Is Square Finally Slowing Down?

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Square, Inc. (NYSE: SQ) reported its most recent quarterly results after markets closed Tuesday. The payment processor posted $0.08 in earnings per share (EPS) on $283 million in adjusted revenue, compared with consensus estimates from Thomson Reuters that called for $0.07 in EPS on $266.26 million in revenue. The fourth quarter from last year had a net loss of $0.04 per share on $451.92 million in revenue.

During the quarter, Gross Payment Volume (GPV) was $17.9 billion, up 31% year over year. The company said it continues to see strength in larger sellers, with GPV from this segment growing 44% year over year and representing 47% of total GPV.

At the same time, subscription and services-based revenue was $79 million, up 96% from the fourth quarter of 2016, an acceleration from year-over-year growth of 84% in the third quarter of 2017. Instant Deposit, Caviar, and Square Capital contributed the majority of subscription and services-based revenue.

Square’s Cash App which competes directly with the likes of Venmo, tallied more than 7 million monthly active customers in December 2017.

In terms of guidance for the first quarter, the company expects to see EPS in the range of $0.03 to $0.05 and adjusted revenues in the range of $290 million to $295 million. The consensus estimates are calling for $0.08 in EPS and $271.86 million in revenue for the coming quarter.

Although the guidance did not live up to analysts’ expectations, Square is still confident going forward in 2018. The firm detailed in its letter to shareholders:

Our 2017 results set the stage for strong momentum in 2018. Three focus areas will drive our strategy and investment this year: omnichannel commerce, financial services, and current international markets. These areas provide meaningful value to sellers and individuals and significantly increase the addressable market opportunity for Square.

Shares of Square closed Tuesday at $45.91, with a consensus analyst price target of $42.97 and a 52-week range of $16.11 to $49.56. Following the announcement the stock was initially flat at $45.90 in the after-hours trading session.

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