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A Look at Square’s Revenue Metrics

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Mar. 8 2019, Published 2:55 p.m. ET

Square breaks out revenue as net revenue and adjusted revenue

Unlike PayPal (PYPL), Square (SQ) reports two revenue metrics: net revenue and adjusted revenue. Square’s net revenue is similar to what other companies including its competitor PayPal report as revenue. But adjusted revenue is calculated by subtracting transaction-based costs and bitcoin costs from net revenue. Square operates a bitcoin trading platform that sits within its Cash App, the same platform used for mobile peer-to-peer money transfer.

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In the fourth quarter, Square reported net revenue of $933 million and adjusted revenue of $464 million. Square’s adjusted revenue is the revenue metric tracked on Wall Street. The reported adjusted revenue of $464 million surpassed consensus estimate of $454 million. Square is expecting to report adjusted revenue in the band of $472 million to $482 million for the current quarter ending March. The adjusted revenue guidance was in line with the consensus estimate. The company is expecting its net revenue to come between $918 million and $938 million in the current quarter.

Square posts fastest growth among major competitors

Square’s net revenue rose 51% YoY in the December quarter, outpacing 13% YoY revenue growth at PayPal and 20% YoY revenue growth at Amazon (AMZN) in the December quarter. Revenue rose 2.0% YoY at Fiserv (FISV) but fell 24% YoY at First Data (FDC) in the December quarter. Fiserv is seeking to absorb First Data in a merger transaction valued at $22 billion.

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