Who Owns Shopify?

Business / By Gennaro Cuofano / April 4, 2023 April 5, 2023

The founder and CEO of Shopify, Tobias Lütke, owned or controlled 7,891,852 Class B multiple voting shares and 5,250 Class A subordinate voting shares, representing approximately 33.8% of the aggregate voting power attached to all of the Company’s outstanding voting shares. Another key stakeholder is John H. Phillips, an angel investor who placed an early bet on Shopify.

Understanding the Shopify business model

Shopify’s Business Model is skewed toward subscriptions and merchant services/solutions.

shopify-business-model — Shopify is an e-commerce platform that enabled over 2 million merchants in 2021 to commercialize their products. While Shopify works with a subscription-based business model, it makes most of its money via merchant services, which are additional services provided to merchants. The company generated over $5.6 billion in revenue, of which $1.5 billion (almost 27% of total revenue) was from subscriptions and $4.1 billion (more than 73% of total revenue) from merchant solutions.

Shopify’s Cost Structure, the subscription revenue, while contributing to about 27% of the company’s revenue, carries a higher gross margin (77%) compared to the merchant services gross margins of 39%.

shopify-cost-structure — While Merchant services drive most of the revenue for Shopify, in reality, subscriptions have a much larger contribution margin. Indeed, in 2022, on $5.6 billion in revenue, merchants’ services generated $1.6 billion in gross profits. On $1.49 billion in revenues, subscriptions generated over a billion dollars in gross profits. In short, subscriptions have a low cost of revenue compared to merchant services. Thus subscriptions carry a gross profit margin of over 77%, vs. a gross margin of almost 39% for merchant services.

Shopify’s Profitability went from $2.9 billion in 2021 to $-3.46 billion in 2022.

shopify-profitability — Shopify was not profitable in 2022, generating over $3.4 billion in net losses. Shopify’s profitability deteriorated in 2022. Indeed, in 2021, driven by the massive wave of e-commerce throughout the COVID-19 pandemic; Shopify had turned to profitability in 2021, generating over $2.9 billion in net income, while it became unprofitable again in 2022.

While Shopify’s Revenue grew from $1 billion in 2018, to $5.6 billion in 2022.

shopify-revenue — Shopify generated $5.6 billion in revenue compared to over $4.6 billion in revenue in 2021.

Shopify had over two million Merchants in 2022.

shopify-merchants

Shopify’s Competitors primarily comprise other e-commerce platforms like BigCommerce, WooCommerce, Squarespace, Volusion, and Magento.

shopify-competitors — In just fifteen short years, Shopify has grown from humble beginnings to become one of the fastest-growing eCommerce platforms online. The Shopify eCommerce solution is perhaps best suited to users who desire an easy, flexible and affordable starter solution for their online store. The provider now has upwards of 820,000 stores accounting for 20% of the total market share. However, the continued success of any company in the dynamic digital market is never guaranteed.

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About The Author

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.