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Square breaks $1 billion in revenue in Q2 2019 and announces Caviar sale. The firm brought in $1.17 billion in total revenue in the quarter, growing 44% year-over-year (YoY). This is a light deceleration from the 48% YoY growth it posted in Q2 2018.
Its gross payments volume saw similar results, as it totaled $26.8 billion in Q2 2019 but saw its annual growth dip to 25% from 30% a year prior. Square turned in a net loss of $7 million for the quarter after losing $6 million in Q2 2018. This marks the third consecutive quarter where it’s posted a loss, after bringing in $20 million in income in Q3 2018.
The firm announced that it has agreed to sell Caviar — its meal delivery segment — to DoorDash for $410 million. Square acquired Caviar in 2014 for $44.3 million and has invested in it over the years by acquiringother delivery platforms and startups related to food ordering to bolster its capabilities and boost the firm’s subscriptions and services revenue.
Square believes that "partnering with DoorDash provides valuable and strategic opportunities for Square," CEO Jack Dorsey said in the press release; DoorDash’s existing integration with the Square for Restaurants point-of-sale (POS) platform could make Square a top choice for DoorDash restaurants, giving the brand a customer acquisition opportunity and helping it accelerate its burgeoning restaurant business as it angles for larger sellers, for example.
Square made the move because it’s increasing its focus on its two ecosystems for businesses and consumers, Dorsey said, and while losing Caviar could hurt, it might help Square build on its strengths.
- Food and drink sales are a top driver of Square’s revenue, and losing Caviar may hurt Square’s ability to recruit more restaurants. Food and drink sales accounted for 26% of the firm’s GPV in Q2 2019, and that volume is driven in part by Square for Restaurants being integrated with over 20 delivery platforms, including Caviar and DoorDash. It’s possible that Caviar’s direct connection to Square encouraged more merchants to use Square for Restaurants, but now that the firm is losing that tie-in it may not be able to build its food and drink segment as effectively.
- Without Caviar, Square’s two key areas are more clearly established, potentially enabling it to improve on their solid performances. It’s built a good mix of sellers, with 26% of them generating more than $500,000 in annualized GPV, up from 22% in Q2 2018 and 19% the year before. Meanwhile, Square’s consumer business, which centers largely around its Cash App business, accounted for 21% of the firm’s total revenue in Q2, jumping up from 16% in the comparable period a year prior, per Digital Transactions. In selling Caviar, Square removes an aspect of its business that didn’t cleanly fit into either of these segments, so it may be better equipped to invest in and grow the two areas more effectively now.
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