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Stripe is in “no rush” to go public after the $65bn payments company returned to positive cash flow and raised its private market valuation.
The company, a Silicon Valley bellwether, told its investors on Wednesday that it had processed more than $1tn in payments last year, up 25 per cent from 2022, helping it rebound from a bruising period during which its valuation was cut in half.
“2023 was a big year. We hit dual milestones of $1tn in payment volume and being cash flow positive,” said John Collison, Stripe’s co-founder and president. “We don’t disclose the historical financials, but obviously Stripe has been in build mode up to this point.”
The San Francisco- and Dublin-headquartered company is among the most valuable private businesses in the US, alongside Elon Musk’s SpaceX and artificial intelligence company OpenAI.
Stripe has been emblematic of venture-backed companies’ boom and bust in recent years — soaring to a $95bn valuation during what Collison describes as “the peak of the madness in 2021” before cutting its valuation to $50bn last year. Last month, Stripe’s private market valuation increased to $65bn.
Stripe’s public listing has long been anticipated among venture backers who would be in line for a bumper payout and other start-ups looking for clues as to how they might perform on public markets. But Collison said he and his brother Patrick, the company’s chief executive, have no plans to take Stripe public while public markets remain volatile.
“With the IPO, we’re not in a rush. Businesses which are profitable have many, many more options than businesses which are dependent on outside capital,” said Collison in an interview with the Financial Times.
That means the company must find other ways to let employees and early investors cash out their stock, which has risen sharply in value. Last month, Stripe arranged the sale of about $1bn in employee stock, and Collison said he wanted to ensure employees had a chance to cash out every year.
In 2023, Stripe raised $6.5bn from venture capital investors including Josh Kushner’s Thrive Capital, Andreessen Horowitz and Peter Thiel’s Founders Fund, in a private stock sale that was one of the largest ever in the US. The sale allowed the company to pay billions in tax liabilities associated with its employees stock units.
“You are starting to see this a bit more with pre-IPO companies [such as] OpenAI, Canva, SpaceX: private companies doing tender offers for staff who tend to have more concentrated positions in the company stock,” said Collison.
Canva, an Australian graphics design platform, is on the cusp of completing its own tender offer which is expected to value the company at about $26bn, according to Cameron Adams, the company’s co-founder. Canva initially planned for the sale of about $1bn in stock but upped the total to more than $1.5bn after the tender was oversubscribed, said Adams.
Launched in 2011 by the Collison brothers, Stripe’s core business is building payments infrastructure for start-ups and more established enterprises. The financial technology group has also developed a suite of tools helping customers with revenue, tax and billing. “We expect the suite’s annual revenue run rate to pass $500mn over the next year,” Stripe told investors on Wednesday.
Stripe did not disclose overall revenues but, according to a person familiar with the matter, its net revenue hit about $1bn in the third quarter of last year. The company was lossmaking in 2022.
Many venture-backed companies have avoided going back to investors who gave them money as the market peaked in 2021, mindful that any fresh capital is likely to come at a lower valuation. But some are now running short of cash. According to industry groups, as many as two-thirds of venture backed start-ups will need to raise money this year.
“The mistake would be private companies refusing to acknowledge market realities . . . Businesses don’t do themselves any favours by having valuations veer away from the fundamental value of the company,” said Collison.