RRiisskk RReewwaarrdd LLeeaaddiinngg SSMMBB SSttoorree FFrroonntt PPllaattffoorrmm Investment Thesis Shopify is a leader in the retail eCommerce software market. The company delivers the power of enterprise level functionality and scalability to SMBs at a fraction of the cost vs. similar enterprise level solutions. One of the best ecosystems in the tech universe. Attractive developer economics draws top coder talent to build on the Shopify platform, resulting in product offerings that are among the best in the market. Elegant design and intuitive apps drive customer growth and usage, which in turn attracts even more developers into the Source: Thomson Reuters, Morgan Stanley Research ecosystem. PPrriiccee TTaarrggeett $$3344 Derived From Base Case Scenario. Potential Catalysts Launch of new merchant solutions BBuullll $$5500 Early signs of growth acceleration due to 1100 YYeeaarr DDCCFF recent social media integration The platform continues to deliver significant growth. Shopify's growth and profitability accelerate with the help of international penetration, new product launches, social media traction, better pricing, and GMV expansion. Developer Risks to Achieving Price Target and app growth remains robust and contributes to better-than-peer economics. Ability to penetrate installed based and The company turns profitable sooner than expected. increase payments adoption BBaassee $$3344 Investor growth expectations could be 1100 YYeeaarr DDCCFF bbaasseedd wwiitthh FFYY2255ee FFCCFF ooff $$331122mmmm disconnected with company guidance Shopify's strategy stays the course. Pricing remains flat, growth is driven by new New product additions don't roll out customer adds and increased GMV. Growth moderates near-term off recent quickly enough, or don’t succeed introduction of Shopify Payments and inflection in subscription growth drives Developer economics shift, resulting in loss margins to improve from (3%) in FY15 to ~23% by FY25, driving FY25 FCF of of talent on the ecosystem $312mm. This yields a DCF value of $34/share based on a 10.2% WACC and a 4.5% terminal growth. BBeeaarr $$1144 1100 YYeeaarr DDCCFF Execution slips. Increased competition in the US, lack of international growth or new products, and deceleration in GMV growth lead to lower revenue growth and margin pressure. Competition at the high end of the market leads to customer loss and deteriorating LTV customer metrics. 3