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After alerting the investment community in July that it intended to file for an initial public offering of stock, merchant processor Square Inc. on Wednesday finally went public with its plans. San Francisco-based Square, which first made a name for itself by providing mobile-payment services to tiny businesses and individual sellers using iPhones, filed a registration statement with the Securities and Exchange Commission that says it hopes to raise $275 million, although that number is a placeholder for calculating registration fees and likely to change.
The filing leaves out some key details, such has how many shares Square will sell, but nonetheless casts light on a number of Square’s metrics that observers have largely guessed at since the company was founded in 2009 by chief executive and Twitter Inc. co-founder Jack Dorsey and Jim McKelvey. More than 2 million so-called sellers accepted Square five or more times in the 12 months ending in June.
Gross payment volume (GPV) in 2014 hit $23.8 billion, up 61% from $14.8 billion in 2013—which was more than double 2012’s GPV $6.52 billion. The transaction count in 2014 came it at 446 million, making Square’s average sale approximately $53.35.
GPV for 2015’s first six months was $15.9 billion, up 53% from $10.4 billion in the year-earlier period, putting Square on track to exceed $32 billion in volume this year.
GPV excludes transactions on the Square Cash peer-to-peer payments service and from Starbucks Corp., for which Square processes credit and debit card transactions. Starbucks accounted for 11%, or $62.9 million, of Square’s total revenues of $560.6 million for the six months ended June 30.
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Although first-half total revenues rose 51% from $371.9 million in 2014’s first six months, the filing shows the company is unprofitable. Net loss for 2015’s first half was $77.6 million, a slight improvement from the $79.4 million loss a year earlier. Square posted losses of $85.2 million, $104.5 million and $154.1 million in 2012, 2013 and 2014, respectively.
The registration statement also addresses the status of Dorsey, Twitter’s former CEO. Dorsey returned to Twitter’s helm, supposedly on an interim basis, when the troubled social network’s previous CEO left in July. But, after first signaling it wanted its leader’s undivided attention, Twitter this month named Dorsey as permanent CEO even though he is retaining the top post at Square. “This may at times adversely affect his ability to devote time, attention, and effort to Square,” Square’s filing says.
Square says it will use the IPO’s proceeds for working capital, general corporate purposes and to make acquisitions. The company has two classes of common stock: Class A, with one vote per share, and Class B, with 10 votes per share. Dorsey currently controls 24% of the Class B shares, and McKelvey has 9%.
Square, according to reports in the financial press, in late July filed for a confidential IPO under the Jumpstart Our Business Startups (JOBS) Act, a 2012 federal law that enables companies with less than $1 billion in annual revenue to explore early investor interest without publicly disclosing full financial details.
