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Square, a leading payments company, exceeded expectations in its third quarter on Wednesday, but equities dropped amid worries over the outlook for the fourth quarter and the impact of competition on growth.
Square
SQ + 6.96%
reported adjusted revenues of $ 431 million, net of transaction costs or bitcoin transactions, exceeding $ 414 million projected by analysts surveyed by FactSet. The company also generated adjusted earnings per share of 13 cents, higher than the consensus estimate of 11 cents.
But as Square increased its revenue forecast for the full year and tightened its earnings guidance, the company's fourth quarter outlook was a little weak. Square forecasted 12 to 13 cents per share of current earnings, while the FactSet consensus predicted 15.
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MoffettNathanson analyst Lisa Ellis told MarketWatch that the company's disappointing turnover and gross volume indicators based on the company's transactions did not exceed 30%.
"It's a very slight deceleration," she said in an email. "Investors will be worried because Square is starting to compete with imitators, clovers, etc."
Square's shares fell 3.6% after trading hours on Wednesday, after gaining 7% in the regular session.
Ellis also indicated that Square had recorded larger-than-expected impacts from its acquisitions of Weebly and Zesty, which means that Square's organic pace is actually lower than the figures reported show.
Square released its first GAAP earnings in the third quarter, but the company said it was largely due to its investment in Eventbrite Inc.
EB + 4.43%
which was made public during the quarter. The Company is now required to report quarterly market value figures for this investment, which would have resulted in a net loss in the last quarter, with no impact on Eventbrite.
The company continued to increase its share of sales from sellers with a gross annual payment volume of more than $ 125,000, which reached 52% in the third quarter, up 50% in the second quarter.
Following the release, Sarah Friar, Chief Financial Officer, said there were a number of factors driving Square's momentum with large companies, including the ability to self-integrate and the complexity of managing multiple products. payment. She added that the company's new Terminal product, which aims to replace the small, black PIN-boxes traditionally found on store counters, will enhance the company's appeal to large merchants.
See more: Square launches a new product for merchants who do not abandon the terminals
The general manager, Jack Dorsey, said at the Square results call that he was seeing a "huge" market in general for the terminals. "One of the things our salespeople are telling us directly is that they do not want to use their personal device to accept credit cards, which gives them the opportunity to make sure they do not have to worry about compromise on this, "he said. I said.
Friar will leave the company at the end of the year to become CEO of Nextdoor Inc., a social network for neighborhoods, and Dorsey told investors during the teleconference that his "No. 1 goal of the company ", is to find a replacement. "We will not share a calendar, but we are working urgently," he said.
Square shares rose 125% in the last 12 months, closing Wednesday, versus 8.6% for the S & P 500
SPX, + 2.12%
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