Square Q1 earnings: Jack Dorsey’s payments firm beats estimates

Jack Dorsey-led payments tech firm Square (NYSE: SQ) reported a wider loss in the first quarter of 2019 due to higher costs and expenses. However, the results exceeded analysts’ expectations. The company guided second-quarter earnings below consensus estimates while maintaining its outlook for the full year 2019.

Net loss widened to $38.15 million or $0.09 per share from $23.99 million or $0.06 per share in the previous year quarter. Adjusted earnings jumped by 83% to $0.11 per share.

Total net revenues soared by 43% year-over-year to $959 million. Adjusted revenue climbed by 59% to $489 million. Excluding the acquisitions of Weebly and Zesty, total net revenues and adjusted revenue grew by 39% and 49% year-over-year, respectively.

Looking ahead into the second quarter of 2019, the company expects total net revenues in the range of $1.09 billion to $1.11 billion and adjusted earnings in the range of $0.14 to $0.16 per share. Net loss is predicted to be in the range of $0.07 to $0.05 per share. Adjusted revenue is expected to be in the range of $545 million to $555 million.

For the full year 2019, the company lifted its total net revenues outlook to the range of $4.41 billion to $4.47 billion from the prior range of $4.35 billion to $4.41 billion, and its adjusted revenue estimate to the range of $2.25 billion to $2.28 billion from the previous range of $2.22 billion to $2.25 billion. Net loss guidance is widened to the range of $0.09 to $0.05 per share from the previous range of $0.05 to $0.01 per share. The company maintained its adjusted earnings outlook of $0.74 to $0.78 per share for the full year.

For the first quarter, gross payment volume (GPV) — the company’s major operating metric — was 27% higher at $22.6 billion. Square continued to see strength from larger sellers. For the quarter, GPV from larger sellers grew 37% year-over-year and accounted for 51% of total GPV, up from 47% a year ago. GPV from mid-market sellers climbed 50% year-over-year and accounted for 24% of total GPV, up from 20% in the previous year quarter.

Also read: PayPal Q1 earnings results

Transaction-based revenue was $657 million, up 26%. Subscription and services-based revenue soared 126% to $219 million, primarily driven by Cash App, Caviar, Square Capital, and Instant Deposit for sellers.

Within Cash App, the company continued to grow the number of monthly active Cash Card customers and saw an increase in transaction frequency per customer. In the first quarter, Square Capital facilitated about 70,000 loans totaling $508 million, up 50% year-over-year.

Many businesses depend on invoices to receive payments – about $1 trillion in consumer invoices are sent annually in the US alone and most payments are made with checks. Square Invoices has more than 350,000 active sellers, with over $5 billion in GPV processed in the last twelve months.

Shares of Square ended Wednesday’s regular session up 0.99% at $73.62 on the NYSE. Following the earnings release, the stock inched down over 5% in the after-market session.

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