Square's Revenue Climbs 41%

Square Inc. posted a better-than-expected 41% jump in revenue during its second quarter, narrowing its loss from a year ago, helped by sharp growth in transaction revenue.

The company also raised annual guidance for adjusted revenue and adjusted earnings before interest, taxes, depreciation and amortization. Square did warn, however, that total net revenue growth would be "impacted" by its continued decline in Starbucks transaction revenue as the coffee chain switches to a new payment processor.

Shares of Square climbed 8.4% to $11.32 after hours.

Square said it now expects adjusted revenue to be in the range of $655 million to $670 million, up from a previous range of $615 million to $635 million. Adjusted Ebitda is also expected to rise to a range of $18 million to $24 million, up from its previous range of $8 million to $14 million.

For the current quarter, Square forecast revenue between $410 million to $420 million and adjusted Ebitda between $5 million and $6 million. The company also released for the first time its expectations for total net revenue for the year between $1.63 billion and $1.67 billion. Analysts cited by Thomson Reuters forecast annual revenue of $1.6 billion, and revenue of $415 million for the third quarter.

For the latest quarter, Square reported a loss of $27.3 million, narrower than its year-earlier loss of $29.6 million. On a per-share basis, the company posted a loss of 8 cents, compared with a loss of 20 cents a year earlier.

Revenue rose 41% to $439 million.

Analysts surveyed by Thomson Reuters expected a loss of 11 cents a share on revenue of $406 million.

Transaction revenue climbed 40% to $364.9 million, while transaction revenue as a percentage of gross payment volume was 2.93%, down from 2.96%. Gross payment volume in the quarter grew 42% to $12.5 billion.

Square's hardware sales shot up to $11.1 million. That came with accelerating hardware costs going to $14 million from $6.7 million a year earlier, as Square spends to develop and distribute the new devices that work with contactless mobile-phone apps and so-called chip cards with enhanced security features.

Software and data revenue jumped to $29.7 million from $12.9 million, thanks in part to Square Capital, the company's lending arm and an expected source of profitability growth. Square Capital extended $189 million in cash advances and loans during the second quarter, a 23% increase from the first quarter.

Run by Twitter Inc. founder and Chief Executive Jack Dorsey and known for the small white payment devices it sells to small businesses, Square has been the subject of intense focus since its initial public offering late last year.

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

August 03, 2016 17:25 ET (21:25 GMT)

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