Jack Dorsey, Founder and CEO of Twitter Inc., speaking during an interview in New York, USA, Monday, May 1, 2017.
Michael Nagle | Bloomberg | Getty Images
Shares of Square fell as much as 8% Thursday after the payer provided weaker-than-expected guidance. The company continued to beat analysts' earnings and revenue expectations for the second quarter.
Here's how the company compared to what Wall Street was looking for:
- Earnings: 21
- Adjusted Revenue: $ 563 million versus $ 557.1 million, calculated by Refinitive.
Adjusted earnings before share in the third quarter were below expectations. The company projected a range of between 18 cents and 20 cents per share, compared to 22 cents analysts had expected. Square did not update the full-year guide.
"The third quarter is an important time for us to invest," Square CFO Amrita Ahuja said in a conversation with reporters.
Adjusted revenues rose to $ 563 million in the second quarter, a jump year of 46% year over year. Gross payment volume came in at $ 26.8 billion versus $ 26.9 billion Wall Street had expected. More than half of Square's payment volume came from larger sellers.
The company updated investors on its popular peer-to-peer Cash app – largely viewed as a competitor to PayPal Venmo. Excluding bitcoin trading, which launched on the app in January last year, the app revenue came in at $ 135 million for the second quarter. That's up from "insignificant" revenue when the app first launched three years ago, Ahuja said in a conversation with analysts.
Square also announced an agreement to sell the food delivery company Caviar to DoorDash for $ 410 million. The acquisition will be a mix of cash and DoorDash preferred shares and is expected to close by the end of this year. According to a securities filing, Square Caviar bought $ 44.3 million in 2014.
CEO Jack Dorsey, who also runs Twitter, said that on the move it was intended to increase Squares focus on business and consumer ecosystems.
"We have seen a lot of opportunity to strengthen both of these ecosystems, but these opportunities require more focus and more investment," Dorsey said in a conversation with analysts. "To increase focus, we decided to sell our Caviar business to DoorDash."
Squares shares had rallied this year with a 47% rally since January, compared to a 20% increase in the S&P 500.
The San Francisco-based company is best known for its credit card processor, payment hardware and growing cash app is hitting. Square also facilitates small business loans through Square Capital, and applied for a special industrial mortgage company license that allows smaller traditional finance companies to receive state-insured deposits.
During the second quarter, Square made 78,000 loans totaling $ 528 million – a 36% jump year over year.
Traders have offered the stock thanks to new product launches, moving into e-commerce opportunities and growth in the Cash app. It also launched a corporate debit card in January. On Thursday, analysts will look for revenue from some of these newer products in addition to their core business with subscriptions and services.