Square Inc. (NYSE: SQ) released their Q4 2019 earnings, beating analyst estimates on strong growth and profitability.
The mobile payment and merchant services company reports total net revenues as $1.31 billion for the quarter but the more important metric is adjusted revenues which eliminates transaction-based costs and bitcoin costs. Square’s adjusted revenues for the quarter were reported as $619 million which beat analyst expectations of $594 million.
Adjusted revenues were up 34% year over year and continued the trend of slowing growth from the 60%-70% odd clip the company was growing last year.
One of the other closely watched metrics for the company is the gross payment volumes (GPV), which helps investors judge growth of the platform overall for financial transactions. With rivals such as PayPal (NASDAQ: PYPL), Visa (NYSE: V), Mastercard (NYSE: MA), and Stripe (private) all ramping up their efforts and acquisitions in the payment ecosystem, seeing Square maintain strong growth in payment volumes will be key for investors to judge the company’s ability to compete.
During the quarter Square reported gross payment volumes of $28.6 billion, growth of 25% over the same period the previous year.
From a profitability perspective Square’s earnings report also didn’t disappoint. The company reported gross margins of 39% and net income of $0.23 per share. Analysts had been forecasting the company to make $0.21 per share on the bottom line so the beat is likely to boost the stock.
Square also provided investors guidance for its expectations of the upcoming fiscal year. The company expects adjusted revenues of between $2.8 billion to $2.84 billion for 2020 which is very close to consensus estimates of $2.84 billion. Company guidance for earnings were between $0.90 and $0.94 per share over the full year 2020 which was also close to Wall Street expectations of $0.95 per share.
Square stock was off to a great start in 2019 until a troublesome earnings report in the summer caused the stock to drop. After the stock grew by more than 150% and 60% in 2017 and 2018, respectively, the stock was up only 11% over the course of 2019. However, Square stock has been on better footing as of late as it has grown in value by over 23% in 2020 thus far but dropped 0.5% during trading over the day prior to releasing earnings results.
After releasing earnings Square stock was up 5.5% in after market trading as of the time of publishing.
Full Disclosure: The author owns shares of Square.
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