SaaS:-
Shopify breaks down its incoming revenue into two buckets. Subscription solutions account for recurring service and license fees that its customers pay for the use of Shopify’s cloud computing tools. The merchant solutions division is made up of mainly payment processing fees with a smaller contribution from transaction fees, shipping services, and the sale of Shopify-powered credit card readers. Every time you buy something from a Shopify-powered online shopping site, a few percent of that transaction’s total value falls into Spotify’s coffers under the merchant solutions banner.
Here’s how the two categories break down in terms of money-making muscle:
| Revenue Type | Q2 2017 Revenue | Q2 2017 Gross Profit | Q2 2017 Sales Growth (YOY) |
|---|---|---|---|
| Subscription solutions | $72 million | $58 million | 64% |
| Merchant solutions | $80 million | $29 million | 86% |
DATA SOURCE: SHOPIFY SEC FILINGS. YOY = YEAR OVER YEAR.”
Merchant solutions brings in more revenue and is growing faster, and that’s exactly how Shopify’s management likes it. The company is explicitly working to expand its merchant programs, and merchant solutions sales are expected to make up a larger portion of total revenue in the future.
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