Shopify vs. Square, which one is better to invest?

ByAdam

Shopify vs. Square, which one is better to invest?

Since demands for online shopping are increasing drastically these days, many sale-assisted tools are created in order to provide retailers with easy and affordable ways to meet consumers’ desires and expectations as quickly and effectively as possible. Among those, sales software products which are offered by Square and Shopify have brought big gains to retailers and both are trusted by a great number of entrepreneurs all around the world.

So, which one is better to invest money in today? To answer this question, first, let’s have look at how each company has performed.

Shopify

Compared to Square, Shopify has also made an equally striking performance with stock escalating $468% since its IPO in 2015.

Unlike Square which has revenue mostly derived from transaction fees and little from subscription plans, 45% of the Shopify’s business comes from subscription services which enable merchants to access software tools, set up and manage online storefronts, inventory, delivery, etc. with an affordable price- $29 per month.

Shopify’s strategy is having merchant’s subscriptions first. Later, they can cross-sell other services and strengthen the relationship with merchants. These services include Shopify Capital, Shopify Payments and Shopify Shipping which make up 54% of Shopify’s revenue.

Shopify’s revenue has been skyrocketing for the last 6 years, from $24 million in 2012 to $854 million in 2018, mostly thanks to the subscriptions and merchant solutions. Subscription revenue sees a rapid annual growth rate of 55% in the second quarter. Meanwhile, with the annual growth rate of 68% in the last quarter, merchant solutions become the company’s fastest-growing category, owing to the rapid rollouts of services including Shopify Capital, Payments, and Shipping.

Square

Square has generated impressive returns with the stock surging up 440% its IPO in late 2015. It is the great software features and checkout systems allowing customers to complete credit cards through mobile wallets or plastic cards that make square become so attractive to retailers.

Square is like a payment processor. The transaction fees (generated through shopper’s payments on the merchant’s site that uses Square’s digital registers or card readers) makes up more than 70% of Square’s total revenue.

Software subscriptions also constitute 16% of the revenue and have become the fastest-growing company’s category. This is mostly thanks to the adoption of Cash App (peer-to-peer payment), which rapidly hits No.1 finance app in the Appstore last quarters. Other services including Square Capital, Square for Restaurants, and Caviar also drive the significant growth in subscriptions.

Owing to these services’ rollouts, along with the acquisitions, Square’s total revenue has risen dramatically, from 30% annual increase in 2017 to 48% year-over-year increase in the second quarter of 2018.

Marketing and product promotion are strongly invested by Square, which seems to make profits elusive. But recently, there is a positive news that the adjusted earnings have been increased to $0.35 per share over the last 12 months, thanks to the robust revenue growth. 

Making a decision

Which one has better values? Which one will be worth your money investment? Perhaps it is not easy to give a straight answer. The better solution depends on your budget, your needs, and priorities.

In my perspective, I would love to have my site powered by Shopify because of its affordable monthly fee ($29), the offering of nice features and stunning themes which helps me to focus more on web sales.

About the author

Adam administrator

Leave a Reply