In this Market Foolery segment, host Mac Greer, David Kretzmann of Supernova and Rule Breakers, and Ron Gross of Motley Fool Total Income pull back the curtain on a back-end e-commerce platform provider that 500,000 small to mid-size merchants globally use so far. In the gold rush that is internet retail, Shopify (SHOP 4.59%) is the guy selling picks and shovels, and based on its growth rate, balance sheet, and more, it's doing precisely what it needs to. But questions remain, both about its rivals and about its eventual path to profitability.

A full transcript follows the video.

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This video was recorded on Aug. 1, 2017.

Mac Greer: David, shares of Shopify up big on Tuesday on earnings. Shopify builds cloud-based commerce platforms for small business. So more of a behind-the-scenes player here.

David Kretzmann: Yeah, behind the scenes. But over the past year, 131 million people have bought a product through a Shopify merchant. You're not going to notice the Shopify brand as a consumer, but you're likely going to interact with one of their merchants. You'll be on a third-party retail website, and you'll buy something, and that whole back-end platform, that e-commerce platform, will be powered by Shopify.

The company is growing incredibly quickly here. Revenue up 75%. They're now serving over half a million merchants in 175 countries, so really just about everywhere around the world. They're growing really quickly. The stock price has more than doubled in the past year, and they're taking advantage of that by issuing more stock and raising more money. They had a secondary offering in May that's coming off another secondary offering in August of last year. With this latest offering, they raised over $500 million in cash. So now, on the balance sheet, they have close to a billion dollars in cash and no debt.

So even though they're unprofitable, they're still burning cash, although they are still technically cash flow-positive. They do have a pretty significant war chest now, and the stock is still close to all-time highs after the report today. All in all, things are going well. There are still question marks. I know Ron has them about -- when does this company become profitable?

Ron Gross: I don't mean to be a stick in the mud, but I enjoy profits.

Kretzmann: Profits do matter at some point. That is still a question mark.

Gross: Did they talk about that?

Kretzmann: Right now they're still in growth mode, so, focusing on the top-line growth. They have, as I said, about 500,000 merchants. When you think about the total worldwide opportunity for small businesses that could potentially use Shopify's platform, that market size is probably close to 40 or 50 million small to mid-size business owners who could use Shopify. I think it makes sense for them to reinvest, to grow that top line.

But I still have questions about Shopify, because there are competitors who are private, so we don't know as much about them and what their numbers look like. But you have BigCommerce, 3dcart, which, as far as I can tell, they offer almost an identical solution that Shopify offers. A few weeks ago, Shopify announced a new "partnership" with eBay where, if you're a Shopify merchant, you can open up an eBay store pretty seamlessly through Shopify and sell your goods on eBay.

But BigCommerce has essentially an identical offering available. So it's not entirely clear to me what sets Shopify apart, longer term. Going forward, we'll want to see how successful they retain customers on that platform. If you have a high churn rate, then bringing on a whole bunch of new merchants doesn't necessarily add a whole lot to the bottom line.

Gross: Do you think this segment of the industry could be ripe for consolidation? If there's more than one player out there doing similar type things all with different customer bases? Do you see Shopify maybe being acquired or merging?

Kretzmann: Yeah, I think either of those could make sense. Even Etsy is doing something similar to these guys. Yeah, I think at some point, you're going to see either an acquisition here, or some consolidation through a merger.