Shopify’s Monthly Recurring Revenue (MRR) (2016-2022)

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This statistic highlights Shopify’s Monthly Recurring Revenue (MRR), reported on a quarterly basis from Q1 2016 onwards.
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This statistic highlights Shopify’s Monthly Recurring Revenue (MRR), reported on a quarterly basis from Q1 2016 onwards.

Shopify’s Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue Q3 2020 Q2 2021 Q3 2021
MRR (in millions)  $74.4 $95.1 $98.8

Monthly Recurring Revenue

Monthly Recurring Revenue (MRR) is a significant metric to track. Key performance indicators (KPIs) are used to assess a company’s performance, discover patterns that impact it, develop financial estimates, and make strategic choices.

MRR enables the business to average its numerous pricing plans and payment periods into a single, consistent figure that can be watched over time. Stakeholders may also look at the components that go into calculating MRR, such as the number of paying merchants that use the platform and changes in average revenue per paying merchant from subscription plan costs. In addition, the MRR is utilized to anticipate subscription plan revenue, which accounts for the bulk of our subscription solutions income, on a monthly, quarterly, and yearly basis.

Calculation

The company calculates MRR at the end of each period by multiplying the number of merchants who have subscription plans with them at the end of the period by the average monthly subscription plan fee (excluding variable platform fees) in effect on the last day of that period, assuming they keep their subscription plans the next month.

It’s worth noting that this includes subscription options for both the platform and the POS Pro service. MRR for subscription plans billed in a merchant’s local currency is translated to USD using the relevant currency exchange rate as of the period end date, if applicable. Free trial merchants are not included in this computation for the period of the free trial.

Observation

As of December 31, 2021, the firm had an MRR of $102.0 million, up from $82.6 million as of December 31, 2020. The MRR growth rate grew considerably in the year ending December 31, 2020, owing to shops that were launched during the extended free trial period from March 21, 2020 to May 31, 2020 being on the platform and converting to paying merchants during the year.

In comparison to the year ended December 31, 2020, the company’s MRR growth rate was lower in the year ended December 31, 2021. This was due to an influx of merchants joining the platform during the early days of the COVID-19 epidemic, which was aided by a variety of measures aimed at making it easier for merchants to get started selling, such as the extended free trial granted to all new standard merchants.

Subscription solutions revenues increased $71.8 million, or 25.7 percent, in the three months ended December 31, 2021, compared to the same period in 2020. The rise was mostly due to an increase in MRR, which was fuelled by the increased number of merchants utilizing the platform. The impact of adopting new partner price conditions for both app and theme developers somewhat offset the rise.

Trend

We anticipate that the company will expand the number of markets where it bills in local currency in the future and that any negative impact on MRR will be more than offset by the fact that the reduced friction and improved in-market experience will attract more merchants to their platform who use the merchant solutions.

The firm expects a fall in the value of other currencies compared to the USD to negatively impact reported subscription revenue and Monthly Recurring Revenue as they roll out local currency billing alternatives in locations outside of North America (“MRR”).

Reduced friction and an improved in-market experience, which the business thinks will attract more merchants to their platform and merchant solutions will outweigh any MRR effect from local currency billing over time. Merchant connections’ long-term worth, the company believes, is most strongly connected with MRR.

About the company

Shopify Inc., situated in Ottawa, Ontario, is a Canadian e-commerce company with a global presence. It also has the same name for its unique e-commerce platform for online retailers and retail point-of-sale systems. Payment processing, marketing, shipping, and customer engagement tools are among the services offered by the Shopify platform to online businesses.

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