Stripe Burned Through More Than $500 Million in Cash Last Year

The half-billion dollars of cash that Stripe burned was a big swing from the roughly $400 million it generated in 2021. The company spent much of the last two years on a hiring spree before laying off 14% of its staff in November.

Stripe also wasn’t profitable last year on the basis of adjusted earnings before interest, taxes, depreciation and amortization, which also excludes stock-based compensation. The firm lost about $75 million on that basis, down from an adjusted profit of nearly $500 million the previous year.

A Stripe spokesperson declined to comment.

(See Stripe’s org chart here.)

Stripe has long been a darling of Silicon Valley, with a relatively simple business model of taking a small cut of sales on the internet. Its valuation rose as high as $95 billion in March of 2021. But its business has slowed and the tech stock downdraft has exposed nagging business challenges for the company.

Stripe recently estimated its own valuation at around $63 billion, although it has recently been looking to raise money at a valuation as low as $55 billion, people familiar with the matter said.

The privately held company needs money to cover tax bills it faces after it modifies its stock grant plans to allow more employees to sell shares to investors through a tender offer. Stripe is in talks with existing investors as well as several new firms to raise the billions of dollars it needs.

The firm had laid out a plan to either resolve the tax issue through a private market deal or an IPO. But Stripe is unlikely to go public anytime soon, people familiar with the matter have told The Information.

Meanwhile, the company’s chief financial officer Dhivya Suryadevara said earlier this month she would depart the company “to attend to family matters.”

The company has been casting its financial performance in 2022 as an anomaly. Stripe has also told investors and employees that it has been conservative with its cash over its history, burning through less than $150 million in aggregate, according to a memo the company sent to employees in November. It has told employees it would start generating cash again soon.

Few believe Stripe’s core payments processing business is under serious threat, but as its growth slows, the firm has struggled to spin up new business lines to help spur growth.

Stripe’s cash burn compares unfavorably to Adyen, a smaller Dutch payments processing firm that is publicly traded. Adyen generated more than $650 million in free cash flow last year, according to public investor presentations.

Stripe’s net revenue figure excludes the money it shares with credit cards and banks in transactions, and incorporates what the company loses on transactions from fraud. Its net revenue isn’t completely apples-to-apples with Adyen’s.