Square posted a largely successful fourth quarter that showed continuing growth with its Cash app — with users spending around $90 million on its Cash card in December, putting it on at a potentially $1 billion run rate.
That would offer another significant avenue for Square to snap up additional customers as it looks to chip away at the alternatives available for directly sending cash between users. While popularized by Venmo, many companies have gone after this space — including Apple, where you can send money over iMessage — and its massive popularity through services abroad are showing the appeal for a company like Square. The rest of the report was largely above analyst expectations, though it got a slight dig for missing a near-term forecast for its earnings.
Square is looking less and less like just the point-of-sale system that it was when it went public, though that still accounts for a significant portion of its business. But as it diversifies into new services revenue, especially with new products like Square Capital and the Cash App, it’s finding new ways to sell a growth (and stability) story to Wall Street that’s so far delivered for its shares over the past year.
For the most part, the stock went nowhere after today’s earnings report, which more or less equates to a continuing run that’s sent its shares skyrocketing in the past year. Square’s shares have risen more than 150% over the past 12 months, sending it to a valuation north of $17.8 billion — a valuation wildly higher than its initial public offering when there were many questions about whether it could be a successful business.
Here’s the final slash line:
- Q4 adjusted earnings: 8 cents per share, compared to analyst expectations of 7 cents per share.
- Q4 adjusted Revenue: $283 million, compared to Wall Street estimates of $266.3 million (up 47% year-over-year)
- Q1 Revenue forecast: $292.5 million midpoint, compared to analyst estimates of $271.9 million
- Q1 adjusted earnings forecast: 4 cents per share (midpoint), compared to analyst estimates of 8 cents per share
- FY2017 Subscription and services- based revenue (including Caviar, Cash and Square Capital: $253 million (up 95% year-over-year)
- Q4 Gross Payment Volume: $17.9 billion (up 31% year-over-year)
- Cash App users: 7 million monthly active customers
Square’s revenue continued to grow at a pretty decent clip year-over-year, and we’re starting to see some trends of it beginning to look more and more healthy even as it looks to diversify its business beyond just its point-of-sale through services like the Cash App, its meal delivery service Caviar, and Square Capital. Subscription revenue — which includes those services — accounted for $253 million in revenue, and Square Capital in the fourth quarter had 47,000 business loans totaling $305 million.
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