Square stock rises on bigger deals

Shares in payments upstart Square have surged after the company pushed revenues above expectations on the basis of more sales to larger retailers.

The company's stock moved up 10% in after-hours trading after it posted a Q1 loss of 4 cents per share on revenue of $551.51 million, ahead of market guidance for a 5 cents a share beating on lower earnings.

A 33% jump in gross payments processing to $16.4 billion was largely attributed to Square's success in courting larger retailers, Payments from merchants processing more than $500,000 in transactions annually grew 61% compared to the comparable quarter and accounted for 19% of all transactions processed, up from 14% a year ago.

The company's loan decisioning platform, which crunches retailer data to offer lending products to business owners is credited with unlocking a lucrative new revenue stream for the company, which saw a 68% rise in loans year-on-year to $318 million.

"We're serving merchants who typically would go to their friends and family to get the sizable loan," Square chief Jack Dorsey told analysts in a conference call. "We think that's a massive opportunity and no one else is really going after it, especially with all the data that we have so we can make really calculated judgments and decisions around it."

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Comments: (1)

A Finextra member 03 August, 2017, 19:56

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Let's keep this in perspective...these "larger merchants" are not corporate and com'l banking customers, but would be Small business owners, who are often serviced in the "retail bank." Established med-sized businesses do not need to reach out to friends and family for loans; ("We're serving merchants who typically would go to their friends and family to get the sizable loan," Square chief Jack Dorsey told analysts in a conference call. "We think that's a massive opportunity and no one else is really going after it, especially with all the data that we have so we can make really calculated judgments and decisions around it.") But, there is growth here and big opportunity, IF Square can do it cost effectively and properly manage the risk. We'll see.