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nostromo

Bigger than eBay by market cap, but much smaller by revenue.

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For perspective:

In 2018 Ebay made $10.74 Billion in revenue

In 2018 Shopify made $1.07 Billion in revenue

More importantly. eBay is profitable. Shopify is not. I have no idea why people overindex on revenue instead of profit - especially for public companies.

because they're investing profit back into the business to grow it - which is what you want them to do

when they run out of places to efficiently deploy capital then they become a standard tech bluechip

Shopify grew revenue by 50% in Q2, eBay by 2%.

eBay has also been around for how long? That is not really a proper comparison.

It would explain why the market caps and revenue numbers diverge.

My kids grew their lemonade stand revenue 125% month-over-month. Truly impressive! :-)

Yeah. 50% of a small number vs 2% of a much MUCH bigger number. It's a classic mistake that the statically-blind make.

A mistake?

So that means Shopify grew by 500M and EBay grew by 200M. Is that right?

Ebay grew by $200m, shopify by $500m.

Does that reflect a difference in how payments are handled?

I can connect my Stripe account to Shopify, but I can't do that on eBay.

What does that have to do with revenue vs profit?

I'm asking if buying something on eBay technically means paying eBay (revenue) that they then pay out to the seller in a way that it wouldn't with Shopify's Stripe integration.

OP didn't say anything about profit.

Buying something for $100 using eBay’s credit card service does technically imply paying $100 to eBay, but eBay would not recognize $100 in revenue. eBay’s revenue from that transaction would only be the fees they collect, mainly the final value fee which is 10% in most categories plus 2.7% in payment processing, and any other fees they charge.

Similarly, Stripe does not recognize the full value of every transaction as revenue, only their fees.

eBay's marketplace (eBay.com) revenue should be the amount that's their listing fees and percentage of the final price that they take. The amount that the sold goods are worth should be the gross merchandise volume. See https://investors.ebayinc.com/fast-facts/default.aspx for their current numbers. Looking at their fees: https://www.ebay.com/help/selling/fees-credits-invoices/sell... , it seems to be 10% to 12% for common things. For the recent quarter, their GMV is $21.5B and revenue is $2.2 billion so that seems about right (this is minus StubHub and only their primary marketplace).

Shopify's revenue from https://investors.shopify.com/financial-reports/default.aspx is $362 million and their GMV is $13.8 billion. Looking at their fees at https://www.shopify.com/pricing , they charge between 2% to 3%. This seems to be about right.

This is a superficial look but, I think to your original question, the revenue should be comparable.

A big chunk of that 3% Shopify fee is eaten by the CC exchanges. But they make money from the App Store, and monthly Shopify fees.

Ah, I didn't dig deep enough. There is the bit about $153 million in Subscription Services revenue which they say is due to mainly the monthly recurring revenue. Their Merchant Solutions seems to be related to the payment fees which is $208 million. My guess is a majority of the stores do not sell a significant amount of merchandise (so the monthly fee is a majority of the Shopify merchant cost) and merchants who do sell significant amounts of goods are able to negotiate a special lower payment fee rate (which most merchant platforms do).

From the growth numbers listed in the report, the gross merchant volume (and therefore the Merchant Solutions revenue) is increasing so maybe more merchants are being successful or the existing successful merchants are selling more. The Merchant Solutions revenue is growing about 18% faster than Subscription Services.

Shopify seems to be trying to make more merchants successful (more merchants selling more goods) versus just making it easy to open (and close) unsuccessful stores.

Hopefully Shopify is able to capitalize on increase in merchandise volume if they haven't been able to negotiate a good deal on the payment processing fees themselves. While they might make profits (and not just revenue) from their monthly fees and their App Store, I just can't imagine a merchant platform which does not capitalize on gross merchant volume since that's where the significant profit comes from (like eBay, for better or worse).

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