Square Company Report - Diego

1. Diego Holt (dmholt)

2. What is Square? ● Well, a lot of things

4. Initially ● Initially it was an easy to use credit card processing system

5. Background ● Square has a simple and noble vision ● Huge market opportunity for Square ○ Out of 30 million business, 20 million did not accept credit card payments ● Square processed $20B just last year

6. How Do They Make Money?

7. Financial Info

8. Revenue Streams for 2nd Quarter 2017

10. GPV, Gross Payment Volume ● A metric that shows how many customers are using the square system ● Company GPV grew, 32% year over year in the second quarter ○ Indicates Square is gaining more customers

11. Is Square Profitable? ● Knowing where revenue is coming from is important ● However, as an investor, we still would like to know if they are profitable

12. So Is Square Profitable?

13. Well, not yet.

14. But They’re Getting There ● Net loss of $171.6 million 2016 ● Net loss of $31.1 million in first half of 2017 ● Closing the gap, will soon become profitable

15. History ● 02/2008: Founded by Jack Dorsey and Jim McKelvey ● 09/2008: Square raises $10M in a series A round ● 12/2009: Square unveils Square Reader ● 11/2010: Closed trial beta opens to public ● 03/2012: Paypal launches competitor ● 05/2013: Square Stand unveiled ● 05/2013: Square cash (Venmo competitor) ● 05/2014: Square Capital ● 10/2015: Square IPOs, shares priced $9

26. Secret Sauce ● Radical new player in an outdated area ● Zero monthly fees for using their system ○ Huge for new businesses that can’t afford big system ● Simple charges and no hidden fees to use their product

27. Competition ● There have been a lot of copycat products that have came out ● Trying to get into the credit card processing business ● Some of the more notable ones are ○ Paypal ○ Clover

29. Prediction ● Square has been showing consistent upward trend ● Gaining ground with more mature businesses ○ Something detractors said square wouldn’t be able to do ○ Two years ago, merchants with $125k > annualized sales only accounted for < 30% of square payment volume ○ Now it’s 42% ● Net loss decrease indicate upward trend ● Yes, I think Square will be successful

30. Questions?

Square Company Report - Diego

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Square Company Report - Diego