Square stocks fall as Q4 earnings outlook disappoint

Square shares fell 7% after trading hours on Wednesday after the payment company released lower-than-expected earnings forecasts for the fourth quarter.

The San Francisco-based company said adjusted earnings per share would be between 12 cents and 13 cents, lower than the analysts' average forecast of 15 cents for the fourth quarter. Square has estimated that adjusted revenues, the most monitored revenue measure by analysts, will be in the range of $ 446 million to $ 451 million, slightly above the consensus forecast of $ 440 million.

Sarah Friar, Square's outgoing finance director, said the company had strong margins, but the forecast was influenced by the determination of its stake in Eventbrite, the platform of events made public during the quarter, at the market price the day she blocked her earnings. ad. Since then, Eventbrite has grown by 11%.

Ms. Friar said Square had experienced its sixth consecutive quarter of acceleration in sales, up 56% year-over-year, excluding acquisitions. "We continue to generate strong revenue growth on a large scale," she said.

Adjusted revenues, which exclude transaction and bitcoin-related products, totaled $ 431 million, up 68% from the prior year, exceeding the consensus forecast of $ 414 million. dollars of revenue for the quarter. The gross volume of payments – the amount of money processed by Square during the quarter – was $ 22.5 billion, up 29% year-over-year.

In the third quarter, adjusted earnings per share was 13 cents, higher than the average estimate of 11 cents per analyst for the quarter ended September 2018.

Net income was $ 20 million for the quarter, up from a loss of $ 16 million for the same period in 2017, thanks to the initial public offering launched by Eventbrite. Excluding the impact of this gain, Square recorded a net loss of $ 17 million.

Square shares fell 5% to 78.65 USD after trading hours. Before the announcement, the shares had recovered some of their losses since the announcement of the massive sale announced after the departure of Ms. Friar, to trade at about 4% down on the month.

Analysts said the shares fell after Friar announced her decision to step down as NextDoor's executive director, as she had played a larger role than chief financial officer, such as Jack Dorsey's number two. shares his time between Square management and the general manager of Twitter, the messaging platform. The search for a new CFO is underway.

Ms. Friar stated that Mr. Dorsey was "an extraordinary CEO for Square," which he had founded, with "a tremendous founding sensor and a keen sense of what will work intuitively for our clients." "He has a great team around him who could all run businesses, but chose to integrate them into the Square portfolio," she said.