Earnings

Square posts quarterly loss, but raises guidance

Jack Dorsey: Core business really strong
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Jack Dorsey: Core business really strong

Square posted another loss after the bell Thursday in its second quarterly report since going public.

The payment processing company reported an adjusted quarterly loss of 14 cents a share on $379 million in revenue. Analysts had expected Square to post a loss of 9 cents a share on $344 million in revenue, according to a consensus estimate from Thomson Reuters.

Shares of Square were choppy after the report. They were last down more than 13 percent.

The company also raised its 2016 guidance and now expects $8 million to $14 million in adjusted full-year earnings before interest, taxes, depreciation and amortization. Square previously saw 2016 EBITDA of $6 million to $12 million.

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In its Thursday statement, Square said it continued to see momentum for its contactless and chip reader as it promoted the products through "unique partnerships."

"The core business is really strong. The small-business economy and moving upmarket towards medium-sized businesses has always been our sweet spot and we are seeing a lot more growth in the midmarket and up-market opportunity," CEO Jack Dorsey said Thursday on CNBC's "Closing Bell."

The 180-day lockup period on Square stock expires May 16. As of the end of the March quarter, the company estimated that there were 335 million common shares outstanding and that roughly "64 million stock options and warrants covered by the lockup will be exercisable at the expiration." Dorsey said the company isn't worried and is "really confident in [its] investors and their confidence in the business."

"This is another one-time event that every single company goes through and what we're focused on is making sure that we continue to focus on what we do which is build our tools so that people continue to value it and our sell base grows and they grow as well," Dorsey said.

Square clean top line beat
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Square clean top line beat

On a GAAP basis, Square had a first-quarter loss of 29 cents a share, compared with a loss 33 cents a year earlier.

The company reported that its operating expenses were up 72 percent year over year, coming in at $207 million in the first quarter. The majority of these operating expenses, however, can be attributed to share-based compensation expense and a nonrecurring litigation accrual. Excluding these items, operating expenses were up 18 percent year over year.

Square also said product development costs were up $65 million in the quarter, which it said primarily reflected a "growth in personnel costs, including share-based compensation, as well as tooling costs associated with the development of [its] next-generation hardware products."

In March, Square posted its first quarterly results. Despite reporting a larger-than-expected loss, the payments processing company topped Wall Street sales expectations as it saw growth in GPV. Square said its GPV was up 47 percent from last year, rising to $10.2 billion.

For the current quarter, the mobile payment company also reported that its first-quarter gross payment volume came in at $10.3 billion, up 45 percent year over year.

Square went public in November, opening at $11.20 a share. The company had initially priced at $9 a share, which was below company expectations of $11 to $13 per share.

Correction: This story has been corrected to show that as of the quarter ending on March 31, Square had 335 million common shares outstanding. The figure was misstated in an earlier version.