Square Sets Terms for Highly Anticipated IPO

By Chris Lange Updated Jan 13, 5:27PM EST · Published Nov 6, 10:35AM EST

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Square Sets Terms for Highly Anticipated IPO — © Thinkstock

Square has filed an amended Form S-1 with the U.S. Securities and Exchange Commission (SEC) regarding its initial public offering (IPO). The company expects to price 27 million shares in the range of $11 to $13, with an overallotment option for an additional 4.05 million shares. At the maximum price, the entire offering is valued up to $403.65 million. The company intends to list its Class A common stock on the New York Stock Exchange under the symbol SQ.

The underwriters for the offering were Goldman Sachs, Morgan Stanley, JPMorgan, Barclays, Deutsche Bank Securities, Jefferies, RBC Capital Markets, Stifel and Loyal3 Securities.

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.

It is worth noting that the CEO and founder of Square, Jack Dorsey, is also the current CEO and co-founder of Twitter Inc. (NYSE: TWTR). Dorsey is a big name in the tech sector and this move to be a CEO of both companies was a huge decision that was met with a fair amount of controversy.

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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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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.