The payment-processing company Square has reported a loss of 14 cents per share on its $379 million revenue, where the expectation resided on the loss of only 9 cents per share, but the revenue actually managed to increase for the end of the period.
Analysts expected a total of $343,60 million in revenue. Shares stood at $13.07 and the company has updated its guidance for the upcoming quarter, arguing that they expect to adjust their raw earnings from $8 million to $14 million.
A young company in today’s market
Square has just completed its second quarter since it has gone public. Last month, it managed to overcome expectations by bringing home a $374 million in total net revenue; the stock then jumped to $15.36 and then it settled at $13.00.
According to the company’s management, the decline in the price of their shares is due to allowing free processing credits for referrals performed among sellers. But it is known that the company had to contribute towards a lawsuit settlement, in which they had to pay $50 million.
The lawsuit was filed by Robert E. Morley Jr. from Washington University in St. Louis, who argued that he was the creator of Square’s first credit card reader which could be connected to any smartphone.
Square not too long ago released a new chip reader that generated over half a million purchase orders, they have also pointed their deal with Starbucks a success as it managed to output $34 million. The company is taking the effort of proving that they are more than just a fancy new way to process transactions.
Why Square? Because we're way more than just the little white reader. https://t.co/moIr7sGbDO
— Square (@Square) May 5, 2016
They have also released the Square API so the payment platform can be integrated with different applications and on a wider array of software. Square is also aiming towards the loaning business, putting pressure on credit card companies and other digital payment services such as PayPal and Apple.
As the company is nearing the end of its lock-down period, employees will have the permission to sell their shares, which will allow for more stock options to be available when the period expires. The expected adjusted revenue stands at $156 million for the current quarter while the annual revenue projection lies at $635 million.
These numbers do not take into account sales and transaction costs performed on Starbucks, whereas this deal is set to expire in 2016’s third quarter.