchant Cash Advances in Q1

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shopify glyphShopify Capital, Shopify’s small business funding arm, issued $60.4 million in merchant cash advances in Q1, according to the company’s earnings report, an increase of more than 300% year-over-year. The company has advanced $230 million to merchants since April 2016.

On the company’s earnings call, Canaccord Genuity equity researcher David Hynes, inquired about the patterns of seasonal demand one could expect for the company’s merchant cash advances.

“So in terms of seasonality on Shopify Capital,” said Shopify COO Harley Finkelstein, “it’s important to note that the use of proceeds for Shopify Capital for most of our merchants tend to be in the realm of inventory or marketing spend, which we quite like, because that leads to more sales, which makes it easier for them to return the capital to us.

“Obviously, there’s the seasonality of capital reflecting the seasonality of retail in general, which is certainly more of a Q4 issue than it is a Q1 issue,” he added.

Canaccord’s Hynes also referred to Shopify’s product as a loan but was corrected by Finkelstein.

“Just keep in mind, these are not loans, these are cash advances, so I want to be very clear about that,” Finkelstein explained.

Shopify is a Canadian e-commerce company headquartered in Ottawa, Ontario. It is also the name of its proprietary e-commerce platform for online stores and retail point-of-sale systems

View the company’s earnings report here

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Last modified: May 1, 2018

Category: Industry News


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