Good morning. My name is Jessa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Shopify Fourth Quarter 2015 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question- and- answer session. If you would like to ask a question during this time, simply press star then number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. Thank you. Ms. Katie Keita, Director of Investor Relations, you may begin your conference.
Good morning. Thank you all for joining us for Shopify's Fourth Quarter 2015 Conference Call. Opening today's call is Tobi Lütke, Shopify's Founder and CEO. Russ Jones, our Chief Financial Officer, will review our 2015 results and discuss our expectations for 2016. Harley Finkelstein, our Chief Operating Officer, is with us to help answer your questions following our prepared remarks. During today's discussion, we will make forward-looking statements which are based on current assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those projected in our forward-looking statements. We undertake no obligation to update these statements except as required by law.
Information concerning such risks and uncertainties is contained in our press release, as well as our filings with the Canadian Securities Regulators and the U.S. Securities and Exchange Commission, also available on our website. Our commentary today will include adjusted financial measures which are non-GAAP measures. We believe that these non-GAAP measures provide information useful to the overall understanding of past financial performance and future prospects. They should be considered as a supplement to and not as a substitute for our GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures for our reported results can be found in our earnings press release, which is available on our website. Finally, a reminder that we report in USD, so all amounts discussed are in U.S. dollars unless otherwise indicated. With that, I will turn the call over to Tobi.
Hey, thanks so much for joining us for our call. It's been a really fun year for us. We shipped a lot of great things, and we really hope that people are starting to get a sense for how we operate as a public company. Today, I'm going to talk about mostly about what we launched today, and I'm going to highlight one thing in particular, which is going to be mobile. I'll cut a little bit on what we're going to do in 2016 as well. Jumping right into it, you're probably sick of hearing about mobile from everyone right now. It's, like, clearly we are not going to tell you much news here. It's big. It's how I think humans have decided to consume internet, at least for foreseeable future.
We can't take credit for the sort of a macroeconomic race of the numbers on mobile. I wanna talk a little bit about, you know, sort of our history of it and what we've been doing. We've been pretty much obsessed with the mobile right from the beginning. It sort of, like, there was, like, all the spider senses started tingling pretty early when we saw, like, how people were using their smartphones and so on. We've always been investing a lot into it and applying a lot of polish. This is now really reflected in the numbers. Traffic to Shopify stores from mobile has climbed now to 61% in December 2015, from 55% in December 2014. Nice increase there year-over-year.
What's probably a little bit more surprising is that, about 46% in December 2015 of all the orders came from mobile devices. I believe that's a higher number than you probably heard from other retailers, and I think this really reflects all our attention on optimizing the checkout experience and making sure that the online stores of our customers are just very optimized for mobile devices and these new form factors. What's also really great is that a lot of our merchants are starting to really run their businesses directly from their mobile phone primarily. This kind of makes sense because of our customer base. Like, we have a lot of entrepreneurs on the platform. We have a lot of SMB owners. Those people are by definition multitaskers in motion, right?
Being able to run your business on the go is important, especially because there's a, like, sizable group of people who are running their stores on the side during their lunch breaks and these kind of things. Another example of something we've done now, if you might remember, we allow people to put buy buttons on their blogs, on their various websites, which is a nicer way to sell your products from your existing web properties than just sort of linking to an online store where people lose a lot of context. We've taken that idea, which has been very popular, and created something called the Mobile Buy SDK.
People who don't have websites, but who have native apps in the App Store with Apple and Google or something like this, can go and essentially do the same thing in these native applications. That allows them to take advantage of things like Apple Pay and so on. So that's another really really great mobile related to thing we are doing. One thing about this sort of shift to the mobile phone is that people are starting to spend a lot less time in their web browsers. Like, the most valuable real estate are really the social media apps. They are, like, people spend a lot of time in Facebook, Twitter, and Pinterest and these kind of things.
Of course, we spent a lot of emphasis in last year ensuring that our merchants can sell directly through these platforms. Looking ahead to 2016, here's what we have planned. We will continue to take the time-consuming tasks and integrate them directly into our core platform. As you know, after building payments, we have only just started this process with our shipping product. You can expect us to continue adding partners and geographies here, some more traditional than others. Shipping is a big challenge, especially for people who are new to the retail world, and we want to make it a non-issue. Also, stay tuned for some other merchant solution announcements coming down the pipe this year.
It is really important to us that our merchants have what they need to really do well and succeed, and so we'll continue to build these features and channels that facilitates this. This formula has served us well so far, and we think it's the best guide through 2016 and beyond. Expect a lot of R&D to happen in 2016. With that, I'll turn it over to Russ.
Thanks, Tobi, and good morning, everyone. We had a really great fourth quarter, a fitting way to close out what has been a banner year for our debut as a public company. I'll now take you through the quarter and full year results, the investments we plan to make in 2016 to support our continued rapid growth, and end with our revenue and operating expectations for 2016. Revenue for the fourth quarter of 2015 was $70.2 million, nearly double the revenue for last year's fourth quarter. Subscription solutions revenue grew 70% year-on-year to $34.6 million, while merchant solutions revenue grew 140% over the fourth quarter of 2014 to $35.6 million.
Subscription solutions revenue growth was again primarily driven by the number of merchants joining our platform, which was the strongest quarterly increase in our history. Monthly recurring revenue was $11.3 million as of December 31st, 2015. This compares with $6.6 million at the end of 2014 and $9.8 million at the end of the third quarter of 2015. There are now over 243,000 merchants running their businesses on Shopify. On the merchant solutions side, the success-based component of our business model, we benefited from strong holiday shopping season with over $2.8 billion of GMV transacted on the Shopify platform, more than twice the volume we processed in Q4 of 2014.
Merchant solution revenue also benefited from the continued strong growth of Shopify Payments as most new merchants joining our platform adopt Shopify Payments where it's available. We ended the year with Shopify Payments merchant penetration rates of 84% in North America, 67% in the U.K., and slightly over 18% in Australia, which is pretty impressive given we just launched there in November 2015. Gross profits in Q4 grew 81% year-over-year to $35.5 million versus $19.6 million for the fourth quarter of 2014. Adjusted operating expense again declined as a percentage of revenue to 53% of revenue versus 58% of revenue for the comparable quarter a year ago. Our adjusted operating loss in Q4 was $1.3 million compared with $0.8 million for last year's fourth quarter.
We recorded an adjusted net loss per share in Q4 of $0.01 compared with $0.03 loss for Q4 of 2014, with 78 million shares outstanding for Q4 2015 versus 39.2 million shares for Q4 of 2014. A few highlights for the full year. Revenue grew 95% from 2014 to $205.2 million, while gross profit for the full year grew 80% over 2014 to $111.1 million. We reported a smaller adjusted operating loss in 2015 of $6.7 million compared with $15 million for 2014. On a per share basis, our adjusted net loss for 2015 was $0.13 versus $0.40 for 2014.
We finished 2015 with over $190 million of cash equivalents and marketable securities and 1,048 employees. These strong results put us in an excellent position to continue to invest strategically to build upon both our competitive position and the exploding demand for multi-channel commerce capabilities by businesses of all sizes. For 2016, we prioritize the following three areas for incremental investments. First is infrastructure. With the rapid growth in both our employee and merchant base, including merchants doing higher order volumes, we will continue to add capacity to our offices and data centers and are planning to open our next data centers in Europe. This will happen in the second half of the year.
While more concentrated product and marketing efforts internationally are further off, we are investing now for a number of reasons, including the natural expansion of our international footprint as well as to provide European merchants with local data centers in light of the changing regulatory environment related to data protection in Europe. Second is the expanded partner and merchant engagement. Among other initiatives, we plan to hold two conferences this year, a partner conference in March and a second later this year for merchants. Our partners, in many ways, are an extension of Shopify, and as we continue to build out our platform, it is critical that our partners continue to have a deep understanding of and be an advocate for Shopify.
On the merchant side, the success of smaller scale retail tours that we experimented with in 2015 indicated strong demand for a larger event. Costs associated with these conferences are incremental as this is the first time we will be holding them. Third is our Shopify Plus offering. With the addition of just a few sales resources in early 2015 to focus on upgrades, respond to inbound leads, and begin outbound efforts, we saw heavy demand. We continue to carefully add capacity each quarter of last year. We now have over 1,000 merchants on Shopify Plus, a number that grows practically by the day. While Plus prices are several times the price of the next plan down, they cost a fraction of enterprise alternatives and can be deployed in a fraction of the time.
Add to this the mobile and multi-channel capability Shopify offers, it's easy to see why Plus is quickly gaining in popularity. In 2016, our plan is to expand the Plus program by adding more sales and support personnel and opening a new office in Waterloo in Q2 that will primarily focus on Plus. Just to be clear, though, our target market continues to be SMBs. Plus allows us to give SMB merchants more options as they grow while also serving larger brands. We believe these 2016 investments are targeted at the right areas at just the right time to ensure our continued strong growth and path to profitability.
Looking ahead to 2016, for the full year, we expect to achieve revenues in the range of $320 million-$330 million and to report an adjusted operating loss in the range of $16 million-$22 million, which excludes share-based compensation expenses and related payroll taxes of $20 million. For the first quarter of 2016, we expect revenues in the range of $65 million-$67 million and adjusted operating loss in the range of $6.5 million-$7.5 million, which excludes share-based compensation expense and related payroll taxes of $4.5 million. With that, I'll turn it back over to Katie to start the Q&A.
Thank you, Russ. Jessa, can we have our first question, please?
Certainly. Again, to ask a question, please press star one on your telephone keypad. Your first question comes from the line of Michael Nemeroff from Credit Suisse. Please go ahead.
Hey, guys. Thanks for taking my questions, and congratulations on a good quarter and a great year. My first question is for Tobi. Tobi, you alluded to some interesting new things on the merchant solutions side. Do you think you maybe give us a sneak peek of what customers or merchants are asking for, what the top things that they're asking for in the platform currently? I've got a follow-up for Russ, please.
Hi, Michael, good morning. This is a lot earlier than we usually get to this point on the call where I'm going to say that I really, really need to retain my ability to surprise my customers. I won't be commenting on the roadmap. It's and we've talked consistently about the like the underlying motivation for what we're doing, right? Like, starting these kind of businesses was really, really, really hard before Shopify started, and then for the last 10 years, we made it incrementally easier to then be at the point now where starting online businesses is now really within the reach of most people.
Bringing it further, reducing the complexity further and bringing things like shipping and not having to choose your, like, find a payment gateway and all these kind of things, that increases our market. We are looking all across the businesses of our customers in our core markets, in, you know, in North America, in, you know, the other markets we are going into to see if there's different challenges. Like, this is the way we kind of thinking about it. One, like, hopefully, over the next decade, we get to all of them. That's the best way to think about it.
Thanks. Thanks, Tobi. I look forward to hearing more about those solutions. Russ, you know, just looking at the guidance, a very strong, well above what we were looking for and I think the street was looking for in terms of growth. But also on the OpEx side, I'm just curious, when you're building your guidance, how much visibility do you have into, you know, the results that you think you're gonna put up for 2016 as well as the net merchant adds that you're expecting in 2016? Maybe if you could just walk us through how you get that'd be helpful. Thanks.
Yeah, when we look at our revenue guidance, we look at sort of the two components of that. One is the subscription solution, which is very much tied to the merchant growth. Typically, what we see is Q1 is a slower quarter for merchant growth just 'cause people are coming back from holidays and thinking about starting something. Q4, obviously, as you've seen from our results, has been our typically one of our stronger quarters there. We do have that visibility there. We do have, in terms of tying in what we're spending on marketing and some of these other programs, a good way to provide a view of that predictable side of the business. On the merchant solutions side, currently the largest piece of that is payments.
We now have that available in all our key markets. As we sort of see the GMV growth, we get a good visibility on that. If there's any potential sort of variability in our view of 2016, it would be around the merchant solutions because it's really tied to the number of merchants and how successful those merchants are gonna be.
Thanks. Thanks very much for taking my questions.
Your next question comes from the line of Gil Luria from Wedbush Securities. Please go ahead.
Thank you. Good morning. Your net merchant additions in the quarter were far above the rates you've had before. What do you attribute that to? What's causing the momentum, particularly what caused the momentum, particularly in the fourth quarter that you added so many more merchants?
I don't think there's any one particular item that's driving it. It's just a accumulation of all the stuff that we do. We saw good growth of merchants through our partner ecosystem. I think the availability of some of the buy buttons and our work in terms of both mobile and social platforms has brought more merchants to us. I think on the Plus program, we do continue to see merchants come to us from that way. On the marketing side, we're very strong in terms of both where we spend our marketing dollars as well as on the organic side. From our blog and a lot of the other stuff that we do, we're getting merchants from that as well.
Specifically social, you're calling that out that the rate of adoption is pretty fast right now. What are the types of applications? What types of merchants are the ones that are figuring out how to sell on those social platforms, the Facebook, the Twitter, the Pinterest? What are the types of products that are better suited for that kind of a sale?
I mean, as so often, it's a big mix of everything. We now have a couple of successful merchants which actually only sell on social channels. They started their business with an idea for something that sells on Facebook, and that's the only thing they're doing. That's there. On the other side, on a completely other end of the spectrum, you have the potentially the merchandising groups of some larger, like existing merchants saying, "Hey, you know, we have a website already, but we want to do the social thing, let's use Shopify for that." That's like the they couldn't be much more different.
The kinds of products that work really well tend to be products that are at the intersection of interest. This is a little bit of subtle point, but the Facebook much more, and social network in general, much more than previously, like search, has more context of the users. Like if I'm, for example, like this is an actual example. Like I really like skateboarding, and I obviously really like technology. The fact that electric skateboards are now on the market is something that I only know because I the people who make them can effectively find me on a system like Facebook because they know that I have both shared interests. There's a lot of these kind of things coming.
Those are the products that really work well because it's easy to navigate for the ad to, it's directed to the right audience.
Got it. Thank you.
Your next question comes from the line of Brendan Barnicle from Pacific Crest Securities. Please go ahead.
Thanks so much. Just following up a bit on Mike's question. You know, obviously much better results around the quarter than folks expected, much better guidance. Based on the guidance, Q4 to Q1 would actually be a sequential decline, which we don't have a lot of history around, but we haven't seen before. Is there more seasonality around the merchant solution business that we should be modeling in as we think about that?
Our expectation is, on the subscription side, we'll continue to see good growth, not as large as potentially other quarters. As I mentioned, merchant additions tend to be smaller in that quarter. In terms of the merchant solutions piece, I mean, we grew in Q4 to over $2.8 billion, up from $1.9 billion the previous quarter. Obviously, we won't do $2.8 billion in Q4, and as that holiday period sort of, works its way through, we expect the merchant solutions piece to be less than it was in Q4, and so that's the reason for the decline. In terms of the subscription, which is kind of the very important piece of the business 'cause merchants start buying merchant solutions, that we see again, still strong growth.
Russ, you had talked about the success you'd had with the enterprise sales efforts. Any other changes that we should look for in sales or distribution this year? Any type of reorg happening here at the beginning of the year?
No plans for that. The Plus side will continue to add resources as it makes sense on that front. Partners, we'll probably continue to attract some larger partners as well, and so the partner ecosystem will stay pretty critical. If anything, maybe at the back end of the year as other sort of additions to the platform come out, we may see something as part of that. It's gonna be really everything continuing to fire the way it has in 2015.
Great. Lastly, Tobi, you said something that was intriguing. You mentioned less traditional shipping partners. I was wondering what a less traditional shipping partner might be.
Oh, okay. Yeah. Sorry, but I had to think about this for a moment. I think I pointed there specifically to Uber. This is something we've been working with them on getting packages moved around that, you know. Because a lot of orders actually happen city, like the object is already within 25 mi of where it's ordered to. You know, that tends to be not a great fit for the traditional like shippers, because often that first truck that picks up a package where it is actually takes it further away from where the person, where the destination actually is.
In most cases, in New York and a couple of other places now, we allow merchants to enable Uber for delivery of these kind of things. If a merchant puts in address and we know that it's close enough, then the checkout will simply offer, you know, tell us the time when you want to receive it, and a driver will bring it to your doorstep. You know, the experience is fantastic. It gives like even really small merchants something that they couldn't previously do, which is like same-day delivery. This is a way of thinking about it. Like we really about shipping in general, like shipping is really just taking things from point A to point B, and that's all we are interested in.
We are taking a whole market holistic approach, looking at, you know, what is potentially the best way of moving the product. We're not gonna be restricting ourselves to traditional shippers, although they are of course going to be the absolute majority of the deliverers.
Great. Thanks for the clarification. Thanks for taking my questions, guys.
Your next question comes from the line of Terry Tillman from Raymond James. Please go ahead.
Hey, good morning, great job on the quarter. I guess the first question just relates to on the Plus side. Russ, you talked about some of the additional investment areas and some of the work you're gonna be doing with Plus, additional sales resources, additional office. Is there any shift or evolution in terms of the go-to-market on the Plus product that focuses on not just graduating up or maturing up your install base customers to that product and more aggressively going after just new logos that may be mid-market or enterprise sellers? Is there any kinda shift there that we could see where you're more aggressive on that ladder?
Hey there, it's Harley here. I'll take this question. As Russ mentioned, excuse me, we now have over 1,000 Plus merchants on the platform. About half of them are sort of homegrown Shopify stories that started on the platform, and as they grew, they upgraded to Shopify Plus. The other half comes from existing brands. As an example, in Q4, we saw Mondelēz bring on Oreo and Procter & Gamble bring on Swash, which is a collaboration with Tide and Whirlpool. We saw T-Mobile, Fairmont, Motorola, and even GE launch a new smart light bulb product on Shopify Plus. We're beginning to see more and more of these existing larger brands choose Shopify and Shopify Plus as to launch on.
In terms of how that fits in with sort of Shopify, you know, Shopify, our focus on entrepreneurship is actually really good for these, for Plus. These larger brands are looking for things that are easy to deploy, simple to use, and obviously, they want it optimized for mobile and social. We're seeing a lot more larger brands that are now deciding Shopify Plus is a much better place to go and that continues to grow really nicely, so we're excited about that.
Thanks, Harley, for that. I guess my follow-up question relates, Russ, to the gross margin. How do we think about gross margins in the model that you've suggested or guided to for 2016 versus 2015 in terms of gross margins on either of the line items or consolidated gross margins? Thanks.
Yeah. In terms of the two components, on subscription, we expect the margins to hold relatively steady. As we bring on the new data centers in the back half of this year, we always do see a bit of a decline and then as that capacity gets used up, back to an improvement there. On the merchant solution side, barring any sort of major changes on interchange in that, we kind of think that we're at where we should be there. Overall, it's really just a change in mix that would impact our margin. I should let you know that our view is currently that subscription solutions will continue to be the larger piece of the business in 2016.
The only exception where we see a bit of a shift there is in the, a period like our Q4, where there's just so much volume going through the platform that merchant solutions can be a bigger piece. That kinda reverts back in Q1 and sort of holds for the year.
Thanks for that extra color. Thanks.
Your next question comes from the line of Richard Davis from Canaccord. Please go ahead.
Hey, thanks, guys. It's DJ on the call for Richard. Can you help us get a feel for GMV concentration? You know, you have 1,000 customers on Shopify Plus. You know, what percent of GMV do they account for or, you know, any other metrics that you can kinda share to help us think about that?
Yeah, as you would expect, I mean, some of these bigger brands are more established, out of the gate will do a higher volume, no concentration at all. Even if you look at individual Plus merchants, they're a fraction of the overall GMV. The majority of the GMV is still coming from our targeted SMB clients.
Okay. Then I guess, on the social efforts, you know, what are the metrics that you guys are tracking to gauge success there? Then I guess, you know, can you share any of those early data points with us?
Yeah. I mean, you know, like yeah, this office is filled to the brim with screens that's showing us metrics. We're very much into it. We are not so much into sharing them. Like the main thing like which might be of interest, what we are really, really into is multi-channel active merchants. This is sort of how we are judging our success. Like because everyone who comes to us comes to us because they're trying to solve a problem. Like often that problem traditionally was, I need a website that can sell my product. Now the problem more often is like, I need a point of sale terminal, or I need to be able to sell on Pinterest or something like this.
We see all those ways, like, and of course, Shopify works really well for all these things, and it works really well when you only use one of those things.
We see our success if we can almost upgrade our customers' ambitions to say, I'm willing to become a multi-channel business. Which, you know, if you go 10 years ago, they would have for a retailer to say, "Hey, let's add a new sales channel," that was probably a couple of months of deliberations and a board-level decision, you know. We are trying to build software that essentially allows you to go multi-channel before breakfast. The percentage of our customer base doing being multi-channel thing is an internal metric that we are tracking.
Mm-hmm. Okay. Okay, thanks for the color, guys. Good numbers.
Your next question comes from the line of Brian Essex from Morgan Stanley. Please go ahead.
Hi, good morning, thank you for taking the question, and congrats on the quarter. Those are nice-looking numbers. I just wanted to talk about the take rate a little bit. It looks like, you know, I'm backing into a take rate of about 125 basis points, so some nice kind of sequential expansion there. I was wondering if you could talk about, you know, we've seen it step up, you know, sequentially throughout the year and, you know, since you've launched Shopify Payments. Any additional color in terms of where that expansion came from, whether it was geographic or incremental penetration of GMV and what that penetration rate might be?
I mean, the biggest thing is the payment side of it. I talked a bit in my scripted part about the penetration that we're getting in various jurisdictions, so that's helping there. Obviously, the volume that went through the platform in Q4 helped that number. Shopify is now sort of the number one. Shopify Payments is the number one gateway of GMV being processed through it. The second one is still PayPal, still a large piece of business on the web. The third one is another sort of gateway. Again, on two and three, we get a rev share associated with that.
In Q4, you saw not only did we do well on the payments, but rev shares from these partners because again of the volume, helped that take rate. The take rate, we're expecting to hold relatively close, maybe a potential decline as you get some of these Plus merchants that already have their own payment gateway in place, throughout 2016. That's the color behind it.
Got it. Thank you. Just kind of follow up on the spending into 2016. You know, as you think about incremental spend, whether it's on infrastructure and OpEx, I mean, how do you think about balancing You've operated actually, you know, surprisingly close, in fact, you know, positive cash flow from operations, which is nice to see that efficiency. How do you think about that longer term and any kind of revision based on what you've seen with the success of the platform in terms of what you're thinking for, you know, maybe growth in cash flow or better profitability, a inflection point at some point?
Yeah, I mean, these investments that we're making this year will make the business stronger. Internally, our view is still the tail end of 2017 with profitability. Similar to the past, we expect for the year that we'll be cash flow positive at the operating level. We're a business that we've been profitable in the past, we've been cash flow positive in the past, and our goal is to get back to there as soon as we can. Right now, the opportunity is so large that we think making these investments is the right thing for the business.
Makes a lot of sense. Thank you.
Your next question comes from the line of Yao Chew from RBC Capital Markets. Please go ahead.
Good morning, guys. I'm on for Ross. Congrats on the quarter. was a pretty solid one. A couple of follow-up questions, I guess. firstly, on merchant numbers, you know, it's a huge ad for the quarter. Trying to understand a bit on seasonality, how many of those are pop-up stores for the season? Would you actually expect merchants to be down quarter on quarter? How much of the impact from Amazon Webstore, migration, so on and so forth? Would you be able to speak to that a little bit?
Not specifically on the Amazon stuff, but I mean, we do get merchants that set up a business for that holiday period. I mean, it's not the lion's share. Most of the people that are doing this are in it for the long haul. But like anything during a holiday period, there will be people that try it. Because it's so inexpensive and easy to do, we do get some merchants that do that. Those ones may decide, post the Christmas period to either stop their business or put it in some sort of a holding pattern until a similar period next year.
Got it. couple of other quick ones. I guess on merchant solutions gross margin, payments to reaching a pretty nice penetration level, and we've sort of seen that, I think it's the first quarter in a long time we've seen that margin inflect positively. It's sort of 24%, 24.3%. What is this quarter, the way to think about it long term as a floor? Are the new merchant solutions that you're introducing, you know, shipping obviously as it reaches scale and whatever else you might have in the pipeline, are these incremental, decremental to sort of that level of margins? How should we think about that?
I'll talk about shipping 'cause it's the next one that we're putting a lot of energy behind. There we recorded on a net basis, so it'll have margins similar to what we get on subscription, so that'll have a positive point of view. We also see outside of North America, higher margins even on the payments business. As we get bigger and do more volume, there is some economies that we get as part of that. Like I said before, like Visa or Mastercard or Amex tomorrow may wanna change their way that they charge for interchange. Assuming that that's not the case, I think we've kinda hit the bottom and we'll see improvement. Not a large improvement, but some improvement in 2006.
Great to hear. Just one last quick one. I was looking through the 20-F, and there was this analysis that you guys put out for the cohorts, during your IPO roadshow, and you sort of broke it out by 2012, 2013, and 2014, and now you've lumped that all into pre-2014 cohort analysis. It looks like it's flat year-over-year from 2014 to 2015. I mean, without having the exact numbers I can back into, it implies that the 2012 and 2013 guys have fallen off quite a bit. Is there any more color you can give us on that particular slide or analysis?
Yeah. No real change on the 12 and 13. We just, because we do really three years of financials, we did that cohort analysis for the three years. What we find is, like a merchant, if they're gonna fail as a business, it happens fairly quickly. Once they're up and running and making sales, there's no reason why they leave the platform. Again, the numbers are a bit smaller just because of our growth rate. If you notice in that cohort chart, the 2014 group is quite a bit bigger than they were back then, and the 2015 is a very substantial one as well. I think that speaks to the strength of the business.
I'll point out, like on the monthly billing retention rate, that again is over 100% for 2015. In the world of SMBs, I think we're performing quite strongly there.
Absolutely. Thank you for answering my questions. Congrats again on the quarter.
Your next question comes from the line of Arvind Ramnani from Gordon Haskett. Please go ahead.
Hi. Congrats on a great quarter. I just had a couple of questions. You know, from a feature set perspective, you know, I'm sure you have merchants making sort of different demands, you know, and you've provided a good roadmap of your investments over the next year. Are there particular feature sets that you're unable to get to in the next year that are being pushed out to, you know, 2017 or beyond?
Hey. Well, I probably have a roadmap all the way for the next 10 years in my head. The answer is absolutely yes. I would love that magic wand that allows me to make software come into existence immediately. I would probably be the first person in line for it if that ever comes from the market. We are limited by our R&D resources, right? Like, this company will never, ever be limited by its ambition. You know, this is part of the reason why we are expanding.
You know, like, you know, we are finding that we are getting incredible talent, which has always been the case, frankly, but specifically after, you know, going public and sort of, you know, creating a consensus in Canada and the regions we are in that, you know, Shopify is a company that's aiming really, really high. We've had just phenomenal people join us. You know, we are definitely getting through the things we want to do faster, and that's really, really positive. I think that's, you know, going to be responsible for some of the growth we are seeing as well.
Great. Just a quick follow-up to this, you know, I'd like to get your perspective. You know, I spend a lot of time doing some groundwork with retailers, and it looks like, you know, there's significant potential, you know, for retailers to leverage this virtual reality, you know, whether it's Google Glass or Oculus. It clearly it's like early days, but what is your view and, you know, will Shopify have a role to play in this potentially significant opportunity?
Love the question. This is a point of time where I usually get into trouble. I'm. Probably, it's probably easy to see if you look at my Twitter feed, that I'm very, very, very into VR. I think I and my team, we think a lot about it. It's, you know, even in our earlier statement, we said that in my opening remarks, I said that mobile is for now how humans decided to consume the Internet. This sort of implies that this might be changing. VR is to me the only way how that has a potential of replacing that at some point. It's huge. It's absolutely massive.
It's fun because it's very early days, and we kind of have to reinvent everything. I think this company is very, very good at reinventing itself and reinventing its product and helping everyone through challenging technology transitions. I want Shopify to have a role in this for sure.
Great. That's very helpful and good luck for the remainder of the year.
If there are any additional questions at this time, please press star one on your telephone keypad. Again, that was star one on your telephone keypad.
Okay.
There are no additional questions at this time. I turn the call back over to the presenters.
Okay. Thank you, Jessa. Thanks everyone for joining us today.
Yeah. Thanks everyone for joining us again. A really fun year. Thanks for easing us into sort of this new state as a public company and welcoming us so nicely to this whole thing. I hope you get a sense for how we act and how the company works. Again, we spend a lot of time thinking about mobile. I'm really thrilled with how this is shaking out. Like, the fact that almost half the orders during the last quarter were placed from mobile phones, really, I think means that we cracked the code on how to adopt the world of online commerce to this form factor.
You know, we are just gonna work, you know, work really hard on adjusting to all these kind of interesting macroeconomical trends that are coming or like the new devices and form factors and requirements that are going to exist for entrepreneurs and other merchants as well. That's kind of what we do, and I think we do it really well. Thanks for joining us for the call.
This concludes today's conference.