Square's Fourth Quarter Highlights More Strong Growth
Financial technology company Square (NYSE: SQ) just posted another quarter of strong growth. Revenue surged thanks to higher gross payment volume and soaring subscription and services-based revenue. The fourth-quarter update captured the company's broad-based momentum across its offerings and its continued traction with larger sellers.
Here's a closer look at the results.
Square's fourth-quarter results: The raw numbers
What happened with Square this quarter?
- Square's revenue rose 51% year over year, in line with the 51% growth it saw in Q3.
- Adjusted revenue jumped 64% year over year, a deceleration from 68% growth in Q3.
- Excluding acquisitions of Weebly and Zesty, adjusted revenue increased 53% year over year.
- Square's net loss was $28 million, or $12 million when excluding the impact of a mark-to-market valuation of the company's Eventbrite investment.
- Adjusted EPS was $0.14, up from $0.08 in the year-ago quarter.
- Gross payment volume increased 28% year over year to $23 billion.
- Subscription and services-based revenue rose 144% year over year to $194 million.
- Square Capital facilitated $472 million worth of loans, up 55% year over year.
What management had to say
With three product launches in recent months, including a new payroll app, a software development kit for accepting in-app payments, and a business card, management took time in its fourth-quarter shareholder letter to highlight its ability to turn new products into meaningful parts of its business over time.
Square also highlighted strong growth in its consumer-facing Cash App, which had over 15 million monthly active customers in December of last year -- more than double what it had in December 2017.
Finally, management importantly pointed out the company's continued momentum with what it calls "larger sellers," or sellers that generate over $125,000 in annualized gross payment volume. "In the fourth quarter of 2018, GPV from this group grew 39% year over year and accounted for 51% of total GPV, up from 47% in the fourth quarter of 2017," the company said.
Looking forward
For the first quarter, adjusted revenue forecast is for between $472 million and $482 million, representing 55% year-over-year growth based on the midpoint of this guidance range. For the full year, adjusted revenue is expected to land between $2.22 billion and $2.25 billion, up from 2018's $1.59 billion.
Management expects its full-year adjusted earnings per share to be between $0.74 and $0.78, up from $0.47 in 2018 and $0.27 in 2017.
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Daniel Sparks owns shares of Square. The Motley Fool owns shares of and recommends Square. The Motley Fool has a disclosure policy.