Transaction volume, payer count and revenue per payer
Shopify reported growth above 30 per cent in gross merchandise volume, revenue and free cash flow, while Match Group's payer count declined and revenue per payer increased.
Economics & Markets··Evening
Volume and cash flow grew together at Shopify
Shopify increased revenue by 34 per cent year on year in the quarter ended June 30, or 33 per cent in constant currency. According to the company release, gross merchandise volume passing through the platform, revenue, gross profit and free cash flow each grew more than 30 per cent. The free cash flow margin was 18 per cent. For the third quarter, Shopify guides revenue growth at a low-thirties percentage rate and gross profit growth at a mid-to-high twenties rate. It expects operating expenses at 33-34 per cent of revenue, stock-based compensation of 150 million dollars and a free cash flow margin ranging from the high teens to low twenties. Chief financial officer Jeff Hoffmeister said volume growth accelerated on top of last year's strong second quarter and results remained solid across merchant sizes, sales channels and geographies. Gross merchandise volume describes transaction value passing through the platform, while revenue and free cash flow are Shopify's own financial outputs; the release reports that these measures rose together during the period.[1]
Payer count and revenue per payer diverged at Match Group
Match Group's total revenue fell 1 per cent year on year, or 2 per cent excluding currency effects, to 853 million dollars. Revenue per payer increased 6 per cent to 21.13 dollars while the payer count declined 6 per cent to 13.3 million. The company said the year-on-year decline in Tinder daily active users narrowed to 4 per cent, its best result in 10 quarters. Monthly active-user declines also improved in each of Tinder's five largest revenue countries and among women. Hinge revenue increased 22 per cent and monthly active users rose 13 per cent. The app entered six new European countries and four more in Latin America, while revenue grew 86 per cent across its European expansion markets. These brand-level figures show different user trends within the company; in the aggregate result, the paying-user base contracted, revenue earned per payer increased and total revenue edged lower.[2]
Three measures describe different sides of demand
The companies' reported measures answer different questions. Shopify's gross merchandise volume tracks the change in total transaction value handled by merchants on its platform; it is separate from Shopify revenue and does not state the number of merchants. Match Group's payer count describes the size of its paying base, while revenue per payer shows the average revenue obtained from that base. The free cash flow margin is a financial outcome about conversion into cash rather than a direct demand measure. Shopify reports increases above 30 per cent in transaction volume, revenue, gross profit and free cash flow moving in the same direction. At Match Group, payer count and revenue per payer moved in opposite directions as total revenue declined 1 per cent. Those simultaneous movements do not prove that higher revenue per payer caused the payer decline or fully offset it. The companies operate different platform models; without drawing a causal link between them, the releases separately show transaction intensity, the size of a paid-user base and the amount monetized per payer.[1], [2]
