Breaking News
0
有香港版
您更倾向于浏览Investing.com的中文版吗?

Square's (SQ) Q4 Earnings And Revenues Surpass Estimates

By Zacks Investment ResearchStock MarketsFeb 27, 2020 02:27AM ET
www.thechinesenews.net/analysis/squares-sq-q4-earnings-and-revenues-surpass-estimates-200511631
Square's (SQ) Q4 Earnings And Revenues Surpass Estimates
By Zacks Investment Research   |  Feb 27, 2020 02:27AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Square, Inc. (NYSE:SQ) reported fourth-quarter 2019 adjusted earnings of 23 cents per share, which beat the Zacks Consensus Estimate by 15%. The bottom line was also higher than management’s guided range of 19-21 cents per share. Further, the figure improved 64.3% on a year-over-year basis but declined 8% sequentially.

Net revenues of $1.31 billion surpassed the Zacks Consensus Estimate of $1.19 billion and came ahead of the guided range of $1.16-$1.18 billion. The top line also improved 41% from the year-ago quarter and 3.7% sequentially.

We note that the company has stopped reporting adjusted revenues from fourth-quarter 2019 onwards.

The top line was driven by Seller ecosystem that contributed $938 million to net revenues, up 26% year over year. Further, robust performance of Cash App, which generated $361 million of net revenues, up 147% year over year, was a major positive. Furthermore, strengthening momentum across Bitcoin and rapid adoption of Cash Card contributed to the results.

Additionally, continued acceleration in gross payment volume (GPV) drove the results.

Notably, the company completed the divestiture of Caviar to DoorDash at the end of October 2019. Caviar had been underperforming and consequently its sale remains a major positive.

Excluding Caviar, net revenues would have exhibited growth of 46% on a year-over-year basis.

Notably, shares of the company surged 6.9% in the pre-market trading following the better-than-expected current quarter and full-year outlook.

We believe the company’s solid momentum across sellers and strong product portfolio is likely to continue aiding performance in the near term.

Gross Payment Volume

GPV in the fourth quarter amounted to $28.64 billion beating the Zacks Consensus Estimate of $28.54 billion. Notably, the figure improved 25% year over year and 1.5% on a sequential basis.

GPV growth was driven by the company’s continued momentum across the larger sellers.

Square defines larger sellers as those that make more than $125,000 of annualized GPV and mid-market sellers as those with annualized revenues of more than $500,000.

GPV from larger sellers contributed 55% to total GPV, up 33% year over year. Further, Square witnessed strong contributions from mid-market sellers, which accounted for 27% of total GPV, up 42% from the year-ago quarter.

This can be attributed to Square’s robust product portfolio and comprehensive ecosystem that aided the company in attracting new sellers to its platform while retaining the existing ones.

Additionally, robust Square Capital aided the company’s momentum across the seller ecosystem. This was a positive. Further, expanding international presence of Square Terminal remained a tailwind.

Top-Line Details

Transaction (63.4% of net revenues): The company generated transaction revenues of $832.2 million, up 25% year over year. Revenue growth within this category can be attributed to strengthening momentum across sellers.

Subscription and services (21.4% of revenues): The company generated $281.4 million revenues from this category, surging 45% from the year-ago quarter. This improvement can be attributed to the strong performance by Cash App, which contributed $183 million to the category’s top line. Further, solid momentum across seller subscription and services products remained positive. Additionally, Square Capital, which facilitated 97,000 originations worth $ 671 million, up 42% from the year-ago quarter, contributed to the results.

Hardware (1.7% of revenues): Square generated $22.3 million of revenues from this business, up 23% year over year. The category’s top line was primarily driven by robust Square Terminal and Square Reader for contactless and chip.

Bitcoin (13.5% of revenues): The company generated $177.6 million revenues from this category, soaring 238.6% on a year-over-year basis. Square continued to benefit in the bitcoin space on the back of growing adoption of Cash App. Notably, without bitcoin revenues, Cash App revenues would have come in at $183 million.

Operating Details

Per management, gross profit as a percentage of net revenues came in 40.1%, contracting 60 basis points (bps) year over year. While Transaction, Subscription and services and Bitcoin generated profit, Hardware category reported loss during the reported quarter.

Adjusted EBITDA as a percentage of net revenues was 9%, expanding 30 bps year over year.

Operating expenses came in $509.7 million, surging 33% from prior-year quarter.

Product development expenses were $173.3 million, up 22.2% year over year, primarily owing to growing engineering, data science and design personnel costs.

General and administrative expenses were $118.2 million, up 23.8% from prior-year quarter. This was primarily owing to finance, legal and support personnel costs.

Further, sales and marketing costs were $185.2 million, up 55.2% year over year, due to increase in Cash App peer-to-peer payment transfer and Cash Card issuances.

Balance Sheet

As of Dec 31, 2019, cash and cash equivalents balance was $1.05 billion, up from $612.04 million as of Sep 30, 2019.

Short-term investments were $492.5 million in the reported quarter, down from $557.6 million in the previous quarter.

Long-term debt was $938.8 million, increasing from $928.9 million in previous quarter.

Guidance

For first-quarter 2020, Square expects net revenues between $1.34 billion and $1.36 billion. The Zacks Consensus Estimate for revenues is pegged at $1.20 billion.

Gros profit is anticipated in the range of $550-$560 million.

Adjusted earnings are expected in the range of 16-18 cents per share. The Zacks Consensus Estimate for earnings is pegged at 14 cents per share.

For 2020, Square expects total net revenues between $5.9 billion and $5.96 billion. The Zacks Consensus Estimate for net revenues is currently pegged at $5.61 billion.

Gros profit is anticipated to lie between $2.44 billion and $2.475 billion.

Adjusted earnings are projected in the range of 90-94 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 91 cents per share.

We note that mid-points of both earnings and revenue guided ranges for first-quarter 2020 and full year 2020 are above the Zacks Consensus Estimate.

Zacks Rank & Key Picks

Square currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Dropbox, Inc. (NASDAQ:DBX) , ManTech International Corp. (NASDAQ:MANT) and Alteryx, Inc. (NYSE:AYX) . While Dropbox and ManTech sport a Zacks Rank #1 (Strong Buy), Alteryx carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Dropbox, ManTech and Alteryx is currently projected to be 22.2%, 8% and 50.59, respectively.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>



ManTech International Corporation (MANT): Free Stock Analysis Report

Square, Inc. (SQ): Free Stock Analysis Report

Alteryx, Inc. (AYX): Free Stock Analysis Report

Dropbox, Inc. (DBX): Free Stock Analysis Report

Original post

Zacks Investment Research
Square's (SQ) Q4 Earnings And Revenues Surpass Estimates
 
Square's (SQ) Q4 Earnings And Revenues Surpass Estimates

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email
We have a special offer for you