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• While Shopify derives most of its revenue from taking slices of transactions processed on its platform, the true value is in the ecosystem it creates.
• Payment processing, point-of-sale systems, and marketing are only a few of the value-added options that merchants have when it comes to using Shopify as a commerce platform, and each of these is a vital piece of its increasingly sticky pie.
• Its second quarter results showed it’s currently operating from a position of strength, with sales and profitability beating analyst expectations. Sales grew by 31% to $2.7bn while gross profit grew by 25% to $1.3bn.
• The company benefited from a growing merchant base, international expansion and growth in the offline business.
• In our view, the company remains well positioned to continue growing, through continued merchant growth, greater Shopify Payments penetration, international expansion, and larger retailers joining the platform (potentially helped by wins in the offline business).