Finance

Square slips after solid earnings, a week after record close

Key Points
  • Square beat analyst expectations on both adjusted revenue and adjusted earnings per share.
  • Square gross payments topped Wall Street's expectations, posting volume of $17.4 billion, or 31 percent growth year over year.
  • Shares of Square fell about 2 percent in after hours trade, a week after setting a record close.
Square beats Wall Street expectations, raises full-year guidance
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Square beats Wall Street expectations, raises full-year guidance

Square reported quarterly earnings and revenue that beat analysts' expectations on Wednesday.

Here's how the company did compared with what Wall Street expected:

  • Adjusted EPS: 7 cents vs. 5 cents expected according to Thomson Reuters.
  • Adjusted Revenue: $257 million vs. $244.9 million expected according to Thomson Reuters.
  • Gross Payment Volume: $17.4 billion vs. $17.03 billion expected according to StreetAccount.

Shares of Square fell roughly 1.3 percent in after hours trading.

The company posted year over year adjusted revenue growth of 45 percent, according to the financial report. Square has beaten Wall Street estimates five quarters in a row and shares are up nearly 200 percent in the past 12 months; the stock closed at an all-time high last Tuesday.

Gross payment volume (GPV) continued to be a critical metric for the young mobile payments company.

Square's gross payments topped Wall Street's expectations, posting volume of $17.4 billion, or 31 percent growth year over year. GPV from sellers that generate more than $125,000 in annualized GPV, increased 44 percent year over year and accounted for 48 percent of total GPV.

That compares with 32 percent year over year growth in the second quarter of 2017.

Based on its year-to-date performance, the company raised full-year adjusted earnings per share guidance to a range of 24 to 25 cents, up from a previous range of 21 to 23 cents.

The payments company now expects full-year adjusted revenue in a range between $963 million to $966 million, up from a range of $925 million to $935 million. It also expects adjusted EBITDA in a range of $132 million to $135 million.

"The main problem is that with the stock up 169 percent year to date, being priced for perfection would be an understatement," wrote Nomura analyst Dan Dolev immediately after the report. "Square's historic pattern suggested adj. EBITDA could have been as high as $39 million with guidance raise potentially reaching $137 million."

Subscription and services-based revenue was $65 million in the third quarter of 2017, up 84 percent year over year. Instant Deposit, Caviar, and Square Capital contributed the majority of subscription and services-based revenue.

Net loss was $16 million in the third quarter of 2017, compared to a net loss of $32 million in the third quarter of 2016.

The technology company, which directly competes with Venmo and peer-to-peer payments services, is a favorite for small businesses who often use Square readers to complete transactions.