After Square issued weak guidance in Q4, all eyes were on the payments company to see what kind of growth it really had in Q1. Results reported today underscored some of the challenges the company is facing.
Square’s adjusted revenues were $489 million, up 59 percent year-on-year, with adjusted earnings per share of $0.11. Both figures beat analysts’ estimates. The company had been expected to report earnings per share of $0.08 and revenues of $479.63 million, respectively up 33.3 percent and 56.2 percent on a year ago. But on the other hand, they were also a signal of a continued slowdown: in the last quarter, Square’s revenues of $464 million represented a rise of 64 percent. It also posted a widening net loss of $38 million, versus $28 million last quarter and $24 million a year ago. (It noted that its “mark-to-market valuation of our Eventbrite investment” accounted for $14 million of that loss.) The company’s stock is down nearly six percent in after-hours trading. Since going public in November 2015, the company has seen strong growth and has generally beaten expectations. But Square has reported a net loss for four of the last five quarters, and so any kind of slowdown in growth poses a challenge for turning that around.
Square continued to grow business operations like Square Cash — its instant money transfer service — and its core payments business (subscription and services revenue). The latter was up 126 percent to $219 million.
But in the last quarter the company started to make some moves into one of the newer areas of fintech, cryptocurrencies, with CEO Jack Dorsey announcing that it was hiring engineers to work on open source contributions to the crypto and bitcoin ecosystems, its first effort to do so “independent of its business objectives.”
The last quarter it also started to make more moves into pure e-commerce and for people who are not physically taking payments with its dongles. That included launching the Square Online Store to complement brick-and-mortar transactions, and the Square Invoices app, for those who are not taking payments in person. More to come