In a much anticipated move, Jack Dorsey’s Square Inc. filed an S-1 form with the U.S. Securities and Exchange Commission (SEC) for its initial public offering (IPO). No pricing terms were given in the filing, but the offering is valued up to $275 million. The company intends to list its Class A common stock on the New York Stock Exchange under the symbol SQ.
The underwriters for this offering are Goldman Sachs, Morgan Stanley, JPMorgan, Barclays, Deutsche Bank, Jefferies, RBC Capital Markets and Stifel.
The company has two classes of authorized common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to 10 votes and is convertible at any time into one share of Class A common stock.
Square was started in February 2009 to enable anyone with a mobile device to accept card payments, anywhere, anytime. While it found early success providing easy access to card payments, Square believes that commerce extends beyond payments. In every transaction, the company sees opportunity for its sellers to learn more about which products are selling best, to reinvest in their businesses or to create and engage loyal buyers. Although it currently generates roughly 95% of its revenue from payments and point-of-sale services, Square has extended its product and service offerings to include financial services and marketing services, all to help sellers start, run and grow their businesses.
In 2014, sellers using Square processed $23.8 billion of gross payment volume (GPV), which was generated by 446 million card payments from approximately 144 million payment cards. GPV measures the total dollar amount of card payment transactions Square processes for its sellers (net of refunds), excluding card payments processed for Starbucks and Square Cash peer-to-peer service. Since the company generates transaction revenue as a percentage of payment volume, the company believes GPV is a key indicator of its ability to generate revenue. In the 12 months ended June 2015, over 2 million sellers accepted five or more payments using Square, accounting for approximately 97% of GPV.
The company intends to use the net proceeds from this offering primarily for working capital and general corporate purposes. Square also may use a portion of the net proceeds from this offering for acquisitions of complementary businesses, technologies or other assets.
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