Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin15.7%
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin-18.3%
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Financial Health
D
Years to Pay Off Debt-0.3 yrs
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital$7.1B
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Valuation
F
Price-to-Book10.62x
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Cash Flow
C
Free Cash Flow$476M
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
Owner Earnings-$569M
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
About Shopify Inc.
Shopify Inc., a commerce technology company, provides tools to start, scale, market, and run a business of various sizes in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The Company offers Shopify platform that enables merchants to manage products and inventory, process orders and payments, fulfill and ship orders, build customer relationships, source products, leverage analytics, and reporting and access financing for running their business across all of their sales channels, including web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces. It also provides Shopify Payments, a fully integrated payment processing service that allows merchants to accept and process payment cards online and offline. In addition, the company engages in the sale of themes and apps; shipping labels through Shopify Shipping; point-of-sale hardware; advertising on the Shopify App Store; and Shop Campaigns for buyer acquisitions, as well as registration of domain names. The company was formerly known as Jaded Pixel Technologies Inc. and changed its name to Shopify Inc. in November 2011. Shopify Inc. was incorporated in 2004 and is based in Ottawa, Canada.
Shopify Inc., a commerce technology company, provides tools to start, scale, market, and run a business of various sizes in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The Company offers Shopify platform that enables merchants to manage products and inventory, process orders and payments, fulfill and ship orders, build customer relationships, source products, leverage analytics, and reporting and access financing for running their business across all of their sales channels, including web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces. It also provides Shopify Payments, a fully integrated payment processing service that allows merchants to accept and process payment cards online and offline. In addition, the company engages in the sale of themes and apps; shipping labels through Shopify Shipping; point-of-sale hardware; advertising on the Shopify App Store; and Shop Campaigns for buyer acquisitions, as well as registration of domain names. The company was formerly known as Jaded Pixel Technologies Inc. and changed its name to Shopify Inc. in November 2011. Shopify Inc. was incorporated in 2004 and is based in Ottawa, Canada.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Net Income From Continuing Operation Net Minority Interest
-581,000
743,000
Reconciled Depreciation
7,000
7,000
Reconciled Cost Of Revenue
1,624,000
1,979,000
EBITDA
505,000
752,000
EBIT
498,000
745,000
Net Interest Income
75,000
79,000
Interest Income
75,000
79,000
Normalized Income
505,855
709,682
Net Income From Continuing And Discontinued Operation
-581,000
743,000
Total Expenses
2,672,000
2,927,000
Total Operating Income As Reported
382,000
631,000
Diluted Average Shares
1,300,779
1,303,904
Basic Average Shares
1,300,779
1,303,904
Diluted EPS
0
0
Basic EPS
0
0
Diluted NI Availto Com Stockholders
-581,000
743,000
Net Income Common Stockholders
-581,000
743,000
Net Income
-581,000
743,000
Net Income Including Noncontrolling Interests
-581,000
743,000
Net Income Continuous Operations
-581,000
743,000
Tax Provision
-53,000
149,000
Pretax Income
-634,000
892,000
Other Income Expense
-1,207,000
68,000
Special Income Charges
-116,000
-114,000
Restructuring And Mergern Acquisition
116,000
114,000
Earnings From Equity Interest
-21,000
28,000
Gain On Sale Of Security
-1,070,000
154,000
Net Non Operating Interest Income Expense
75,000
79,000
Interest Income Non Operating
75,000
79,000
Operating Income
498,000
745,000
Operating Expense
1,048,000
948,000
Other Operating Expenses
76,000
Research And Development
437,000
390,000
Selling General And Administration
611,000
558,000
Selling And Marketing Expense
496,000
433,000
General And Administrative Expense
115,000
125,000
Other Gand A
115,000
125,000
Gross Profit
1,546,000
1,693,000
Cost Of Revenue
1,624,000
1,979,000
Total Revenue
3,170,000
3,672,000
Operating Revenue
3,170,000
3,672,000
Balance Sheet
2026
2025
2024
Ordinary Shares Number
1,300,779
1,303,904
Share Issued
1,300,779
1,303,904
Total Debt
179,000
188,000
Tangible Book Value
11,982,000
12,952,000
Invested Capital
12,501,000
13,473,000
Working Capital
7,124,000
6,904,000
Net Tangible Assets
11,982,000
12,952,000
Capital Lease Obligations
179,000
188,000
Common Stock Equity
12,501,000
13,473,000
Total Capitalization
12,501,000
13,473,000
Total Equity Gross Minority Interest
12,501,000
13,473,000
Stockholders Equity
12,501,000
13,473,000
Gains Losses Not Affecting Retained Earnings
-4,000
1,000
Other Equity Adjustments
-4,000
1,000
Retained Earnings
2,279,000
2,860,000
Additional Paid In Capital
255,000
236,000
Capital Stock
9,971,000
10,376,000
Common Stock
9,971,000
10,376,000
Total Liabilities Net Minority Interest
1,620,000
1,716,000
Total Non Current Liabilities Net Minority Interest
249,000
324,000
Non Current Deferred Liabilities
86,000
153,000
Non Current Deferred Revenue
86,000
98,000
Non Current Deferred Taxes Liabilities
0
55,000
Long Term Debt And Capital Lease Obligation
163,000
171,000
Long Term Capital Lease Obligation
163,000
171,000
Long Term Debt
Current Liabilities
1,371,000
1,392,000
Other Current Liabilities
1,000
13,000
Current Deferred Liabilities
321,000
300,000
Current Deferred Revenue
321,000
300,000
Current Debt And Capital Lease Obligation
16,000
17,000
Current Capital Lease Obligation
16,000
17,000
Current Debt
918,000
Other Current Borrowings
918,000
Pensionand Other Post Retirement Benefit Plans Current
102,000
99,000
Current Provisions
66,000
48,000
Payables And Accrued Expenses
1,034,000
906,000
Current Accrued Expenses
48,000
Payables
1,034,000
906,000
Other Payable
19,000
38,000
Total Tax Payable
317,000
179,000
Income Tax Payable
156,000
58,000
Accounts Payable
1,034,000
570,000
Total Assets
14,121,000
15,189,000
Total Non Current Assets
5,626,000
6,893,000
Other Non Current Assets
30,000
39,000
Non Current Deferred Assets
117,000
33,000
Non Current Deferred Taxes Assets
117,000
33,000
Investments And Advances
4,822,000
6,159,000
Investmentin Financial Assets
708,000
975,000
Held To Maturity Securities
Available For Sale Securities
708,000
975,000
Long Term Equity Investment
4,114,000
5,184,000
Goodwill And Other Intangible Assets
519,000
521,000
Other Intangible Assets
28,000
30,000
Goodwill
491,000
491,000
Net PPE
138,000
141,000
Accumulated Depreciation
-175,000
-170,000
Gross PPE
138,000
316,000
Leases
159,000
149,000
Other Properties
138,000
88,000
Machinery Furniture Equipment
69,000
68,000
Current Assets
8,495,000
8,296,000
Other Current Assets
206,000
Hedging Assets Current
3,000
0
Restricted Cash
11,000
9,000
Prepaid Assets
124,000
94,000
Inventory
21,000
26,000
Other Inventories
26,000
Receivables
2,546,000
2,370,000
Other Receivables
245,000
306,000
Taxes Receivable
71,000
143,000
Accrued Interest Receivable
34,000
39,000
Loans Receivable
2,097,000
1,461,000
Accounts Receivable
99,000
421,000
Allowance For Doubtful Accounts Receivable
-35,000
-31,000
Gross Accounts Receivable
99,000
456,000
Cash Cash Equivalents And Short Term Investments
5,743,000
5,767,000
Other Short Term Investments
3,895,000
4,233,000
Cash And Cash Equivalents
1,848,000
1,534,000
Cash Flow
2026
2025
2024
Free Cash Flow
476,000
715,000
Repurchase Of Capital Stock
-491,000
Capital Expenditure
-5,000
-10,000
Income Tax Paid Supplemental Data
93,000
83,000
End Cash Position
1,848,000
1,545,000
Beginning Cash Position
1,545,000
2,414,000
Effect Of Exchange Rate Changes
-3,000
-2,000
Changes In Cash
306,000
-867,000
Financing Cash Flow
-485,000
-938,000
Cash Flow From Continuing Financing Activities
-485,000
-938,000
Proceeds From Stock Option Exercised
6,000
105,000
Net Common Stock Issuance
-491,000
Common Stock Payments
-491,000
Investing Cash Flow
310,000
-654,000
Cash Flow From Continuing Investing Activities
310,000
-654,000
Net Other Investing Changes
-304,000
-31,000
Net Investment Purchase And Sale
620,000
-597,000
Sale Of Investment
1,463,000
1,801,000
Purchase Of Investment
-843,000
-2,398,000
Net Business Purchase And Sale
-1,000
-16,000
Purchase Of Business
-1,000
-16,000
Net PPE Purchase And Sale
-5,000
-10,000
Purchase Of PPE
-5,000
-10,000
Operating Cash Flow
481,000
725,000
Cash Flow From Continuing Operating Activities
481,000
725,000
Change In Working Capital
-70,000
-6,000
Change In Other Working Capital
-70,000
130,000
Other Non Cash Items
-12,000
-12,000
Stock Based Compensation
132,000
115,000
Provisionand Write Offof Assets
48,000
41,000
Asset Impairment Charge
0
0
Deferred Tax
-139,000
22,000
Deferred Income Tax
-139,000
22,000
Depreciation Amortization Depletion
7,000
7,000
Depreciation And Amortization
7,000
7,000
Operating Gains Losses
1,096,000
-185,000
Earnings Losses From Equity Investments
1,082,000
-276,000
Gain Loss On Investment Securities
94,000
Net Foreign Currency Exchange Gain Loss
14,000
-3,000
Net Income From Continuing Operations
-581,000
743,000
📊Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.
Quarter vs Same Quarter Last Year
YoY strips seasonality
Revenue Growth (YoY)
Prior year: $2.4B▲ $3.2B+34.3%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 49.5%▲ 48.8%-0.8pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: 21.1%▲ 15.7%-5.4pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: -28.9%▲ -18.3%+10.6pp
Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.
Quarterly Health Checks
3 Graham/Buffett criteria that are valid and reliable on quarterly data
✅ Adequate Size
Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.
$3.2B/qtr (≈$12.7B ann.)
vs > $1.5B annualised revenue
✅ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
6.20x current ratio
vs ≥ 2.0x
✅ Free Cash Flow
Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.
$476M
vs Positive
Operating Cash Flow
$481M
Latest quarter · Buffett's cash reality check
ROIC
3.1%
Based on latest annual operating income
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
Market Cap / Net Assets
10.6x
Net Assets: $12.5B
Asset Context — Software - Application
Software companies store most of their value in code, IP, recurring revenue, and customer relationships — none of which appear on the balance sheet under GAAP. Book value and Net Assets are poor proxies for intrinsic value here. Focus on ROIC, gross margin trajectory, and free cash flow instead.
⚠️Operating income is positive but net income is negative. This typically reflects below-the-line items: interest expense, impairment charges, tax adjustments, or one-time write-offs. The core business may be healthy — operating margin is a better signal of ongoing profitability here.
⚠️Revenue grew vs prior year but operating margin contracted. Possible explanations: deliberate investment in growth (hiring, marketing, R&D), input cost inflation, or pricing pressure from competition. Buffett distinguishes between spending that builds moat vs. spending that doesn't.
Peers & Industry
No auto-detected peers for Software - Application. You can manually compare SHOP against any stock using the Compare tool.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
0.21%
Low — management has little skin in the game
Return on Equity (ROE)
-4.6%
Weak — poor returns on equity
Return on Assets (ROA)
-4.1%
Poor — assets are not generating adequate returns
Debt Trend YoY
-4.8% YoY
Debt is declining — management is deleveraging
Leadership Team
Tobias Lutke
Founder, Chairman, CEO and Head of R&D
Age 44
Pay: $1
Harley Finkelstein
President
Age 42
Pay: $1,018,193
Jeff Hoffmeister CPA
Chief Financial Officer
Age 55
Pay: $1,000,000
Jessica Rose Hertz
Chief Operating Officer
Age 43
Pay: $1,000,000
Top Institutional Holders
Institution
% Owned
Shares
Capital International Investors
4.12%
50,060,088
FMR, LLC
3.77%
45,834,484
Vanguard Capital Management LLC
2.78%
33,735,144
Capital World Investors
2.77%
33,696,844
BAILLIE GIFFORD & CO
2.39%
29,021,841
Price (T.Rowe) Associates Inc
2.06%
25,016,858
Morgan Stanley
2.03%
24,704,666
Royal Bank of Canada
1.78%
21,658,696
⚠️Very high beta — extreme price volatility
Risk Analysis
Beta (Market Risk)
2.59
High volatility — moves more than the market
Short Interest
1.8% of float
Low short interest — market is not heavily bearish
Debt-to-Equity
0.01x
Conservative balance sheet — low financial risk
Current Ratio
6.20x
Strong liquidity — Graham approved
52-Week Price Range
Low: $94.00Current: $108.85High: $182.19
Currently at 17% of 52-week range
Shopify Inc. (SHOP) fundamental analysis — Overall grade F based on profitability, financial health, valuation and cash flow. Graham's
Fair Value: N/A (negative EPS). Gross profit margin: 48.8%. Operating margin: 15.7%. Net margin: -18.3%. Market cap: $141.2B. Sector: Technology. Industry: Software - Application. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
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