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Dorsey's Square reports smaller-than-expected quarterly loss

Signage for Square Inc. covers the front of the New York Stock Exchange celebrating the company's IPO November 19, 2015. REUTERS/Lucas Jackson

(Reuters) - Square Inc (SQ.N), the mobile payments company co-founded and run by Twitter Inc (TWTR.N) Chief Executive Jack Dorsey, reported a smaller-than-expected quarterly loss as it processed more payments.

The company's shares were up 5 percent in after-market trading on Wednesday.

Square, which went public in November 2015, facilitates payments between businesses and customers by using a credit card reader that turns any mobile phone into a payment terminal.

The company's net revenue rose 20.7 percent to $451.9 million in the fourth quarter ended Dec. 31 from a year earlier.

Square said gross payment volume in the quarter surged 34.3 percent to $13.7 billion, as the company continued to attract larger merchants to its platform.

Analysts had expected payment volume of $13.65 billion, according to market research firm FactSet StreetAccount.

However, Square's aggressive spending on product development and marketing has been eating into its bottom line.

Operating expenses rose 15 percent to $180.5 million in the latest quarter.

Net loss attributable to common stockholders narrowed to $15.17 million, or 4 cents per share, in the three months ended Dec. 31, from $80.5 million, or 34 cents per share, a year earlier.

Analysts on average had expected a loss of 9 cents per share, according to Thomson Reuters I/B/E/S.

Square is also focusing on its growing lending venture, Square Capital, which provides loans to merchants.

Square Capital processed $248 million in loans in the quarter, a jump of 68 percent from a year earlier.

(Reporting by Diptendu Lahiri in Bengaluru; Editing by Sriraj Kalluvila)