Why Square's Q1 Beat Was Not Enough for Investors

Banking, finance, and taxes

Published: May 1, 2019 4:29 pm

Last Updated: January 6, 2020 5:03 am

Square Inc. (NYSE: SQ) released first-quarter financial results after markets closed Wednesday. The company said that it had $0.11 in earnings per share (EPS) and $489 million in revenue, compared with consensus estimates that called for $0.08 in EPS and $478.27 million in revenue. The same period of last year had $0.06 in EPS and $306.82 million in revenue.

Excluding the acquisitions of Weebly and Zesty, total net revenue and adjusted revenue grew 39% and 49% year over year, respectively, in the first quarter.

Gross Payment Volume (GPV) increased 27% year over year to $22.6 billion. The GPV from larger sellers grew 37% year over year and accounted for 51% of total GPV, up from 47% in the first quarter of 2018.

Transaction-based revenue was $657 million, up 26% year over year, and transaction-based profit was $248 million, up 27%.

Separately, subscription and services-based revenue totaled $219 million in the first quarter, up 126% year over year. Excluding the acquisitions of Weebly and Zesty, subscription and services based revenue came to $191 million, up 97% in the same time.

Despite the top and bottom line beats, guidance was still enough to drag this stock down. Looking ahead to the second quarter, the company expects to see EPS in the range of $0.14 to $0.16 and revenue in the range of $545 million to $555 million. Consensus estimates are calling for $0.19 in EPS and $555.51 million in revenue for the coming quarter.

Shares of Square closed Wednesday at $73.67, with a 52-week range of $46.50 to $101.15. The stock has a consensus analyst price target of $83.33. Following the announcement, the stock was down 6% at $69.18 in the after-hours session.

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