Stripe's annual data provides the framework for a thriving and expanding company. Stripe is so big that its growth must be compared to the overall growth of the payments space. By that measure, the company is outperforming its market.
Main development points
According to Stripe, they exceeded the limit of Total payments volume of $1 trillion in 2023, a significant figure. The threshold is certainly impressive, but when recent growth numbers are considered, it becomes even more impressive. According to its data, its payment volume increased by 25% in 2023. If the company processed $1 trillion last year, it would mean processing $800 billion in 2022 and POS revenue of $200 billion in a single anus. It's an impressive result for Stripe's size.
Stripe's fee starts at 2,9%, with an additional 30 cent charge for domestic card transactions. This indicates that the payment volume it added last year, even with volume discounts, represented significant new revenue for the company.
Income translates into cash flow, which is a crucial measure for investors. The company says it "was strongly cash flow positive in 2023 and expects to be cash flow positive again in 2024," indicating it likely won't need to raise more funding before going public. That may be part of the reason it's not looking for an IPO anytime soon: IPOs are mechanisms for raising funds, and Stripe doesn't currently need it.
Two additional pieces of information stand out.
Now, at least a hundred companies use their service and process a billion dollars or more a year with Stripe. Those companies represent about 10% of its total payments volume, which indicates some concentration of customers (a concern for some investors, although it does not affect the risk radar), but more importantly, it means that Stripe is achieving retain large accounts for a long time. Any company that processes so many payments through Stripe could choose to establish an in-house solution or look for a more in-house alternative. However, the fact that so many large accounts are sticking with Stripe shows that customers won't necessarily abandon the payment services it offers. This portends future growth and income stability.
Additionally, this year, its “Revenue and Finance Automation” group's offerings are expected to reach an annual run rate of $500 million: tools that help businesses manage billing, taxes, and revenue recognition. income. That run rate would be enough for that business unit to become a legally publicly traded company. This gives Stripe a software story to tell, as well as a large-scale payments operation. Revenue diversity allows for fast-growing and potentially high-margin revenues.
The surprising success of a startup
A decrease in venture capital financing continues to be observed. However, Stripe says that doesn't stop people from setting up new businesses. In fact, the year 2023 marked a record in the creation of startups. The company says the United States leads in that field, but there has also been progress in Canada, the Netherlands and Sweden.
Even without venture capital backing, these startups are finding success. For example, according to Stripe, startups founded in 2022 (the most recent full year of data) were 60% more likely to start raising revenue in their first year, while startups founded in 2019 were 57% more likely to start collecting revenue in their first year. probability of processing $1 million in its first year.
That's pretty impressive given that the year 2023 began with some people saying that the predictors of startup success would come down to more frequently reassessing budgets and plans and finding a path to balance.
Additionally, Stripe announces the addition of one in six new Delaware corporations to Stripe atlas. More than 50.000 of them were working to earn $5.000 billion in annual income.
The future
Overall, the year has been interesting for Stripe, which now has a valuation of $65 billion. Although a Stripe IPO has been anticipated in the near future, it is unlikely to take place until at least next year.
In an unorthodox move, it bought Okay, a startup that developed low-code analytics software to help engineering leaders better understand how their teams are performing. This acquisition was quite unusual. Stripe's decision to acquire a startup that helps engineering leaders create performance dashboards to evaluate their teams' performance seems like the company is taking seriously the task of making sure its own engineering team is working with effective enough not to do it. You will not only be faster, but also more productive.
The “relationship model” was another important theme in the letter. The company provides a variety of examples of how it continues to roll out services to help businesses build closer relationships with their customers and improve the overall payments experience.
Additionally, Stripe states that the company is still in its early stages. “Being the most reliable part of a company as a whole” is his goal. Although it is an ambitious goal, customers are finding that it is being executed well.
