Holy cr*p Shopify.
At a $9B Billion run rate (most of it not software, but that’s the revenue run rate), it’s growing at a stunning 31%. And it’s accelerating.
- $9B run-rate
- 31% growth rate
- 22% free cash flow margins
- 12% share of U.S. e-commerce
It’s just stunning to see this sort of growth at this scale. Shopify has tripled since 2020 and is on path to do that again in just a few more years. Wow.
5 Interesting Learnings:
#1. Strongest Quarterly Growth in 3 Years.
That’s acceleration at scale. Big brands (more enterprise) and the big revenue from managing their payments is the top accelerant.
#2. International Revenue Up +33%. 50% of Revenue Outside North America.
Go global as early as you can! Shopify has just 45% of its revenue in the U.S. (plus 5% in its home base of Canada,).
#3. Offline Revenue Up +33%, B2B Growth up 140%
While many think of Shopify as mainly an SMB online solution, its biggest growth now is in its largest customers (who run far more payments through Shopify), in its offline/ in-store business, and in B2B commerce. Relatively speaking, SMB online is softer.
#4. Just 23% of Revenue From SaaS / Software, Down From 26%
This isn’t new, but always helpful to see this over time. Shopify is an ecommerce fintech that is powered by a SaaS solution.
#5. Holding Almost All Expenses Just Above “Flat”
Even as it accelerates, Shopify is getting more profitable. How? It’s only growing sales & marketing 10%, engineering and product 12%, and G&A 12% even as it grows 31%. So Shopify is hiring and spending, but at a rate about a third of how fast revenue is growing.
And a few other interesting learnings:
#6. Effective NRR of Perhaps 105%-110%
Shopify doesn’t break down its NRR but it does present Revenue by Cohort which is a good proxy. As you can see, it’s well above 100%, even with its large SMB base.
#7. Stripe and PayPal Power 100% of Shopify Payments
It’s interesting Shopify has not chosen to bring this in-house even at their scale, even partially. But it has added PayPal to the mix.
#8. Founder CEO Tobi Lutke Still Controls 40%-49% of All Shareholder Votes
Supermajority voting for founders (10:1 voting) hasn’t slowed Shopify down yet.
#9. 40% Gross Margins on Payments & Merchant Solutions, 81% on SaaS / Subscription Solutions
Not a surprise, but helpful to see it broken out for those with somewhat similar models.
#10. SaaS Revenue (Subscription Revenue) Only Up 9.1% Though
Without payments and other merchant services, it would be a very different Shopify. One a quarter the size, and only growing 9.1%. What would that be worth? Maybe 1/20th of what Shopify is worth today. Maybe less. If there ever was an example of the power of adding payments and fintech to SaaS … it’s Shopify.
Wow Shopify! On an incredible run … after $10B in revenues!
