Tech company Shopify (SHOP 0.14%) has generated fantastic growth over the years. In 2018, its top line was just under $1.1 billion, and last year, it came in at over $4.6 billion. But while revenue has been soaring, so too have expenses. And now that the business's growth is slowing, attention has turned to keeping costs under control, where Shopify has a lot to work to do.

Has the company dug itself into too deep a hole, or is this a good contrarian investment to add to your portfolio today?

Shopify's expenses have risen faster than its revenue

There's no doubt Shopify has achieved impressive results over the years providing entrepreneurs and business owners with various tools and services to run an e-commerce store. During the early stages of the pandemic, when people were losing their jobs or scrambling for ways to make some extra money, Shopify offered a way for its customers to profit from a hobby or trade. The pandemic accelerated its growth, but it also led to a surge in expenses, which have been growing at an even faster rate than its top line.

SHOP Revenue (Quarterly) Chart

Data by YCharts.

There was a brief time when Shopify's profit margin rapidly improved, but that was tied to the surge in pandemic buying when companies were struggling to meet demand, and online businesses were thriving. Now, as the economy has normalized, the trend has reversed.

Shopify is working on cutting its costs, but with a net loss of $158 million in its most recent quarter (for the period ended Sept. 30), its bottom line is back in the red.

Cash burn is another problem

A more problematic issue for the business may be its cash burn. This is what should matter most to growth investors, because companies need ample cash to fuel any expansion.

Amid this recent slowdown, Shopify is struggling to remain cash-flow positive. Last quarter, the company burned through $214 million from its day-to-day operating activities, which is a continuation of a troubling trend:

SHOP Cash from Operations (Quarterly) Chart

Data by YCharts.

What's encouraging, however, is that Shopify reported just under $1.4 billion in cash and cash equivalents on its books as of the end of September. It also has another $3.6 billion in marketable securities. The business isn't in any danger of running out of cash unless its burn rate significantly accelerates.

However, what this visual does tell investors is that Shopify still has a long way to go to improving its operations, as a cash-burning business is one that risk-averse investors will likely steer clear of. 

Is Shopify stock a buy today?

Shopify's business grew at a rate of 22% last quarter, which is on top of the 46% growth it achieved a year earlier. Those are impressive results given the challenging economic conditions that exist today, and it's a positive sign that the business is still doing well.

There's lots of work ahead for the company before its business becomes profitable. It could take years for that to happen, but if Shopify can trim its expenses while still generating positive growth, then this could be a terrific investment to buy right now. At 9.1 times revenue, the stock is trading at a much more reasonable multiple than the nearly 50 times sales of a year ago.

With loads of cash on its books, Shopify is a well-funded business, and it's safer than it looks. Although it may be a bumpy ride, buying and holding shares of Shopify could be an excellent move for long-term investors.