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Brex has four years of runway and a burn rate "way below" $10 million a month, CEO Pedro Franceschi told Axios.

Why it matters: The expense management fintech is reshaping after its $12.3 billion valuation came under intense scrutiny when The Information reported the company was burning $17 million a month.

The other side: Brex has insisted the $17 million figure is inaccurate.

Driving the news: The company says it's cut its cash burn by over 50% since the article published in January. That includes a 20% reduction to its workforce that month.

"It's way below $10 million," Franceschi said when asked about monthly burn.

A beneficiary of the mega-round era, Brex has raised over $1 billion from investors including Tiger Global and Mubadala.

Franceschi previously told TechCrunch it's aiming to be cash-flow positive by 2025.

The big picture: The company is trying to prove it can be a standalone business able to weather the volatility of public markets.

Co-CEO Henrique Dubugras, (who remains active in the company as board chair), stepped down in June, making Franceschi sole CEO.

"As we think about an IPO eventually, evolving into a more standard governance structure is something we're excited about — something  slightly more common," he says.

The organizational chart had become overly complex, he says. "We've massively simplified," he says, "and got a lot more rigorous in our execution."

Flashback: When it first came onto the scene, Brex papered San Francisco in  billboards, dubbing itself the "first corporate card for startups." The message took off, and the young tech scene became its largest group of customers.

What's next: Startups remain its main growth driver, but Brex sees itself growing outside that category and beyond San Francisco.

The company has sought high-spending enterprise customers — a figure that now numbers 140. Doubling down on that focus, Brex exited the small-business market in 2022.

"The other exciting area honestly is the midmarket — those between 50 to 500 employees. It's the businesses in the middle of the U.S. that don't have some management platforms that are suited to their needs," says Franchesci.

In the last 12 months, 21% of new Brex customers were headquartered outside SF and NYC, the company says.

State of play: Brex faces a bevy of competitors in the spend management space that have fresh funding, including Ramp, which raised $150 million in an April round led by Khosla Ventures and Founders Fund. Brex's last fundraise was announced in early 2022.

Does that put Brex at a tactical disadvantage? Franchesci says no, saying the spend management space is large enough for multiple players. "And frankly, I think what we've learned over the years is: Capital is important and necessary, but not sufficient."

The big picture: Brex started out with cards and still makes most of its revenue from interchange, the fee that merchants pay for each card swipe. But it wants eventually to be the one system that tracks all spending — from procurement, to accounts payables, to travel.

But the company, which has made eight acquisitions (six acquihires) since 2017 is more likely to build out those features itself (in some cases, it already has) than buy a startup that offers such services.

"It's not a core part of the company's strategy," says Franceschi of M&A.

The bottom line: "I'd be surprised if there was a single winner," he says. "I think time will tell what strategy wins."

Brex CEO says monthly cash burn below $10M

The company's valuation faced scrutiny after a report claimed higher cash burn.

Photo illustration of Pedro Franceschi surrounded by an abstract pattern made up of the Brex logo. 

Photo illustration: Axios Visuals. Photo: Courtesy of Brex

Fintech

Brex has four years of runway and a burn rate &quot;way below&quot; $10 million a month, CEO Pedro Franceschi told Axios.Why it matters: The expense management fintech is reshaping after its $12.3 billion valuation came under intense scrutiny when The Information reported the company was <a class="gtmContentClick" data-vars-link-text="burning $17 million" data-vars-click-url="https://www.theinformation.com/articles/brex-is-burning-17-million-a-month-raising-questions-about-future-growth?rc=un2dms" data-vars-content-id="b9d89fb8-ed31-41ae-ba3e-12a72fd9bdd5" data-vars-headline="Brex CEO says monthly cash burn below $10M" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.theinformation.com/articles/brex-is-burning-17-million-a-month-raising-questions-about-future-growth?rc=un2dms" target="_blank">burning $17 million</a> a month.

Brex CEO says monthly cash burn below $10M

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