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Square reached $959 million in revenue in Q1 2019, up 43% year-over-year (YoY) — a deceleration from the 45% annual growth the firm saw in Q1 2018, when its revenue reached $669 million, and a slight sequential deceleration from 51% YoY growth in Q4 2018.
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And Square’s gross payment volume (GPV) grew 27% annually to reach $22.6 billion, marking a deceleration from 31% annual GPV growth in Q1 2018.
In Square’s earnings call, CEO Jack Dorsey highlighted the ecosystem of services it’s building out as the firm’s strongest competitive differentiator.
- Throughout Q1, Square broadened its omnichannel capabilities for larger sellers, which comprise 51% of its overall GPV. For context, Square defines larger sellers as merchants that process over $125,000 in annualized GPV. In March, Square redesigned Square for Retail, its point-of-sale (POS) solution, to streamline managing online orders alongside a brick-and-mortar store. It also redesigned Square Online Store and extended it to restaurants — a major seller segment — and throughout the US, the UK, Australia, and Canada. Sellers can create a website and automatically connect their Square for Retail catalog to their Square Online Store, which allows sellers to sync their inventory, prices, and data instantly across their online and in-store channels to grow their business.
- And Square Cash led its subscription and services (SSR) segment to inflate 126% YoY to $219 million — the highest rate of growth for any Square segment in Q1.This marks an acceleration from the 98% uptick in the segment in Q1 2018. The firm highlighted Square Cash — including peer-to-peer (P2P), Cash Card, and Cash for business transactions — as a bright spot in its Q1 earnings, with volume more than doubling annually, which the firm attributed to growing network effects, reach, and engagement. The firm added that Cash Card continued to grow its user base and saw an increase in transaction frequency per customer. As the firm looks for ways to bolster Square Card’s value, it’s been pursuing cryptos further, as adding Bitcoin trading to Square Cash was a key volume driver in 2018: Throughout Q1, Square focused on building out its cryptocurrency team, for example.
Dorsey also noted that Square is excited about its "increased velocity in … markets outside the United States" — specifically pointing toward the opportunity in Japan. In March, Square launched Square Stand and Square chip card reader in Japan, and partnered with Japanese bank SMBC to allow the bank to distribute Square readers to sellers from all of its branches in the country.
Dorsey highlighted the upcoming 2020 Olympics International Rugby League in Japan as "a perfect storm of situation where we can really see a potential for a lot of growth," as people from across the globe will be attending and expecting to pay "the way that they know how to," which can tend to be with card or a phone.
Japan is seeing a government-fueled shift away from cash payments and could ultimately serve as a blueprint for Square to expand into other markets with similar conditions.
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