Services Portfolio Expansion to Drive Square (SQ) Q1 Earnings
Square, Inc. SQ is set to report first-quarter 2018 results on May 2.
The company’s focus on expansion of financial services offering is anticipated to be a major growth driver as the demand for payments processing and mobile-commerce services among small businesses is on the rise globally.
Square’s Cash App, which ensures peer-to-peer payments, trade of bitcoins, receiving paychecks and store money, is likely to drive the adoption rate. This will boost the customer base of the company, which will further aid revenue generation.
The company witnessed robust performance of this app in the last reported quarter in which its monthly active customer base exceeded seven million.
Further, Cash Card is a Visa debit card offered by Square, which allows users to pay merchants and retailers with the funds stored in their Cash app. This will continue to drive the user base of the company.
In December 2017, the company recorded an annual run rate beyond $1 billion, which was attributed to strong customer spending. Reportedly, customers spent over $90 million.
Moreover, Square’s efforts to build more powerful ecosystem for payment services will continue to enhance its product and services portfolio and this is likely to drive the top-line growth of the company.
Introduction of Chip card reader and Interac acceptance in Canada, which enables sellers to accept contactless payments remain positive for subscription growth of the company’s products in the country.
Also, Square Stand for contactless and chip in Australia will continue to boost customer base in the country.
These efforts bode well for the product offering expansion globally and reap benefits from all the regions.
Click here to know how the company’s overall first-quarter performance is expected to be.
Growing GPV to Drive Profitability
The increasing percentage of higher-margin mid-market and larger sellers in Gross Payment Volume (“GPV”) is likely to expand profitability.
Square defines larger sellers as those who make more than $125,000 of annualized GPV and midmarket sellers as those who make more than $500,000 of annualized revenues.
In the fourth quarter, the company processed $17.9 billion of GPV, which went up 31% year over year and 2.8% on a sequential basis.
Square, Inc. Price and EPS Surprise
Square, Inc. Price and EPS Surprise | Square, Inc. Quote
Zacks Rank & Other Stocks to Consider
Square currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader technology sector are Nice NICE, Micron Technology MU and Agilent Technologies A. While Nice and Micron Technology sport a Zacks Rank #1 (Strong Buy), Agilent Technologies carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Nice, Micron Technology and Agilent Technologies is pegged at 12.5%, 10% and 10.75%, respectively.
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