C-Suite Transitions – Management Shakeups At Shopify and Peloton

There was a significant increase in C-Suite transitions last week.

Shopify (SHOP)

Tobias Lütke and Scott Lake created Shopify (SHOP) a global Canadian e-commerce business, in 2006 after failing to launch Snowdevil, an online store for snowboarding gear. Lütke, a computer programmer, decided to create his own e-commerce platform for the internet business because the available e-commerce platforms weren’t good enough. Snowdevil was released after two months of development.

Shopify merchants have the ability to choose a theme and create an online  store front using Shopify’s software. The app also allows merchants to add details about their products, upload images and organize inventory. Shopify’s technology has been used by well known brands like Vera Bradley (VRA), Kylie Cosmetics and Allbirds (BIRD) to sell directly to consumers. Merchants are charged a monthly fee and Shopify takes a percentage of every transaction on its platform. According to The Wall Street Journal, Shopify’s revenue nearly doubled to $714.3 million in the second quarter of 2020 as the number of new stores created on Shopify increased 71% compared with the previous quarter.

During the pandemic Shopify almost tripled its market cap, and the stock is now back to pre-pandemic levels as you can see from the five year chart below. Like most high growth technology companies, Shopify was unprofitable for several years before the pandemic but the huge spike in revenue during the last two years helped the company post operating profits in 2020 and 2021.

Shopify 5 Year Stock Chart

Shopify 5 Year Stock Chart

 

Earnings for Q2 2022

Total revenue in the second quarter grew 16% year-over-year to $1.3 billion, which represents a three-year compound annual growth rate of 53%. Net loss for the second quarter of 2022 was a whopping $1.2 billion, or $0.95 per basic and diluted share, compared with net income of $0.9 billion, or $0.695 per diluted share, for the second quarter of 2021. A big driver of the loss was their equity investments in other companies that were marked to market. Operating loss was $190.2 million and the company mentioned the following after reporting Q2 2022 results,

“Second-quarter 2022 net loss includes a $1.0 billion net unrealized loss on our equity and other investments, while our net income in the second quarter of 2021 included a $0.8 billion net unrealized gain from equity and other investments.”

Merchant Solutions revenue was $928.6 million, up 18% year over year. The company missed earnings and revenue expectations for the second quarter, further warning that inflation and rising interest rates would weigh on consumer spending for the remainder of 2022. Shopify warned that it would post losses for the rest of the year and indicated that it would cut 10% of its employees.

While revenue is up 18% in the first six months of the year compared to the prior year, Shopify’s costs, including for research and development, have nearly doubled. The $1 billion paper loss on its equity investments in the second quarter caused it to swing to a $2.7 billion net loss for the first six months of 2022 from a $2.1 billion profit a year earlier. The company’s stock continued to hold up through 2021 but is down 75% year to date.

On September 8, 2022, Shopify named Jeff Hoffmeister, an investment banker, as its next Chief Financial Officer. Current Finance Chief Amy Shapero will be stepping down next month. Hoffmeister has worked at Morgan Stanley for over two decades, including most recently as Managing Director of the technology investment banking group. During his tenure at Morgan Stanley, he led Shopify’s 2015 initial public offering.

The company also promoted Kaz Nejatian to Chief Operating Officer. He will be succeeding Toby Shannan, who will transition to the role of Special Advisor and Board Member.

Peloton Interactive (PTON)

Another company that made it to our top 10 C-Suite Transitions list last week is Peloton Interactive (PTON), the high-end exercise bikes that became a sensation during the pandemic. Just like Shopify, Peleton also experienced a pandemic-fueled spike in demand for its at-home workout bikes. This demand dropped significantly when consumers returned to gyms and outdoor activities. The company’s shares plunged more than 90% over the past year.

Barry McCarthy – who took over as CEO of Peloton in February announced a shake-up to help the company turn itself around. Several members of the senior management are leaving the company as a result of this shake-up.

Peloton’s co-founder John Foley resigned on Monday, September 12. Foley had led the company for most of its 10-year existence, and had stepped down as CEO in February but remained executive chairman of the board. Chief Legal Officer, Hisao Kushi, and Chief Commercial Officer, Kevin Cornils, are also leaving the company. Peloton has hired Tammy Albarrán, a deputy general counsel from Uber Technologies (UBER) to succeed Kushi starting in October.

Welcome to edition 6 of  C-Suite Transitions, a new weekly series on InsideArbitrage that tracks appointments and departures at publicly traded companies during the prior week. We highlight five appointments and departures each week by picking the largest companies from the full list of management changes.

You can find all the appointments and departures listed below in our  C-Suite Transitions tool.

Appointments

1. Shopify Inc.  (SHOP): $33.69

On September 8, Shopify announced Jeff Hoffmeister, CPA, has been appointed Chief Financial Officer.

Hoffmeister has worked at Morgan Stanley for over two decades. He served as the Co-Head Americas Tech Banking at Morgan Stanley and was at the company for a period of 22 years and 9 months.

 

MarketCap: $41.57B Avg. Daily Volume (30 days): 27,224,974 Revenue (TTM): $5.00B
Net Income Margin (TTM): -38.01% ROE (TTM): -20.18% Net Cash: $5.76B
P/E: -128.51 Forward P/E: N/A EV/EBIDTA (TTM): -33.41
P/S (TTM): 8.22 P/B (TTM): 5.07 52 Week Range: $29.07 – $176.29

2. Simpson Manufacturing Co., Inc. (SSD): $84.04

On September 8, 2022, Simpson Manufacturing Co, announced that Mike Olosky, currently the company’s President and Chief Operating Officer, will succeed Colonias as President and Chief Executive Officer effective January 1, 2023.

MarketCap: $3.67B Avg. Daily Volume (30 days): 203,126 Revenue (TTM): $1.90B
Net Income Margin (TTM): 17.44 ROE (TTM): 27.98 Net Debt: N/A
P/E: -48.88 Forward P/E: N/A EV/EBIDTA (TTM): 7.94
P/S (TTM): 2.06 P/B (TTM): 3.04 52 Week Range: $84.97 – $140.32

3. Peloton Interactive (PTON): $10.23

The Board has appointed Tammy Albarrán to replace Kushi as Chief Legal Officer and Corporate Secretary for Peloton, effective October 3, 2022.

MarketCap: $3.35B Avg. Daily Volume (30 days): 21,107,710 Revenue (TTM): $3.58
Net Income Margin (TTM): -78.94% ROE (TTM): N/A Net Debt: $1.12B
P/E: -1.13 Forward P/E: 21.37 EV/EBIDTA (TTM): 23.00
P/S (TTM): 0.93 P/B (TTM): 5.89 52 Week Range: 8.22 – $108.99

4. Ziff Davis Inc  (ZD): $75.03

On September 12, 2022, Ziff Davis announced that Layth Taki has been appointed to serve as the company’s new Chief Accounting Officer, effective as of September 27, 2022.

 

MarketCap: $3.60B Avg. Daily Volume (30 days): 252,736 Revenue (TTM): $1.42B
Net Income Margin (TTM): 26.92% ROE (TTM): 23.55% Net Debt: $449.1M
P/E: 10.03 Forward P/E: 10.96 EV/EBIDTA (TTM): 9.05
P/S (TTM): 2.64 P/B (TTM): 2.06 52 Week Range: $68.42 – $135

5. Altice USA Inc (ATUS): $.88

On September 7, 2022, Altice USA, announced the appointment of Dennis Mathew as the Company’s new Chief Executive Office, effective on October 3, 2022.

Since 2005, has served in various roles with Comcast Corporation, including as Senior Vice President, Western New England Region, Vice President and General Manager

MarketCap: $4.39B Avg. Daily Volume (30 days): 3,062,100 Revenue (TTM): $9.98B
Net Income Margin (TTM): 8.23% ROE (TTM): -92.91% Net Debt: $26.37B
P/E: N/A Forward P/E: 8.31 EV/EBIDTA (TTM): -18.01
P/S (TTM): 0.82 P/B (TTM): 27.46 52 Week Range: $55.97 – $176.64

Departures

1. McKesson Corporation (MCK): $341.40

On September 7, 2022, Tracy L. Faber, Executive Vice President and Chief Human Resources Officer of McKesson Corporation, gave the company notice of her decision to retire from the Company effective on December 1, 2022.

MarketCap: $50.00BB Avg. Daily Volume (30 days): 948,641 Revenue (TTM): $268.45B
Net Income Margin (TTM): 0.52% ROE (TTM): N/A Net Debt: $20.65B
P/E: 37.64 Forward P/E: 15.48 EV/EBIDTA (TTM): 16.46
P/S (TTM): 0.21 P/B (TTM): 5.04 52 Week Range: $192.87 – $374.67

2. Tenable Holdings Inc (TENB): $65.75

On September 8, 2022, Stephen A. Riddick notified Tenable Holdings, of his intention to retire from his position as Chief Legal Officer and Corporate Secretary, effective October 14, 2022.

 

 

 

MarketCap: $4.54B Avg. Daily Volume (30 days): 734,691 Revenue (TTM): $611.39M
Net Income Margin (TTM): -12.97 ROE (TTM): -37.49% Net Cash: $87.69M
P/E: -55.54 Forward P/E: 129.87 EV/EBIDTA (TTM): -110.98
P/S (TTM): 7.43 P/B (TTM): 19.59 52 Week Range: $36.24 – $63.61

3. Simpson Manufacturing Co., Inc. (SSD): $84.04

On September 8, 2022, Simpson Manufacturing Co, announced that Karen Colonias notified the company that she will retire from the company on June 30, 2023, and step down from her position as Chief Executive Officer, effective December 31, 2022.

 

 

MarketCap: $3.67B Avg. Daily Volume (30 days): 203,126 Revenue (TTM): $1.90B
Net Income Margin (TTM): 17.44 ROE (TTM): 27.98 Net Debt: N/A
P/E: -48.88 Forward P/E: N/A EV/EBIDTA (TTM): 7.94
P/S (TTM): 2.06 P/B (TTM): 3.04 52 Week Range: $84.97 – $140.32

4.Peloton Interactive (PTON): $10.23

Co-founders John Foley and Hisao Kushi step down.

On September 12, 2022, Peleton announced that it has accepted the resignation of  Hisao Kushi as Chief Legal Officer, effective October 3, 2022. He has served as the company’s Chief Legal Officer since 2015.

 

 

 

On September 12, 2022, Peleton announced that it has accepted the resignation of John Foley as Executive Chair effective September 12, 2022. John Foley co-founded Peloton in 2012, Having previously been the company’s CEO for 10 years, he became Executive Chair in February 2022.

MarketCap: $3.35B Avg. Daily Volume (30 days): 21,107,710 Revenue (TTM): $3.58
Net Income Margin (TTM): -78.94% ROE (TTM): N/A Net Debt: $1.12B
P/E: -1.13 Forward P/E: 21.37 EV/EBIDTA (TTM): 23.00
P/S (TTM): 0.93 P/B (TTM): 5.89 52 Week Range: 8.22 – $108.99

5. Ziff Davis Inc  (ZD): $75.03

On September 12, 2022, Ziff Davis, announced that effective September 27, 2022, Steve Dunn, Ziff Davis’s current Chief Accounting Officer will step down from his position.

 

MarketCap: $3.60B Avg. Daily Volume (30 days): 252,736 Revenue (TTM): $1.42B
Net Income Margin (TTM): 26.92% ROE (TTM): 23.55% Net Debt: $449.1M
P/E: 10.03 Forward P/E: 10.96 EV/EBIDTA (TTM): 9.05
P/S (TTM): 2.64 P/B (TTM): 2.06 52 Week Range: $68.42 – $135

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