Fintech company Square has released its first quarterly results since going public in November, beating expectations with a total rise in revenue of almost 50 percent. While the company is not yet profitable (posting a loss of $80.5m in the fourth quarter), improved revenue across all categories of its business has increased confidence in Square’s ability to move beyond mobile payments and into business support systems.
In 2015, Square Capital issued over $400m in cash advances
Started by Twitter cofounder Jack Dorsey in 2009, Square specialises in mobile payments through small attachments to smartphones and tablets. While this has remained the core of its business, Square has been offering more varied financial services. Its system has a low charge per transaction, but users are encouraged to use its add-on services such as inventory management, sales data analysis and loans. In 2015, Square Capital issued over $400m in cash advances.
The company has announced it expects to be profitable by the end of the year thanks to increased support from larger merchants. According to its website, “over 40 percent of Square’s payment volume comes from sellers who process over $125,000 a year, up from less than 25 percent in 2012”.
Square’s first earnings release has been seen as a major test of the company’s viability. The value of its shares dropped over 30 percent in January, briefly reaching a level below the IPO price before rebounding in February. Doubts centre on Square’s ability to compete with companies such as PayPal and Apple as they move into the mobile transaction business. Confidence has also been low in Dorsey as he juggles his roles as CEO of both Twitter and Square. He was reappointed CEO of Twitter in October, replacing Dick Costolo as the social media network struggled to grow its user base.