Square Wows Investors in First Public Earnings Report

Square, Inc. (NYSE: SQ) released its fourth-quarter earnings report after the markets closed on Wednesday, its first report as a publicly traded company. The financial results came out to a net loss per share of $0.20 (excluding a loss of $0.14 per share associated with the IPO) and $374 million in revenue compared to Thomson Reuters consensus estimates that called for a net loss of $0.13 per share on $343.22 million in revenues.

In the fourth quarter of 2015, Square processed Gross Payment Volume (GPV) of $10.2 billion, which represents an increase of 47% from the fourth quarter of 2014. GPV growth was driven by both ongoing growth in the company’s existing seller base and new sellers added in 2015. GPV from larger sellers, which are defined as those that generate greater than $125,000 in annualized GPV, grew over 70% in the fourth quarter and now represent 39% of GPV, up from 33% a year ago.

In terms of first quarter guidance, the company expects adjusted revenues in the range of $132 million to $137 million and EBITDA in the range of negative $11 million to negative $9 million. There are consensus estimates that call for a net loss of $0.10 per share on $325.93 million in revenue.

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Historically, the fourth quarter has been the strongest revenue quarter, driven by strong seller GPV momentum during the holiday season. While the first quarter is seasonally the slowest in terms of transaction revenue sequential growth.

Square detailed in its report:

As of the end of the fourth quarter, we had already received over 350,000 pre-orders for our new contactless and chip reader. With this reader, Square sellers can accept payments in nearly every way their customers want to pay. It makes it easy to accept EMV chip cards and also new, faster forms of payment such as Apple Pay and Android Pay. It’s a simple, beautiful experience that allows you to pay for a haircut with a tap of your phone. The reader is for sale online and in Apple Stores around the country for $49, and we are planning to sell the product on Amazon and in Staples, Best Buy, and Target stores in the spring.

On the books, cash and cash equivalents totaled $471 million, which was driven primarily by the proceeds raised in the initial public offering and improvements in cash flow from operations.

Shares of Square closed Wednesday up 4.8% at $12.03, with a consensus analyst price target of $13.58 and a 52-week trading range of $8.06 to $14.78. Following the release of the earnings report, the stock was up 3.4% at $12.44 in the after-hours trading session.