Podcast Summary: Run the Numbers

Episode: Stripe, Klarna, & the Fintech Resurgence—What’s Driving Valuations?

Host: CJ Gustafson
Date: February 22, 2025

Overview

This episode dives into major shifts in fintech valuations and the evolving landscape of back office software consolidation. CJ Gustafson reviews headline moves from companies like Stripe, Mercury, Klarna, Chime, and Affirm, focusing on what drives their market valuations—and what founders and finance operators should take away for their own businesses. He also analyzes the HiBob acquisition of Mosaic and what it signals for the future integration of HR and finance tools.

Key Discussion Points & Insights

1. Stripe’s Employee Tender and Valuation Surge

Announcement: Stripe is offering an employee tender at a company valuation of $85 billion, up from $70 billion last summer.
Revenue Metrics: Around $4 billion in revenue, growing high teens to low 20%s YoY.
Implied Multiple: About a 20x forward revenue multiple, justified by high-margin, sticky payments revenue and dominant infrastructure.
Reasoning:

“If you want to get a little bit of those tendies in the private market in payments, you’re probably going to go to Stripe.” (02:01)

2. Mercury’s Strong Profitability, Lower Multiple

Valuation: $3 billion, with $500 million in revenue and $200 million EBITDA—a rare level of profitability for fintech.
Multiple: Valued at ~6x revenue, much lower than Stripe’s 20x.
Driving Factors: Mercury’s revenue relies on interest from deposits (more sensitive to macroeconomic factors like Fed rates), thus discounted by investors.
Insight:

“Not all fintech revenue is valued equally… Payments flow revenue gets higher multiples, deposit interest gets lower ones.” (03:49)

3. What Drives Fintech Valuations?

Payments-Focused Models: Stripe, Brex—predictable revenue, higher multiples.
Deposit/Interest Models: Mercury—tied to rate cycles, lower multiples.
Growth and Stickiness: Moat, recurring revenue, scale, and risk management all factor in.

4. Chime and Klarna: Tailwinds from Regulatory Changes

Regulation Shift: Key regulatory agencies disbanded, reducing hurdles for creative fintech models—especially in lending.
Chime:
- Neobank, revenue from interchange/debit cards with some lending.
- Last valuation: $25B rumored; could receive 5x forward multiple but could be squeezed if regulations return.
- “All signs point to go… easier for us to IPO. Our story is less weighed down by government regulation.” (06:08)
Klarna:
- Buy-now-pay-later model, targeting 15–20B valuation (big rebound from 6.7B in 2022).
- Risk: Is this “a true payments business or just a subprime loan lending business in disguise?” (08:11)
- Notable rollercoaster in valuation: “In 2021, they went all the way up to a peak of $46 billion. That’ll make you spit out your iced coffee.” (08:31)

5. Affirm’s Public Market Resurgence—A Bellwether for BNPL

Stock Performance: Soared in 2025, from $8–9 to $79/share.
Financials: $866M revenue last quarter, up 47% YoY.
Profitability: On track for GAAP profitability by late 2025, a rarity in fintech.
Implications:
- Validates business model at scale; bodes well for Klarna’s IPO prospects if they can show similar discipline.
- “They did that brave thing where they went out and IPO’d as the IPO market was freezing up—and they got beat up for it. But they've done an amazing job building a durable business.” (09:55)
“If Affirm can prove Buy Now Pay Later works at scale, that’s an awesome omen for Klarna.” (11:47)

6. HR and Finance Stack Consolidation: HiBob Acquires Mosaic

Acquisition: HiBob (HRIS) acquires Mosaic (FP&A tool).
Trend: HR and Finance tools converging, forming “mini-ERPs” even for mid-market and SMBs.
Historic Parallel: Workday acquiring Adaptive Insights in 2018, mirroring SAP’s past moves.
Shift: Companies want one “source of truth” rather than a proliferation of point solutions.
Implications for CFOs: Expect more consolidation; standalone FP&A tools may need to partner with, or be integrated into, HR platforms.
Quote:

“HR and finance are becoming a single system in many ways. Payroll, expenses, headcount planning—they’re deeply tied to financial forecasting.” (13:35)
“HiBob is making a bet that HR will be the entry point to owning the entire back office.” (16:40)

Notable Quotes & Memorable Moments

On valuations and content:

“I hate when people just give me interesting information, but they don’t tell me why it’s important.” (01:09)
On Stripe’s moat:

“They have this moat of infrastructure that they’ve amortized over time—which is a fancy word for paid down.” (02:40)
On regulatory risk:

“If you remember, the government will have a heavy hand when something looks pretty risky and is going to harm consumers. And then the companies end up having to pay for that, because your consumer’s risk is essentially your risk.” (06:55)
On founder advice:

“If you’re a founder in these spaces, knowing how investors value your revenue model is critical. Your multiple depends on it.” (18:42)
On future drinks:

“Please give us five stars. I will buy you a beer… Next time we meet in person, just remind me I’m good for it, I promise.” (19:10)

Timestamps for Important Segments

00:55 — Main content starts
02:01 — Stripe’s employee tender and valuation explained
03:35 — Mercury’s profitability and revenue model comparison
05:50 — What drives different fintech multiples
06:08 — Chime and Klarna’s regulatory tailwind advantage
08:11–09:00 — Klarna’s rebound and business model risks
09:45–12:00 — Affirm’s resurgence, growth, and profitability
12:50–16:00 — HiBob + Mosaic acquisition; HR and Finance stack consolidation
18:42 — Final thoughts and advice for founders

Final Takeaways

Fintech valuations are surging back, but the type of revenue matters—a lot.
Payments models (Stripe, Brex) earn higher multiples than deposit/interest models (Mercury).
Regulation shifts are giving companies like Klarna and Chime a tailwind toward IPOs.
Affirm’s success in the public markets may set the stage for Klarna’s future.
Back office consolidation is real; expect to see HR and finance more deeply integrated as companies seek single sources of truth for decision making.
For founders: Understand not just the amount but the quality and risk of your revenue—it directly impacts your valuation multiple.

Transcript

A (0:01)

Fintech is back, baby. And back office sources of truth are converging. Yo. Welcome back to another State of the Private Markets Report. Today we're breaking down the biggest private market stories and not just what happened, but why it matters if you're trying to position your company for the highest possible valuation. I hate when people just give me interesting information, but they don't tell me why it's important. But first, a spot. Yeah, we have a sponsor. Yeah, I'm reading it right. We have a sponsor. It's NetSuite. And they paid for the couch next to me for my dog. That is the true meaning of wealth in this world. You don't have to have a ton of money. You just have to have enough money to buy a couch for your dog so he can stare into your soul as you do a podcast by yourself. Thank you, Walter. What does the future hold for business? Ask nine experts and you'll get 10 answers. Bull market. Bear market rates will rise or fall. Can someone please invent a crystal ball? 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Speaking of opportunity, download the CFO's guide to AI and machine learning at netsuite.com metrics. The guide is free to you at netsuite.com metrics netsuite.com metrics so I can buy my dog another couch. First story. Stripe's valuation jumped to 85 billion. Whoa. So stripe is arranging an employee tender. Pretty nice of them. Allowing employees to take a little bit of those chips off the table. It would value the company at 85 billion, up from 70 billion, its latest mark last summer. Now, if you look at the revenue, I checked it on position, so. And they're at about 4 billion and growing in the high teens to low 20s. So quick math would put them at about a 20x forward revenue multiple if you extrapolate that out, which makes sense given that they have this moat of infrastructure that they've amortized over time, which is a fancy word for paid down. They have this high margin software plus payments revenue and it's really sticky. And the fact that investors still see them as a dominant private fintech. Right. If you want to get, if you want to get a little bit of those tendies in the private market in payments, you're probably going to go to Stripe. Now let's compare that to Mercury. Congrats on their latest round at a $3 billion valuation on a reported 500 million in revenue. And they're wicked profitable. 200 million in EBITDA. That's crazy. 200 on 500, so. So that's roughly a 6x current revenue multiple, which is notably lower than Stripe's multiple, which made me go down this rabbit hole. Everyone on what makes a fintech valuable, how the hell do they come up with these valuations? And not all fintech revenue is valued equally. So you have the payments flow revenue which receives pretty high multiples. So you have Stripe and Brex. They're either in online payments, corporate cards, they fall into this camp and they take a clip of every transaction. Right. That, that's their modus operandi. And that makes the revenue more predictable. It's more about how much throughput you have versus interest rates. Mercury earns a big chunk from interest on deposits, so that'll receive a lower multiple because it's so tied to macro factors like Fed rates, so investors will discount it. So to talk a bit more about fintechs and how they're valued, I want to hit on Chime and Klarna, who are making waves in the news, who will get a better multiple? Time will tell. And it's important to note up front that basically the, the department that says like, hey, that's not good for consumers, this is good for consumers. Payday loans. Be careful. Like the Financial Bureau Protection Agency, which I'm probably butchering the name, but like those acronyms are getting really long. They were disbanded by that other acronym group, the Doge Group. And basically what it means is it's easy, easier to have more creative business models with lending and financial products. So this is a massive tailwind for Chime and Klarna. They're probably like, hell yeah, it's going to be easier for us to ipo. Because our story of where our revenue will go over. Time is less weighed down by what may happen with the government and the regulations that are slapped on us. Because if you remember, the government will, you know, have a heavy hand when something looks pretty risky and is going to harm consumers. And then what happens is the companies end up having to pay for that in some way because your consumer's risk is essentially your risk. Right. So Chime has this Neobank model where the revenue comes from interchange fees, mostly debit cards and some lending because you can get paid faster. And Matthew Newcomb, amazing guest of the Run the Numbers podcast CFO there, um, he's running this company at scale that was valued at a rumored 25 billion. Woo. They're expected to garner a valuation probably in like the 5x forward revenue range, but it could get squeezed if that department did spring back up again. But like I said, right now, all signs point to go. And then Klarna, they run a buy now pay later model. So that's a different fintech model. And they make money from merchant fees plus consumer lending. Their target valuation is somewhere in the 15 to 20 billion, which will be a massive rebound from the 6.7 billion I see on position. So that they're trading at back in 2022. You remember in 2021 they went all the way up to a peak of 46 billion. That'll make you spit out your iced coffee. 46 billion. The key risk for them, Buy now, pay later defaults. Right. Could this be a true payments business or just a subprime loan lending business in disguise for you to decide? But who wants to pay for a peloton now? I certainly don't. Maybe the peloton treadmill would look good in this office. We already have the SOFA Affirm just to link this to the public markets. Cause part of my job is to help you translate the macro to the micro Affirm's comeback is really astounding here. They're one of the highest traded fintech companies when it comes to revenue multiples. They're over 7x as of this week and they're probably the closest comp to Klarna if, if you want a comp. Their stock is up big in 2025 they hit it's at $79 at its peak, way up from I think it was at like 8 bucks a share, 9 bucks a share. In 2022 they did that brave thing where they went out and IPO'd like as the IPO market was freezing up and they got beat up for it. But they've done an amazing job at building a durable business. Michael Linford, also a friend of the Run the Numbers podcast. Check out that episode. He crushed it. Their stock is up big and their revenue surged to 866 million last quarter, up 47% year over year. That's nutty growth, right? And so they're on track for GAAP profitability by late 2025, which is a big deal at Fintech because we talked about amortizing down your costs before. At scale, these businesses absolutely rip and print cash like Mercury is doing. Congrats to Mercury. So if a firm can prove that Buy Now, Pay later works at scale, that's an awesome omen for Klarna, who benefits from stronger IPO demand. But if Klarna can't show cost control and profitability, which was a major worry in why their stock tanked when everyone was like, oh no, we want efficient growth, then yeah, investors won't bite. Bottom line, Buy Now, Pay later is back. But Klarna still has to prove it's not just a boom and bust model. Maybe we'll see later in 2025 when they hit the public markets. One other story I wanted to hit on here because it's relevant to CFOs. Hi Bob. Acquired Mosaic. So is HR becoming an ERP. So this isn't just another HR tech acquisition. In my opinion, it signals a bigger shift in how back office software is evolving. So, Hi Bob. And HRIs, they bought Mosaic and FP and a tool, so budgeting tool. And I think it suggests we're heading towards this world where HR and finance converge, similar to what's already happened with some of the ERP tools out there, especially around like close management. So HR and finance are becoming a single system in many ways. Payroll expenses, headcount planning, they're deeply tied to financial forecasting. And at software companies, I mean like 70, 75 of the cost walk on two feet. So why wouldn't you want them in the same place? Right? And Companies don't want 10 different tools anymore. They want one source of truth. There's been this proliferation of all these point solutions out there. I think what we're seeing is the pendulum is swinging in the other way. And Workday saw this early. They acquired adaptive insights, another FP and a tool back in 2018 to move from just HR into financial planning. And now they're basically building their own enterprise erp. They've built something amazing there and I think it takes a page out of SAP's playbook. Right. They already did this at scale. With HR in a finance stack that's been around for years proving that the model works in the enterprise. But now what I find fascinating is it's happening amongst SMBs and Mid Markets because hi Bob, that's really where they play. If you're like a company with 200 to 500 employees, it's perfect for you. And now you have an FP and a solution as well. So what's next? I think if you're a CFO or somebody evaluating tools, expect more consolidation in the HR and finance stack. Really look from who you're buying from and standalone FP&A tools, I'm wondering if like a cube or a pigment, not that they'll get squeezed, they can actually go the other way and maybe work with an HR vendor, maybe they'll even create their own, I don't know. But yeah, the mid market doesn't need a full blown netsuite or SAP from the very start. People are going to netsuite sooner and sooner. Sponsor the podcast, bought that sofa. But they do need a modern ERP Lite that combines HR and finance. So hibob is making a bet that HR will be the entry point to owning the entire back office. And if they're right, more HR platforms could start absorbing finance tools instead of the other way around. So some final thoughts here. Fintech is back, valuations are shifting back. Office software is consolidating into these mini ERPs. And so if you're a founder in these spaces, knowing how investors value revenue model is critical, pay attention to other comps that are out there. Are you more like Stripe? Are you more like Brex? Are you more like Mercury if you're a fintech? And are you dealing with credit risk? Because that'll be factored in to your valuation multiple as well. Your multiple depends on it. Please give us five stars. I will buy you a beer. As Vin Diesel says, you can have any beer you want as long as it's a Corona. As long as it's a Miller Lite. I'll buy you a beer. Next time we meet in person, just remind me I'm good for it. I promise. Till next time.