Stripe has recently hit a $95 billion private valuation after an additional fundraising round of $600 million. Seeing as we will be waiting some time before an IPO, here are some great alternative businesses seeing rapid growth in the payments space.
Square (NYSE: SQ) is a payment technology company that allows businesses to quickly accept payments and enables peer-to-peer money transactions through its Cash App platform. The company has revolutionized traditional banking by offering a fully-mobile platform that eliminates the middle man, processes payments instantly, and provides merchants with real-time payment analytics. Square gives small and traditional businesses the ability to accept card payments either online or through its point-of-sale without the need for high setup costs, which is in huge demand due to society's shift towards cashless payments. Square also offers Cash App, an application that allows peers to transfer money instantly as well as purchase Bitcoin, invest in stocks, and make online purchases.
Square announced a 52% year-over-year (YoY) increase in Q4 2020 gross profit, from $794 million in Q3 to $804 million. Total net revenue for Q4 2020 stood at $3.16 billion, up 141% YoY. Transaction-based revenue reached $929 million in Q4, a 12% YoY increase, and gross profit for this segment rose 26% YoY to $394 million. The company enjoyed impressive 60% growth in subscription- and services-based revenue, reaching $449 million in Q4 2020. Cash App's monthly user figure has grown 50% YoY to 36 million, bringing in $377 million in gross profit, a 162% YoY increase.
Shopify (NYSE: SHOP) was MyWallSt's first 30-bagger, shortlisted in 2016, but the business still has plenty of runway left. Tobi Lutke founded the company in 2006 with the vision of "making commerce better for everyone" and owns 6.7% of the company. Like Square, Shopify has empowered small businesses to accept online payments as well as create modern online stores, easily manage inventory, and view valuable analytics. Not only that, but Shopify Plus makes e-commerce easy for large businesses such as Steve Madden, Diageo, Gymshark, and ALDI.
Shopify has seen impressive growth since its 2015 IPO and it looks like this trend will continue. Q4 2020 revenue grew 94% YoY to $977.7 million, with full-year revenue growing 86% over 2019 to $2.93 billion. Shopify had an amazing 2020, with its' full-year Subscription Solutions revenue growing 41% YoY to $908.8 million and Merchant Solutions revenue growing 116% to just over $2 billion. The company's margins are impressive, with gross profit growing 78% to $1.54 billion in 2020. We can expect to see Shopify grow even more over the coming decade, as the number of consumers buying from Shopify merchants grew 38% in 2019 and then 52% to 457 million in 2020.
Sea Limited is a promising e-commerce, finance, and gaming company storming Southeast Asia and Latin America. The company operates three core segments -- Shopee in e-commerce, SeaMoney in digital financial services, and Garena in digital entertainment and gaming. Shopee is busy paving the way for e-commerce in Southeast Asia and is focused on creating a shopping experience that is personalized by leveraging AI and AR-powered tools to help brands deliver a unique and enjoyable shopping experience. Garena is a leading global online games developer and publisher hugely popular in Latin America, and it runs FreeFire, the most downloaded mobile game globally in 2020.
SeaMoney is an internally-developed financial payments platform that Sea Limited has integrated into the rest of its business, especially Shopee. The platform has recently been awarded a Singaporean banking license and also manages 30% of all payments made on Shopee.
Sea Limited is a diverse business experiencing high-growth in all segments. Total GAAP revenue for full-year 2020 grew 101%, reaching $4.4 billion. Total gross profit rose 123% to $1.3 billion. SeaMoney saw a payment volume of $7.8 billion in 2020, despite only being introduced in 2014. The pandemic had a notable impact on Shopee, with the number of orders growing 133% to 2.8 billion. Bookings for Garena exceeded expectations and reached $3.2 billion in 2020, an 80.3% YoY increase. Sea Limited is rapidly growing in all aspects, making it an excellent bet.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
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