"Approximately 2/3 of this [transaction take rate] decline was driven by a decline in foreign exchange fees, in part driven by lower currency volatility, a decline in gains from foreign currency hedges, which are recorded as international transaction revenue, and the headwind from lapping elevated contractual assessments from merchants last year." Gab Rabinovitch, Acting CFO
The above doesn't appear recurring. It was also indicated that they have seen improvements in the branded checkout take rate (vs Q1) which adds some confidence on the future direction of transaction margin.
All in all, Braintree is a drag to take rate, however, it drives growth. Meanwhile, when it is implemented by merchants, they get the latest integration on branded checkout improving the overall experience, justifying your comments above about the highest NPS and "43 of its largest 100 merchants are on its latest checkout flow vs. 30 Q/Q".
Aug 3, 2023·edited Aug 3, 2023Liked by Brad Freeman
Nice writeup on Shopify. Long-time and happy reader.
Regarding this:
"Find another company growing revenues at 30% Y/Y in this e-commerce environment while delivering inflecting free cash flow. You can’t."
$MELI also reported today. They are like an Amazon + Block of Latin America, with similar margin profile of Shopify. Here are their relevant metrics for Q2 2023:
Excellent update Brad!
Regarding PayPal's transaction margin:
"Approximately 2/3 of this [transaction take rate] decline was driven by a decline in foreign exchange fees, in part driven by lower currency volatility, a decline in gains from foreign currency hedges, which are recorded as international transaction revenue, and the headwind from lapping elevated contractual assessments from merchants last year." Gab Rabinovitch, Acting CFO
The above doesn't appear recurring. It was also indicated that they have seen improvements in the branded checkout take rate (vs Q1) which adds some confidence on the future direction of transaction margin.
All in all, Braintree is a drag to take rate, however, it drives growth. Meanwhile, when it is implemented by merchants, they get the latest integration on branded checkout improving the overall experience, justifying your comments above about the highest NPS and "43 of its largest 100 merchants are on its latest checkout flow vs. 30 Q/Q".
Nice writeup on Shopify. Long-time and happy reader.
Regarding this:
"Find another company growing revenues at 30% Y/Y in this e-commerce environment while delivering inflecting free cash flow. You can’t."
$MELI also reported today. They are like an Amazon + Block of Latin America, with similar margin profile of Shopify. Here are their relevant metrics for Q2 2023:
MELI SHOP
Revenue $3.415B $1.69B
Rev. growth 31% Y/Y 31% Y/Y
Gross margin 56.3% 49.3%
Net Income margin 8.5% 10.5%
NI growth 113% N/A
FCF (6 months) $2.068B. $0.183B
FCF margin (6 months) 32% 5.7%
FCF growth (6m Y/Y) 372% 142%
TTM EV/S 5.5 13.5
I want only ask, what do you think about Fed ? Is it thread for Paypal ?
Really thank you for your work. It´s fast and really helpfull. Good job