Square loss widens as operating expenses surge
Payments provider Square Inc. posted a wider-than-expected loss for its first quarter, as its operating expenses surged 72%.
Shares dropped 5.4% after hours.
In its second presentation as a public company, the 7-year-old San Francisco company raised its revenue guidance for the year. The company now expects $615 million to $635 million, when excluding the effect of its payment processing agreement with Starbucks Corp. that expires in the third quarter. The company previously guided for $600 million to $620 million.
Run by Twitter Inc. founder and Chief Executive Jack Dorsey and known for the small white payment devices it sells to small businesses, Square has been the subject of intense focus since its initial public offering late last year amid a growing tide of pessimism about Silicon Valley as startups deal with lower valuations and skittish markets.
Square’s offering priced below expectations, but shares soared on their first day of trading. Through Thursday’s close at $13.05, shares are up 45% from November’s IPO price of $9.
Gross payment volume in the quarter grew 45% to $10.3 billion.
Transaction revenue climbed 42% to $300 million, while transaction revenue as a percentage of gross payment volume was 2.92%, down from 2.97%.
In all for the quarter, Square reported a loss of $96.8 million, wider than its year-earlier loss of $48 million. On a per-share basis, the company posted a loss of 29 cents a share, compared with a loss of 33 cents a year earlier.
Revenue surged 51% to $379.3 million, and climbed 64% to $146 million when excluding the impact from Starbucks.
Analysts surveyed by Thomson Reuters expected a loss of nine cents a share on $344 million in revenue.
Operating expenses grew to $207 million, as product development expenses climbed 63%, reflecting higher personnel costs.
Starbucks said in late 2014 that it would no longer allow customers to order and pay for coffee using Square on their mobile phones, in part due to the popularity of Starbucks’ own payments app. That followed Square’s announcement it was discontinuing its mobile wallet app in favor of another to let consumers place orders in advance of showing up at stores.
by Ezequiel Minaya