These are a few observations that you might miss with a cursory glance:
Adjusted EBITDA
2015: -$42 million
2016: +$46 million
2017: +138 million
You’ll note that it was up $86 million from 2015 to 2016 and up $92 million from 2016 to 2017. That’s quite a rate of growth.
Quarterly Adjusted Revenue growth over the year before
For the last four quarters it was 39%, 41%, 45% 47%. It’s been accelerating.
Subscription and Services Revenue (the good stuff)
It was up 95% for the year (and obviously becoming a larger part of adjusted revenue).
GAAP Net Income
2015: -$211 million 47% of adjusted revenue
2016: -$123 million 18% of adjusted revenue
2017: - $63 million 6% of adjusted revenue
Even GAAP is moving in the right direction. And the loss fell from 47% of adjusted revenue in 2015 to a little more than 6% in 2017.
Best to you all
Saul
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The yahoo yearly numbers seem to be different form your numbers Saul for previous years . Its says -171 as the Net income for 2016.
Where did you get your numbers from is it your own DB or is that a typo because that makes it even better.
Rajesh
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Hi Saul,
Thanks very much for this!
Quick question regarding SQ’s adjusted revenues. Because of their transaction costs, is it something we should keep an eye on? Or maybe not if it something outside of their control?
Can kind of make reading through the PR confusing.
Best,
Matt
Quick question regarding SQ’s adjusted revenues. Because of their transaction costs, is it something we should keep an eye on? Or maybe not if it something outside of their control?
Tinker,
Not Saul, but I think the adjusted revenues for SQ are the more relevant value than total revenue, as I think the delta is essentially just a pass-through that they don’t make money on.
From a few months ago, I recall someone here posting that Square requested to the SEC to be able to report the total revenue value, whereas they could have simply gone with the more relevant adjusted revenue value. This whole thing could probably confuse folks who might be trying to compare different companies on a P/S basis. Square would seem more expensive if the adjusted revenue value were used…but the adjusted revenue growth is accelerating, as Saul pointed out.
volfan84
long SQ with a 4.25% position
2 Likes
Tinker,
Make that BreakerForce not Tinker…I see the XMFBreaker and then don’t read the rest sometimes.
My bad.
No worries volfan84.
I understand the adjusted revenues, I know they are the one to look at, but my question is really more along the lines of the transaction costs. Is it something they have no control over (like an oil company and oil prices) or is it something to check in on every now and then to see if it is rising or falling as a % of adjusted revenues.
Best,
Matt
my question is really more along the lines of the transaction costs. Is it something they have no control over (like an oil company and oil prices) or is it something to check in on every now and then to see if it is rising or falling as a % of adjusted revenues.
Here is transaction cost as a percentage of transaction revenue for the last 9 quarters. It’s trended down ever so slightly. Matt Cochrane can probably explain in much more detail. This isn’t something I look at further than going, “Hmm, looks steady.”
Dec 15: 64.56%
Mar 16: 64.66%
Jun 16: 64.37%
Sep 16: 65.42%
Dec 16: 64.60%
Mar 17: 63.89%
Jun 17: 64.53%
Sep 17: 64.32%
Dec 17: 63.55%
Bear
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Here is transaction cost as a percentage of transaction revenue for the last 9 quarters. It’s trended down ever so slightly. Matt Cochrane can probably explain in much more detail. This isn’t something I look at further than going, “Hmm, looks steady.”
Thanks Bear!
Yeah, actually trending downward every year. So that is good, actually considering the growth in revenues!
Matt
The yahoo yearly numbers for Square seem to be different form your numbers Saul for previous years. It says -$171M as the GAAP Net income for 2016… that makes it even better.
You are correct, Rajesh, it is -171, and you are right in that it does make this year’s numbers an even greater improvement.
By the way, Yahoo’s computer was correct this time but I would never get important numbers from Yahoo, because you can never tell what a computer will grab. It took me just a minute to Google “Square Investor Relations” and click on “Dec 2016 investor letter”, and there it was. Get it from the company if it’s a number that matters to you.
Saul
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Quick question regarding SQ’s adjusted revenues. Because of their transaction costs, is it something we should keep an eye on? Or maybe not if it something outside of their control?
Hi Matt
The only thing I pay attention to is the adjusted revenue, which removes the pass thru stuff. Total revenue is irrelevant in this case, it seems to me.
Saul
5 Likes
Quarterly Adjusted Revenue growth over the year before
For the last four quarters it was 39%, 41%, 45% 47%. It’s been accelerating.
I really like Square but they did guide to ‘only’ a 34% increase in Adj Rev at the midpoint for 2018.
Of course they may surpass that!
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