There was some good news for tech entrepreneur Jack Dorsey on Wednesday, for a change: Square, the payment company he founded, reported robust growth, with total revenue up by nearly half to $374m.
The digital payments firm entered the market in November at a price so low it shaved off more than half of the company’s value, and it fell precipitously throughout January.
In February, however, Square stock has climbed steadily, and now the company’s report of strengthening fundamentals seems to have momentarily silenced naysayers in the market. Shares were up more than 2% in after-hours trading.
The company may be able to capitalize on changes in the financial services world, especially as more companies need to enable new methods of payment beyond the simple magnetic-strip scanners. “The financial services industry as a whole is now undergoing a significant transformation,” wrote company executives. “Commerce is becoming increasingly digital and mobile, new technologies such as EMV (chip cards) and NFC (contactless payments) are taking hold, and consumer habits are changing fast.”
Square is tracking that transformation: during December, more than half the cards used for Square payments used EMV chips, up from 12% in January.
The firm’s fourth-quarter results included some data for the full fiscal year as well, indicating that the company was getting closer to breaking even: Square said it had lost only $41m during 2015, compared to a loss of $68m the previous year.
“We have momentum in our business and will continue investing to pave the way for long-term scale and profitability,” wrote Sarah Friar, the company’s CFO, and founder and CEO Jack Dorsey, who is also CEO of troubled microblogging service Twitter.
The company said it would not renew its partnership with Starbucks, which sucked $71m out of the fledgling electronic payments company according to documents filed for its initial public offering last year.
“We do not intend to renew our payment processing agreement with Starbucks when it expires in the third quarter of 2016, and we recently amended the agreement to eliminate the exclusivity provision in order to permit Starbucks to begin transitioning to another payment processor starting October 1, 2015,” wrote Square executives in a letter to shareholders about the quarter’s results.
This article was written by Sam Thielman in New York, for theguardian.com on Wednesday 9th March 2016 22.34 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010