Stripe says in annual letter that it processed $817B in transactions in 2022, but growth has definitely slowed

Stripe, the payments and fintech giant currently valued at $50 billion, sometimes feels like it has been forever on the brink of a public listing. But in the absence of any concrete IPO moves and the transparency that the listing process brings with it, today it published an annual update with a few new numbers that paint a picture of where the company is standing right now.

According to the update signed by co-founders and brothers Patrick and John Collison (CEO and president respectively), Stripe processed transactions totaling $817 billion in 2022, up 26% from 2021 (when it processed $640 billion), and its big company list has grown. Stripe now has more than 100 companies each processing more than $1 billion in payments over the platform.

The number of new customers is up by 19% this year, averaging out to 1,000+ new businesses joining daily. And Stripe also seems to be finding that its resonance with new customers is expanding geographically: while the U.S. is still Stripe’s biggest market, it said that 55% of new customers came this year from other countries. (Stripe’s active in 50 markets currently.)

This is the second year running that the Collisons have published this note (here is the one from April 2022). I’ve been told that they’ve been writing them for years for internal purposes, and so you might think that publishing more openly may speak to building a more public profile. But if that is the case, it’s one that is very well controlled.

You won’t find simple answers to tough questions — or much mention of the tough questions, either.

Stripe raised $6.5 billion on a $50 billion valuation last month, a major step down from the $95 billion valuation it had two years prior. In 2022, we asked if Stripe was “cheap” at $95 billion. Well, we have an answer to that now: it looks now like it was opposite, that it was overvalued by some $45 billion. That begs the question of whether it’s still overvalued now at $50 billion. That’s a topic not explored in the letter.

Nor does the letter touch on one of the very biggest themes of the last year in tech: layoffs. Not only is this, and the bigger layoff trend, omitted in the year in review, but Stripe notably doesn’t include any mention at all about its employees, employee numbers or where it currently stands on hiring. Stripe has not been immune to these itself, letting go of 14% of its staff in November, so obviously its a theme that is pretty close to the company and its strategy.

There are other things it would be great to know more about, such as where the company currently sits with revenue and profit (or loss).

Or what percentage of its business is attributable to its core payments product these days, versus the performance of its newer and adjacent lines of business tools in areas like tax, fraud protection, company incorporation and so on?

And while Stripe has been a major story on the venture investing front for years, it’s also been amassing quite a big portfolio of investments itself. Some of these are financial, the company has said in the past, but some might be interesting maneouvres to help . How are they doing, and is there a big picture strategy behind that activity?

One thing that you can glean from the letter — although it’s not explicitly stated — is that growth is most definitely slowing. Transaction volumes this year may have been up 26%, but the year before the rate was 60%. And 1,000 new companies a day is an impressive number, but not as impressive as 1,400/day a year ago.

Granted, part of the expansion in business last year was due to the huge boost in online payments during the peak of the Covid-19 pandemic, but it underscores how any company working in digital commerce, even the most golden of them, still are facing very different realities now, some of them quite difficult.

The company’s strategy for years has been one of diversification: it’s rolled out many services that complement its core payments product, banking on these being a great way to build stronger relationships with customers, and to hopefully build out bigger revenue streams and margins, too. That’s likely something that we will see a lot more from the company, sometimes chasing the newest shiny concept — be it cryptocurrency or generative AI — or sometimes just addressing very classic pain points for those running businesses online, such as collecting sales tax in multiple jurisdictions.

It’s clearly a massive business, and a massive opportunity. As Jareau Wadé eloquently lays out in a recent essay, Stripe’s impact and place in the market in the last decade have been undoubtedly huge, but its success is not inevitable, and with a plethora of competitors and choices for users out there, that success may not look like a boom in the greater scheme of things. Not something you might read in Stripe’s letter, but a salient point all the same.

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