Square Circles Up the IPO Wagons
It happened. Square has filed for its long-awaited IPO, and in doing so gave a small glimpse at the company’s path forward.
On Wednesday, the San Francisco-based electronic payments company made the announcement, via blog post, that it has filed the necessary public documents with the U.S. Securities and Exchange Commission, though the number of shares it will offer and the price range for the offering have not yet been determined. Square says it will list its common stock on the New York Stock Exchange under the symbol “SQ.”
The filing also gives the best look yet at Square’s financial situation, and its steady growth. For the first six months of 2015, the company says, its total revenue was up 51 percent, to $560.6 million, from the same period one year ago. It showed similar total net revenue in 2014, as well, taking in $850.2 million, up 54 percent from the previous year ($552 million). In 2012, the company’s net revenue was $203 million. In 2014, according to its filing, Square processed 446 million card payments from approximately 144 million payment cards.
The company’s still solidly in the red, but it narrowed its operating losses year over year, from $79.9 million in the first half of 2014 to $74.4 million in the first half of this year. Square also spent $450.8 million—more than half its revenue—on transaction costs in 2014.
And we now know a little more about how Square plans to evolve past its reliance on a plug-and-play card reader to succeed as a business moving forward. Square still generates 95 percent of its revenue from payments and point-of-sale services; financial and marketing arms, like Square Capital and Caviar, an on-demand food delivery service, make up the remainder. That balance may be about to change. “The collective power of our millions of sellers sustains a scale from which we can build valuable financial services and marketing services, creating reinforcing and virtuous cycles back to our core business of payments,” the company said, signaling an intent to leverage all that consumer data more than it has in the past.
Square’s public filing, notably, includes a note from Jack Dorsey, who recently committed to being the full-time CEO of both Square and Twitter. Dorsey wavered on committing to be Twitter’s CEO before he finally made it official last week and immediately started making changes to the company, including hundreds of layoffs. Now with Square filing for an IPO, Dorsey has the unenviable responsibility of being the CEO of two public companies.
But Dorsey says he’s fully committed to both companies, something he’s tried to make apparent with this Square filing. Dorsey says he’s given over 15 million shares, or 20 percent of his own equity, back to Square as well as the Start Small Foundation, an organization created to help small businesses. “I believe so much in the potential of this company to drive positive impact in my lifetime,” Dorsey wrote. Soon he’ll find out if the markets agree.