Square Reports Earnings and Beats on Revenue

03/10/2016 9:20 am EST

Focus: STOCKS

Michael Berger

President & Founder, Technical420.com

Michael Berger of Technical420.com highlights Square, Inc's. fourth quarter earnings report where the company reported better than expected revenue due to the continued demand for its various products and services.

After reporting fourth quarter earnings yesterday, Square, Inc. (SQ), one of the most highly anticipated initial public offerings of 2015, is back in the spotlight.

Although SQ reported ($0.34) in earnings per share which came in below the consensus estimate of ($0.13), the company generated $374.36 million in revenue which came in above the consensus estimate of $340.60 million.

Software and Data Products Show Strong Growth

During the quarter, SQ not only saw strong growth in its core payments business but also across its software and data products. The growth in SQ's software and data products was one of the primary drivers behind the top-line beat as the company generated $22 million in revenue from these products, an increase of 52% from the previous quarter.
This continued and sustained growth reflects the strength of SQ's base of 2+ million active sellers and its ability to create new revenue streams. SQ plans to continue investing so as to pave the way for long-term scale and profitability.

Levered to a Transforming Financial Service Industry

SQ is benefiting from the transformation of the financial services industry as it has become increasingly more digital and mobile.

SQ is levered to the growth of new technologies such as EMV (chip cards) and NFC (contactless payments). The company has been a leader in this space and are in an ideal position to capitalize on this industry wide shift.

Introducing New Customer Friendly Solutions

As of the end of the fourth quarter, SQ had already received over 350,000 pre-orders for its new contactless, chip reading solution. The new reader is customer friendly as it lets Square sellers accept nearly every form of payment.

The reader makes it easy for sellers to accept EMV chip cards, as well as new and faster forms of payment such as Apple Pay and Android Pay. We expect this product to serve as a catalyst for the company as it creates another revenue stream which is expected to see continued growth. SQ plans to start selling the product on Amazon and in Staples, Best Buy, and Target stores in the spring.

Outlook is Bright

SQ has stated that its sellers are its number one priority and the company continues to make this evident through new product introductions. The company is focused on giving its sellers accessible and affordable tools to grow their businesses and we expect to see continued growth for years to come.

Michael Berger, Founder and President, Technical420.com

Related Articles on STOCKS

Keyword Image
11 Reasons to Buy Microsoft
9 hours ago

For our latest recommendation, we revisit one of the world's most prominent technology companies, Mi...

Keyword Image
A Trio of Top-Tier Biotechs
9 hours ago

We hold three biotech stocks in our growth portfolio — Biogen (BIIB), Bioverativ (BIVV), and R...

Keyword Image
Saudis, Oil and ETFs
9 hours ago

Under the guise of clamping down on “widespread corruption,” Prince Mohammed bin Salman ...