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Is Square Poised to See Revenue Growth?

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Square’s performance

Mobile payment company Square (SQ) has been reporting strong revenues. In the second quarter of fiscal 2018, net revenues of $814.9 billion grew 47.8% YoY (year-over-year), while adjusted revenues of $385.0 million exceeded Wall Street estimates of $376.6 million. Square posted adjusted earnings of $0.13 per share, beating analysts’ estimates of $0.11 in the quarter.

The growing adoption of Cash App, thanks to Cash Card, led to growth in the company’s bitcoin revenues. Caviar’s performance also improved. Gross payment volumes increased around 30.5% year-over-year in the quarter driven by growth in larger sellers. The rollout of Square for restaurants will strengthen Square’s footprints in the growing restaurant market. The completion of the acquisition of Weebly in May is expected to help Square improve its business and could aid global expansion.

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Third-quarter expectations

Square is scheduled to report its third quarter of fiscal 2018 results on November 7 and is expected to deliver robust results even though the company’s CFO, Sarah Friar, has decided to move to Nextdoor.

The company expects net revenues to lie in the range of $840 million–$860 million for the third quarter, while it predicts adjusted revenues in the range of $407 million–$412 million. Wall Street expects revenue to reach $413.6 million. Adjusted EBITDA is likely to grow in the range of $62 million–$65 million for the upcoming quarter. The company also anticipates its adjusted earnings in the range of $0.08–$0.10 per share.

Fiscal year outlook

During the second quarter, Square had raised its 2018 revenue outlook in the band of $3.19 billion–$3.22 billion, up from the recently revised guided range of $3.03 billion–$3.09 billion. On May 31, the company had raised its revenue outlook to $3.03–$3.09 billion, up from the prior guidance of $3.00–$3.06 billion for 2018 to reflect the acquisition of Weebly. Square also raised its guidance for adjusted revenues from $1.45 billion–$1.48 billion to $1.52 billion–$1.54 billion. Wall Street expects fiscal year revenue of $1.55 billion.

Adjusted EBITDA for 2018 is expected in the range of $240 million–$250 million, while adjusted earnings will likely grow in the range of $0.42 to $0.46 per share.

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