Square drops 6 percent after issuing a disappointing forecast

  • Square fell more than 6 percent in extended trading after reporting first-quarter results.
  • It matched on EPS and beat revenue estimates, but offered a forecast that fell short of analysts' estimates.
  • Square has more than doubled in value over the past 12 months.
Jack Dorsey, chief executive officer, Twitter.
David Paul Morris | Bloomberg | Getty Images
Jack Dorsey, chief executive officer, Twitter.

Square tumbled more than six percent in after-hours trading on Wednesday after issuing an earnings forecast that trailed analysts' estimates.

First-quarter earnings matched expectations, while revenue came in ahead of estimates. But investors appear to be focused on what's coming for Square.

Here are the most important numbers:

  • Revenue: $307 million vs. $293 million, as estimated, according to Thomson Reuters
  • EPS: 6 cents per share vs 6 cents per share, as estimated, according to Thomson Reuters

Square gave second-quarter revenue guidance in the range of $355 million to $360 million, above the $334 million street estimate. But earnings will be between 9 cents and 11 cents per share, below analyst estimates of 12 cents.

The payments company said it will continue to reinvest in its business, focusing on revenue growth over profit expansion.

"Given the significant market opportunity ahead of us, we will continue to reinvest in our business to drive future growth," it said in a statement.

Gross payment volume grew 31 percent to $17.8 billion for the quarter. That's consistent with the growth rate seen in the fourth quarter.

Square continued to see momentum among the larger seller segment, or those who sell more than $125,000 through Square. Larger sellers accounted for 47 percent of total users, up from 42 percent last year. Revenue from larger sellers also jumped 47 percent from the previous year.

The company also disclosed that it generated $200,000 from bitcoin. Square launched a new bitcoin transaction service through its Cash App in January.

Square shares fell 6.4 percent to $45.55 after the report. As of Wednesday's close, the stock was up 159 percent over the past 12 months.

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