Square Share Price Hits Record as the Processor Doubles Down on Retailers

By Jim Daly
@DTPaymentNews

Square Inc.’s stock hit a record high Thursday in the wake of a strong fourth-quarter financial report. Now the merchant processor is looking to an updated point-of-sale system for retailers called Square for Retail to help keep the volume and revenue gains going.

Square’s share price closed Thursday at $17.15, up $2.11, or 14%, from Wednesday’s $15.04 close. The company reported earnings after the market closed Wednesday, a report that included a 34% gain, to $13.7 billion, in gross payment volume from 2015’s fourth quarter, and a 43% increase in adjusted net revenues.

While San Francisco-based Square has many irons in the fire, the company is looking to sustain growth among its core retailer merchant base with a new product called Square for Retail. The point-of-sale application, announced earlier this month, will succeed the older version dubbed Square Register. Retail businesses generate 20% of Square’s payment volume, the company said.

“We heard from our sellers that they do need something quite specific in the retail vertical,” Sarah Friar, Square’s chief financial officer, said at a conference call with analysts late Wednesday.

Friar said other new features include “a much more retail friendly UI [user interface]” than Square Register that will enable stores to manage very large numbers of stock-keeping units, or individual items. It also has improved inventory-management capabilities, she said. The third improvement was enhanced customer-relationship management, “the ability to track the customer when they’re right in front of you making a purchase,” she said, according to a Thomson Reuters StreetEvents transcript.

While Square is best known for recruiting part-time sellers and small startup businesses as merchants, larger merchants account for an increasingly bigger share of its payment volume. Thus, Square for Retail is aimed at retailers of all sizes, chief executive Jack Dorsey said on the call.

“One of the reasons we launched Square for Retail, is, we believe we have an opportunity to build another utility that can scale to any size of merchant,” he said.

The system costs $60 per month and works with existing Square hardware. Friar declined to give specific predictions on Square for Retail’s adoption.

Square’s stock was up about 1.7% Friday morning in New York Stock Exchange trading.