Technology Stocks

Square Inc (NYSE:SQ) Shapes Up for Test of the Fifty on Q3 Data

Square Inc (NYSE:SQ) recently announced its Q3 data, noting that top-line growth accelerated from the second quarter of 2017: Total net revenue increased 33% year over year, up from 26%, and Adjusted Revenue increased 45% year over year, up from 41%.

The company also noted that “We launched Square Register, our first all-in-one hardware offering, and we brought our contactless and chip reader to Canada and Square Stand to Australia. Our open platform strategy is working: Sellers using business systems that are integrated with Square contributed nearly 20% of third-quarter GPV. Virtual Terminal, which was built with our E-Commerce API, is our fastest product to reach $1 billion in cumulative GPV.”

Square Inc (NYSE:SQ), for a little background, bills itself as a company that provides payment and point-of-sale solutions in the United States and internationally.

The company’s commerce ecosystem includes point-of-sale software and hardware that enables sellers to turn mobile and computing devices into payment and point-of-sale solutions.

It offers hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts Europay, MasterCard, and Visa (EMV) chip cards and Near Field Communication payments; Chip card reader, which accepts EMV chip cards and enables swiped transactions of magnetic stripe cards; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; and Square Register that combines its hardware, point-of-sale software, and payments technology, as well as managed payments solutions.

The company also provides Square Point of Sale software; Cash App, which provides access to the financial system, allowing customers to electronically send, store, and spend money; Caviar, a food ordering platform for restaurants to offer food ordering, pickup and delivery, to their customers; and Square Capital that facilitates loans to sellers based on real-time payment and point-of-sale data.

Square, Inc. was founded in 2009 and is headquartered in San Francisco, California.

 

Circular Logic

As noted above, SQ recently announced its Q3 data, noting that top-line growth accelerated from the second quarter of 2017: Total net revenue increased 33% year over year, up from 26%,and Adjusted Revenue increased 45% year over year, up from 41%.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action SQ shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -6% on above-average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.

Management further noted, “In the third quarter, we saw ongoing strength in both transaction-based and subscription and services-based revenue. Top-line growth accelerated from the second quarter of 2017: Total net revenue increased 33% year over year, up from 26%, and Adjusted Revenue increased 45% year over year, up from 41%. We grew GPV 31% year over year, with particular strength in midmarket sellers. GPV from this segment grew 64% year over year and represented 20% of total GPV, up from 14% in the third quarter of 2016. Net loss of $16 million was an improvement of $16 million year over year. And Adjusted EBITDA of $34 million was an improvement of 195% year over year, driven by strong top-line growth and ongoing operating expense leverage.”

Square Inc (NYSE:SQ) managed to rope in revenues totaling $882.1M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 50.7%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.2B against $1.9B, respectively).

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