Square Inc. (SQ) Reports +41 Percent Jump in Revenue in 2Q

Shares of Square Inc. (SQ) were trading up +1.79 or +17.15 percent to $12.23 per share in Thursday’s premarket after the company reported second quarter earnings on Wednesday after the market close. Despite reporting a loss for its second quarter, revenue increased over +41 percent from 2015’s second quarter. Square Inc. stock closed at $10.44, up +0.39 or +3.88 percent in Wednesday’s regular trading session.

Stock Analysis

Founded in 2009 by Jack Dorsey, San Francisco, California based Square Inc. is a mobile payment and financial services company, as well as a merchant account provider.

Square Inc. offers software and hardware products for businesses to receive payments online, such as the Square Reader and the Square Register. The company has expanded its products to small businesses with Square Capital that extends credit to small businesses and a financing program called Square Payroll. The company currently allows merchants and individuals in the United States, Australia, Canada and Japan to accept offline debit and credit cards for payment on Android, iOS or tablet computers.

For the company’s second quarter, Square Inc. reported a GAAP net loss of -$27.3 million or -$0.08 per diluted share compared to a net loss of -$29.6 million or -$0.20 per share in the same period one year ago. Adjusted EBITDA came to +$13 million in the quarter versus +$1 million in 2015’s second quarter.

Square Inc. cited the improvement in EBITDA to increased scale and operating leverage, the company’s ability to drive new product adoption and positive dollar based retention of the company’s sellers. Square Inc. had 334 million weighted average shares in this year’s second quarter.

Total net revenue for the quarter came to $439 million, including revenue from Starbucks, an increase of +41 percent over last year’s second quarter when the company reported $310 million in revenue. Adjusted revenue, which excludes revenue from Starbucks, was $171 million, a +54 percent increase year on year.

Square Inc. processed $12.5 billion in payments, an increase of +42 percent from last year, which was in large part attributed to new and larger retailers using Square for payments. The analyst consensus was for the company to report a net loss of -$0.11 per share on revenue of $406 million.

In a conference call with investors, Square Inc. founder and Chief Executive Officer, Jack Dorsey, who is also the Chief Executive Officer of Twitter (TWT) said that, “We are finally at a place where our tools scale to any size seller,” he added that, “We are seeing more and more appetite from the larger sellers,” in addition to business from chain retailers with multiple stores.

Last month, the company incorporated a company called Squareup Europe Ltd in an effort to expand operations in Europe, with the UK being the first step. For the full 2016 year, Square Inc. is expecting total revenue to be in the range of $1.63 billion to $1.67 billion.

Square Inc. stock is trading in the middle of its yearly range of $8.06 to $15.91 per share. The company’s stock has traded with volatility since the initial public offering at $9 per share in November. Nevertheless, with yesterday’s earnings and revenue results and the positive guidance for the company’s full year, a test to the stock’s March highs could take place in the third quarter.

Other News About SQ

Why Square Inc's Shares Popped 11% in July

The company’s European expansion is one of the reasons cited for the stock’s monthly increase.

Square Inc. (SQ) Lowered to Hold at Vetr Inc.

Analyst downgraded the stock twice last month, giving shares a $9.34 price target.

Other Stocks in the News

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Company will stop selling golf clubs and concentrate on shoes and apparel after the recent downturn in the sport.

Ford to recall vehicles to replace side-door latches

Company will recall approximately 830,000 vehicles in North America.

Published on Aug 4, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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