Square ($SQ) today reported its Q1 2016 earnings of $379 million in revenue, up 51 percent annually, and had gross payment volume (GPV) of $10.3 billion, up 45 percent for the same time last year. Net loss in the company, however, was $96.7 million for the quarter, compared to $47.98 million at the same time in 2015.
Wall Street analysts had been expecting the company to bring in revenue of $343.60 million, so clearly Square exceeded those estimates. Shares in the company fell 2.39 percent to end at $13.07 for the day, and is now tanking 14.94 percent in after-hours trading, likely due to that net loss.
In what may have been a temporary boost to investors, Square revealed updated guidance for the second quarter, saying that it expects to break even then, and moved its full 2016 adjusted EBITDA from $8 million to $14 million.
Much of its revenue came from transactions bringing in $300 million, which represented 2.92 percent of total GPV for the quarter, a decrease of 0.05 percent from the prior year. Square attributed the decline to “free processing credits for seller-to-seller referrals” and other seller benefits. Software and data product brought in $24 million for the quarter, an increase of 197 percent from Q1 2015, with the gain coming from Square Capital and Caviar.
Hardware revenue rose 634 percent annually this quarter to contribute $16 million to Square’s financials. Finally, as Starbucks nears the end of its deal with the commerce company, it generated $39 million. Square even saw a gross profit of $2 million from the relationship this quarter because of renegotiated processing rates.
This is the second quarter Square has reported on since going public. In March, it surpassed expectations with $374 million in total net revenue and gross payment volume of $10.2 billion. Investors liked what they heard then, and the company’s stock soared to a high of $15.36 before dropping to around $13.00.
Since the release of its new contactless and chip reader, Square said that it has received “nearly half a million” orders for the devices, and that in March 2016, 61 percent of such readers’ accepted transactions involved EMV-enabled cards, up 8 percent from December. But to put it into perspective: According to Visa research, only 20 percent of all U.S. merchants have EMV-enabled terminals.
Square reports that it has provided $153 million to more than 23,000 businesses through its Square Capital program. This is $13 million more than last quarter, and the overall amount is said to have “tripled year over year.” The company blamed the 4 percent sequential growth rate on “delayed signing of two new investors.”
In the past quarter, Square has been working to show investors, businesses, and buyers that it has more up its sleeve than just a fancy card reader and register. Perhaps the most significant development was the unveiling of a new platform called Build with Square, which lets developers integrate apps with Square’s APIs so merchants can continue to grow their business along with Square.
Something else that’s worth noting: We’re just days away from the expiration of Square’s lock-up period, when employees will be able to sell their shares in the company. In its release, the company estimated that “approximately 64 million stock options and warrants covered by the lockup will be exercisable at the expiration” out of a total 335 million common shares outstanding.