Shares are down about 3% in AH trading. From the shareholder letter:
In the third quarter of 2018, we continued to drive strong revenue growth at scale. Total net revenue was $882 million, up 51% year over year, and Adjusted Revenue was $431 million, up 68% year over year. Excluding the acquisitions of Weebly and Zesty, total net revenue and Adjusted Revenue grew 46% and 56% year over year, respectively, which represents an acceleration compared to the prior quarter. Gross Payment Volume (GPV) was $22.5 billion, up 29% year over year.
Read the whole thing at https://s21.q4cdn.com/114365585/files/doc_financials/2018/20…
Here’s a quick look at the numbers, have only skimmed the letter:
Total Net Revenue (millions) Q1 Q2 Q3 Q4 2014 250 2015 374 310 332 374 2016 379 438 439 452 2017 462 552 585 616 2018 669 815 882 Adjusted Revenue (millions) Q1 Q2 Q3 Q4 2014 82 2015 89 111 118 135 2016 146 171 178 192 2017 204 240 257 283 2018 307 385 431 Adjusted EBITDA (millions) Q1 Q2 Q3 Q4 2016 13 12 30 2017 27 36 34 41 2018 36 68 71 EPS (diluted) Q1 Q2 Q3 Q4 2014 (0.25) 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) 0.04 EPS (Adjusted) Q1 Q2 Q3 Q4 2015 (0.05) 2016 (0.05) 0.02 0.01 0.05 2017 0.05 0.07 0.07 0.08 2018 0.06 0.13 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 22.5 Subscription and Services Rev (millions) Q1 Q2 Q3 Q4 2016 35 41 2017 49 59 65 79 2018 97 134 166
2018 Q3 Earnings:
Adjusted Revenue Growth (millions)
2017 Q3 TTM Revenue = $893
2018 Q3 TTM Revenue = $1,406
YOY TTM Adj Revenue Growth =57.4%, previous quarter 51.4%
*Remember adjusted revenue is what you want to look at, not total net revenue, for Square
EPS Growth (Adjusted)
2017 Q3 TTM Earnings = $0.24
2018 Q3 TTM Earnings = $0.40
YOY TTM EPS Growth = 67%, previous quarter 89%
Other quick and dirty highlights:
Subscription and services-based revenue: $166M, +155% YOY; excluding Weebly and Zesty acquisitions it was $141M, +117% YOY
Square Capital: Loan volume +34% YOY, 62K business loans for $405M
Transaction/loan losses were again below 0.1% (~$24M) reflecting investments in risk management.
Instant Deposit: No figure given this quarter. In Q2, Instant Deposit volume was approx… $4B.
Caviar: No indication given
Take rate revenue: 2.91% - down 2 basis points sequentially
Take rate profit: 1.07% - down 1 basis point sequentially
Cash app: No new info
Cash App Cash Card: One of primary drivers of subscription and services-based revenue growth
Operating expenses: Non-GAAP operating expenses were $363M, up 55% YOY, accounting for 67% of Adjusted Revenue.
Cash/cash equivalents: $1.8B, previous quarter $1.8B.
Most of the letter focuses on how Square is appealing to more sellers with:
*Square Terminal, a portable, all-in-one payments device to replace traditional keypad terminals.
Square Terminal expands our addressable market to serve new sellers and new use cases. It is ideal for sellers with crowded countertops, such as doctors’ offices, dry cleaners, and the much-beloved bodegas (i.e., corner stores). The compact size and portability of Square Terminal enable the seller to also meet the buyer beyond the countertop— customers on the sales floor in a distributed retail environment, patients in a physician’s treatment room, or diners at their table in a restaurant. We see a significant market opportunity for Square Terminal, as there are nearly two million standalone payment terminal devices in the U.S. alone.
*Square Reader SDK - Enables sellers to use Square hardware with customized point of sale solutions
Developers use Square Reader SDK to integrate Square hardware with a seller’s custom point of sale, allowing them to build unique checkout experiences such as self-ordering kiosks and line-busting apps. This SDK enables developers to build a seamless payment experience with no switching between the seller’s point of sale and Square’s payment flow.
*Square Installment - purchase financing product, sellers can offer their buyers the option to split large purchases into fixed monthly payments.
Square Installments is a strong fit for many of our sellers and their buyers. In the third quarter of 2018, Square processed over 10 million transactions greater than $250 in the U.S. alone. These purchases are often for products that have a long, useful life, such as furniture, auto repairs, or home renovations, and many buyers seek payment flexibility: 76% of individuals believe financing options help them effectively manage their budget.³ Buyers apply online for Square Installments in just a few steps by providing identity and financial information, and see the total cost of borrowing before completing the purchase. Buyers receive a response in real time, and once approved, they can use Installments anywhere the seller accepts payments with Square: in Square Point of Sale, Square Invoices, or on their website.
That’s all I’ve got for now. Will report back once I’ve gone through the conference call.
Intuit (INTU), MasterCard (MA), PayPal (PYPL), and Square (SQ) Ticker Guide
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