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About Square, Inc.

If your neighborhood bakery now accepts credit cards as well as cash, you might have Square Inc. to thank for the convenience. Square provides hardware (a square-shaped card reader) and software to merchants and other service providers that enable them to accept credit card payments. The card readers attach to smartphones and tablets, providing a business with a low-cost point of sale system. Square's software handles the backend of the transaction, making sure accounts square up between the merchant, the card company, the bank, and the consumer. Square charges a per-transaction fee (its standard rate is 2.75%). An early provider of mobile payment equipment and software, Square faces competition from established financial and technology companies.


Square raised $243 million in its initial public offering of stock in November 2015. The company intends to use the proceeds for working capital, general corporate purposes and, possibly, acquisitions. The company's offering price was $9 a share, which was less than investors had expected. It closed out 2015 at around $12.75.


Square extends its platform by offering products and services such as Square Cash, a peer-to-peer payment service using debit cards for businesses and consumers; Square Payroll, which helps merchants track employees' hours and wages; and Square Capital, which extends credit to Square customers. Square also has services that help its customers engage with their customers.

Square generates 85% of revenue from transactions fees charged to its general customers. Transaction fees for Starbucks account for about 10%. Some 5% of revenue comes from software and data products and hardware.

Geographic Reach

Square began generating revenue outside the US in 2014 and international sales, in Canada and Japan, accounted for just 3% of revenue in for the nine months of 2015 through September.

Sales and Marketing

Square has pitched itself as the company that enables small businesses to accept almost any kind of payment and that seems to work. Small businesses account for most of its sales. Its customers with less than $125,000 in annual revenue account for 62% of sales. Those with revenue between $125,000 and $500,000 generate 27% while those with more than $500,000 sales account for 11%. The mix has changed over Square's history with the less than $125,000 segment declining from 88% of Square's revenue in 2011.

The company advertises through channels that include online, mobile, email, direct mail, and direct response TV. Square's sales and marketing expenses include the costs of making and distributing the Square Reader for magnetic stripe cards. The company offers the reader free on its website. Customers who buy card readers can get a full rebate on the price.

Financial Performance

Square has yet to post a profit as it continues to spend on product development and sales and marketing in order to gain market share.

The company's revenue grew about 50% to $893 million for the nine months through September 2015 compared to the same period of 2014 when revenue was about $599 million. Revenue was $855 million for all of 2014. (Square reported comparable nine-month financials for 2014 and 2015 in its filings for the IPO). Transaction revenue paced the company's revenue rise, jumping 50% in the 2015 period compared to 2014. Revenue from Starbucks transactions increased 10% in the 2015 period from 2014.

Square lost $131.5 million in the first nine months of 2014 compared to a loss of $117 million in the same period of 2014. The company posted a $153 million loss for all of 2014, compared to a loss of $104 million in 2013. Product development costs rose 35% in 2015 from 2014 and sales and marketing costs were 30% higher.

Square generated $2.9 million cash flow from operations for the nine months of 2015 compared to a cash outflow of $87.5 million through September 2014.


From the foundation of its mobile payments customers (which Square calls 'sellers'), Square is building an ecosystem of financial and management systems directed mostly at small businesses, the ones who have neither the time, money, nor inclination to install and learn big software systems. The company has added products that help analyze sales, manage a business, track payroll, make appointments, and engage with customers. Square's products work with payment options such as Apple Pay and Android Pay as with near-field communications and card chip systems. It also encourages the creation of apps for its platform by third-party developers.

Square has added Caviar, a system for handles logistics for deliveries from restaurants, in an attempt to move beyond the financial services side of its business.

Since it was founded in 2009 Square has attracted millions of small businesses to its platform. It says that about 50% of its customers came to it, which underscores the value of its brand.

While the company has grown quickly, it has drawn a number of competitors as the market for mobile payments has grown. Some of them such as Visa, MasterCard, Google (with Google Wallet), Intuit and PayPal are more established companies with deeper resources. Others such as PayAnywhere and ShopKeep offer similar services leavened with differentiation. Amazon, which launched a Square competitor in 2014, signaled in late 2015 that it would pull the plug on the service.

Square's agreement to provide point-of-sale services for Starbucks was coming to an end in late 2015, taking a chunk out of Square's revenue. Starbucks transactions accounted for 14% of Square's revenue in 2014. On the other hand, the Starbucks deal was been a money loser for Square. The company spent about $20 million more on the Starbucks deal than it took in 2015.

Another possible issue for Square is that its CEO, Jack Dorsey also is the CEO of Twitter. He was a co-founder of Twitter and had previously served as its CEO. It founded Square and has been its only CEO. It remains to be seen how the arrangement will affect each company.

Mergers and Acquisitions

In 2018 Square agreed to buy Weebly, a developer of website building tools, for $365 million. The deal brings the combination of website creation and enabling ecommerce capabilities to small businesses. Making it easier for small businesses to establish an online presence could help drive sales for Square and Weebly. The deal was expected to close in the 2018 second quarter.

In another 2018 deal, Square acquired assets of Zesty, an online catering company, to beef up its Caviar corporate food ordering business. The Zesty addition would enable Caviar to accept bigger, more complex orders from corporate customers that would include ordering from multiple restaurants for one event. Square acquired Caviar in 2014 and added assets of OrderAhead in 2017 to fill out its food-ordering menu.

Square, Inc.

1455 Market St Ste 600
San Francisco, CA 94103-1332
Phone: 1 (415) 375-3176

Firm Stats

Employer Type: Publicly Owned
Stock Symbol: SQ
Stock Exchange: , NYSE
Chief Accounting Officer: Ajmere Dale
CEO: Jack Dorsey
Finance and Strategy: Joanna Xu
Employees (This Location): 50
Employees (All Locations): 3,835

Major Office Locations

San Francisco, CA

Other Locations

San Francisco, CA