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How Square’s New Products Are Performing

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Mar. 28 2018, Updated 10:31 a.m. ET

Yelp sold its Caviar competitor

Square (SQ) has introduced several new products since 2014 to expand its ecosystem and complement its core offering. Products launched since 2014 include Square Capital, Caviar, and Instant Deposit. Through Square Capital, Square merchants can access loans to plug their funding shortages. Caviar is a meal ordering service that enables users to order food from their favorite restaurants and have it delivered to their doorstep. Yelp (YELP) last year sold its Caviar competitor Eat24 to GrubHub (GRUB) for more than $280 million. Square’s instant deposit service enables merchants to receive payments in their bank accounts instantly. Square charges a 1.0% fee for instant loading.

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36% of adjusted revenue came from new products

In 4Q17, products launched since 2014 accounted for 36% of Square’s adjusted revenue compared to 25% a year ago. Adjusted revenue reflects the adjustments to exclude the effect of activity with Starbucks (SBUX), which decided to stop using Square’s payments solutions. Square’s adjusted revenue increased 47% YoY (year-over-year) compared to a 43% YoY increase a year ago.

New products driving revenue growth

Square’s investment in new products can be seen driving revenue growth, as the company is able to sell more to existing customers and get new customers to sign up for its services. As Square’s ecosystem expands with new products being launched, the company is also able to improve its customer retention.

As competition heats up with PayPal (PYPL) for merchants’ payment business, there is also pressure on Square to keep its existing customers from leaving.

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