Agreed: Great quarter! Here’s a look at the numbers:
Total Net Revenue (millions) Q1 Q2 Q3 Q4
2015 374 310 332 374
2016 379 438 439 452
2017 462 552 585 616
2018 669 815
Adjusted Revenue (millions) Q1 Q2 Q3 Q4
2015 89 111 118 135
2016 146 171 178 192
2017 204 240 257 283
2018 307 385
Adjusted EBITDA (millions) Q1 Q2 Q3 Q4
2016 13 12 30
2017 27 36 34 41
2018 36 68
EPS (diluted) Q1 Q2 Q3 Q4
2015 (0.34) (0.20) (0.35) (0.34)
2016 (0.29) (0.08) (0.09) (0.04)
2017 (0.04) (0.04) (0.04) (0.04)
2018 (0.06) (0.01)
EPS (Adjusted) Q1 Q2 Q3 Q4
2016 (0.05) 0.02 0.01 0.05
2017 0.05 0.07 0.07 0.08
2018 0.06 0.13
GPV (billions) Q1 Q2 Q3 Q4
2015 7.1 8.8 9.5 10.2
2016 10.3 12.5 13.2 13.7
2017 13.6 16.4 17.4 17.9
2018 17.8 21.4
Subscription and Services Rev (millions) Q1 Q2 Q3 Q4
2016 35 41
2017 49 59 65 79
2018 97 134
2018 Q2 Earnings:
Adjusted Revenue Growth (millions)
2017 Q2 TTM Revenue = 814
2018 Q2 TTM Revenue = 1232
YOY TTM Adj Revenue Growth = 51.4%, previous quarter 45.9%
*Remember adjusted revenue is what you want to look at, not total net revenue, for Square
EPS Growth (GAAP - diluted)
2017 Q2 TTM Earnings = ($0.21)
2018 Q2 TTM Earnings = ($0.15)
YOY TTM EPS Growth = NA
EPS Growth (Adjusted)
2017 Q2 TTM Earnings = $0.18
2018 Q2 TTM Earnings = $0.34
YOY TTM EPS Growth = 89%, previous quarter 115%
Adjusted P/E (Check Current Price) = 66.86/0.34 = 197 (Yes, I know this is a ridiculous metric to track right now)
Other quick and dirty highlights:
Subscription and services-based revenue: $134M, +127% YOY and +38% sequentially
Square Capital: Loan volume +22% YOY, 60K business loans for $390M - Growth is slowing down here. Losses were again below 0.1% (~$18M) reflecting investments in risk management.
Instant Deposit: $4B volume this quarter. First time I remember getting a figure for this metric. Benefited from sellers and Cash App users.
Caviar: Revenue growing rapidly, doubled YOY
Take rate revenue: 2.93% - flat sequentially
Take rate profit: 1.08% - up 4 basis points YOY, down 1 basis point sequentially
Cash app: #1 domestic finance app in Q2. Have not seen an update on active users since 2017 Q4 when it was 7M.
Cash App Cash Card: In June alone, payment volume was $250B, triple that of December 2017 payment volume.
Operating expenses: Non-GAAP operating expenses were $318M, up 46% YOY, accounting for 65% of Adjusted Revenue.
Cash/cash equivalents: $1.8B, previous quarter $1.2B. Completed offering for $862.5M in convertible senior notes.
Updated 2018 Full Year Guidance
Adj. Revenue: $1.52B to $1.54B, 55% YOY growth at midpoint
Adj. EBITDA: $240M to $250M
GAAP EPS: ($0.21) to ($0.17)
Adj. EPS: $0.42 to $0.46
Quick takeaway: I need to go through the numbers more, I’ve only given them a quick glance. But expenses seem to be rising fast, but not as fast as adj. revenue. Subscription and services-based revenue category is on fire - as Bear aptly noted above. The services Square bundles in this revenue stream are company’s biggest differentiator. Large sellers are moving to Square for its ecosystem, not its payment processing services. Though, we also need to point out, SQ’s specialized point-of-sale solutions for different types of businesses – and their ease of use and installation – might be beginning to make big difference too. From the shareholder letter:
Square for Restaurants, together with Square Appointments and Square for Retail, rounds out our industry-specific point-of-sale offerings for food, services, and retail—industries that together represent approximately 85% of our GPV. With Square for Restaurants, we are now able to meet the needs of full-service restaurants (FSRs), which represent a total addressable market of over 300,000 restaurants that generate nearly $200 billion in annual gross receipts in the U.S.¹ The average annualized GPV of a Square for Restaurants seller is more than $650,000, demonstrating that the product resonates with larger sellers.
FSRs are busy and have complex needs—Square brings speed and ease of use to the restaurant point of sale, making it easy for servers to delight diners while managing tables, orders, courses, and tickets. “Back of the house” functionality, such as revenue and cost reporting, enables managers and owners to make informed decisions and run an efficient business. Speed and ease of use also extend to the onboarding and customization process: While most restaurant points of sale require assisted implementation, to date more than 60% of Square for Restaurants sellers have selfonboarded. Additionally, we are enabling restaurants to manage an omnichannel business. Square is the only company that provides both the point of sale and the food delivery and pickup platform, and we are integrating Caviar with Square for Restaurants.
Again, that’s just a quick takeaway. I’ll have more after I get a chance to go through the company’s conference call this weekend.
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