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The work in artificial intelligence (AI) has accelerated over the last decade and is becoming a part of our everyday lives. Companies in numerous industries are racing to adopt AI to improve operations and the customer experience or make sense of the massive amounts of data available. We asked three Motley Fool contributors to highlight one company that's making strides in AI that would be worth buying and holding for the next decade. They came up with Alphabet (GOOGL -1.01%) (GOOG -1.17%), Etsy (ETSY -1.75%), and Zebra Technologies (ZBRA 0.62%). 

Shopify: Aligning with its customers to grow

Brian Withers (Shopify): The market flocked to e-commerce stocks as the coronavirus raged around the world. But now, as the coronavirus is becoming smaller in our rearview mirror, the market has fled these same stocks and left them for dead. Shopify, the platform that powers e-commerce sites for businesses and entrepreneurs, hasn’t escaped this sell-off. With the stock approaching levels from three years ago and the upcoming 10-for-1 stock split, it’s worth taking another look at this behind-the-scenes operator.

Over the past three years, Shopify’s top line has almost tripled. That’s absolutely mind-blowing, but there’s another interesting trend going on that’s even more telling for the future. Shopify reports its revenue in two segments: subscription solutions and merchant solutions. The subscription segment represents the revenue collected from the monthly subscription plans to get access to the platform. Like any subscription business, the company collects money from its customers whether or not they use the platform.

The merchant solutions segment, on the other hand, is driven by customer usage. As Shopify’s merchants make sales on the platform, they collect payments, use fulfillment services, or utilize Shopify shipping. The costs for these transaction-based services are shown in the merchant solutions segment. So when customers are successful on the platform with more sales, Shopify benefits along with the merchants.

Source: Company earnings releases. Calculations by author.

You’ll note from the table above that the merchant solutions segment is growing faster than the overall business. This is a very positive sign for Shopify, its merchants, and investors. This means that Shopify’s customers, the merchants selling goods on the platform, are growing faster than Shopify’s core subscription business. This bodes well for the long term.

Looking at the shopper metrics, you can see that customers using Shopify’s platform to buy goods online are spending more every year. This says that consumers love spending on Shopify’s merchant's online stores.

Source: Company presentation. Calculations by author.

Even as e-commerce growth slows down, Shopify and its merchants have found a winning formula that is attracting customers. Even better, those customers spend more over time. As an investor, I love that a majority of Shopify’s revenue is aligned with the success of its customers. Whether you buy some shares before the stock split on June 22, or after, it’s likely that in five years' time, you will be very happy you own this e-commerce gem.

Key point: Looking under the covers of this e-commerce platform's results will bolster investors' confidence in the long term prospects of this gem.