How do Shopify's merchant solutions compare to subscriptions in 2024?

Shopify's merchant solutions and subscriptions have shown distinct growth patterns and contributed differently to the company's revenue in 2024.

1. **Merchant Solutions Growth**:
- **Revenue Increase**: Shopify's Merchant Solutions revenue grew by 21% to $1.6 billion in Q4, primarily driven by the growth of Gross Merchandise Volume (GMV) and the continued penetration of Shopify Payments.
- **GMV Growth**: GMV from merchant transactions rose by 23% to $75.1 billion, surpassing estimates.
- **Payment Volume**: Gross Payments Volume (GPV) increased to $45.1 billion, representing 60% of GMV processed in the quarter, up from $34.2 billion (56% of GMV) in the previous year's fourth quarter.
2. **Subscription Solutions Growth**:
- **Revenue Increase**: Subscription Solutions revenue increased by 26% year-over-year to $525 million in Q3.
- **MRR Growth**: Monthly Recurring Revenue (MRR) reached $175 million, marking a 28% year-over-year increase.
- **New Merchant Acquisition**: The growth in Subscription Solutions was driven by new merchants joining the platform and successful pricing adjustments on standard plans.
3. **Comparison and Insights**:
- **Revenue Contribution**: While Merchant Solutions contributed 73% of Shopify's revenue in the first half of 2024, Subscriptions accounted for 27%.
- **Growth Drivers**: Merchant Solutions growth was fueled by GMV expansion and payment processing activities, whereas Subscription Solutions growth was driven by new merchant acquisitions and pricing strategies.
- **Margin Impact**: Gross margin decreased slightly to 51.7% in Q3 due to lower noncash revenues from partnerships and lower margins on payments.

In conclusion, Shopify's Merchant Solutions and Subscriptions both experienced significant growth in 2024, but they differed in their specific drivers and contribution to the overall revenue. The Merchant Solutions segment saw growth primarily from GMV and payment processing volume, while the Subscription Solutions segment grew due to new merchant sign-ups and pricing adjustments.