Stripe to let staff cash in again through share buyback scheme
The payments firm, founded in 2010 by Limerick brothers Patrick and John Collison, is funding the move from its own cash pile, according to US reports
Stripe is engaging in another round of employee equity compensation, in place of a stock market flotation, according to an online news report by The Information.
The cash-out mechanism is seen as a way of rewarding employees in an industry where stock options are considered a valuable part of staff incentives.
According to the report, which cites an unnamed person familiar with the transaction, the employee tender offer will be financed by Stripe's own cash this time, rather than outside sources.
Stripe's free cash flow was around $615 million at the end of the second quarter, according to a Bloomberg report, meaning that it does not need external cash from investors to fund an employee share buyback this time.
Unlike publicly-quoted companies, Stripe’s private status means that trading shares is less straight-forward.
Last month, Stripe’s valuation rose to from $65bn (€59.6bn) to $70bn (€64.2bn) after one of Silicon Valley’s biggest venture capital investors, Sequioa Capital, agreed to buy up to $861m (€790m) in private shares from other investors.
The online payments firm, which was founded in 2010 by Limerick-born brothers Patrick and John Collison, hit a valuation high during the Covid pandemic of $90bn (€82.6bn) before falling to $50bn (€45.9nb) last year.
Stripe, which is jointly headquartered in Dublin and San Francisco, is one of the world’s largest online payment companies and is used by thousands of major ecommerce firms. Its last financial update revealed that it handled over $1 trillion of payments in 2023, up 25pc on the year before that.
The company, which is competition with rivals such as Adyen, Braintree and PayPal, has a regular pipeline of deals with retail and commercial brands.
Stripe is one of the most-watched firms for a potential IPO. In public interviews, including with this news organisation, John Collison has repeatedly said that the firm does not yet plan a public offering.
This has left some longstanding investors and employees seeking ways of realising a monetary return on their shares in the company.
Earlier this year, the company struck a $1bn deal, where the company and some investors allow staff to cash out by buying their shares.
This strategy has been publicly cited by John Collision as something that may be repeated as a way of satisfy staff and investors.
Reporting on:independent.ie