Square Inc. (NYSE: SQ) released its Q4 2017 earnings report after closing bell. On an adjusted basis, Square earnings amounted to 8 cents per share on $616 million in total net revenue or $283 million in adjusted revenue. Analysts had been expecting Square earnings for Q4 2017 to amount to 7 cents per share on $266.6 million in adjusted revenue or $600.7 million in gross revenue. The company had guided for gross revenue of $585 million to $595 million and net revenue of $262 million to $265 million.
The digital payments processor reported a net loss of $16 million or 4 cents per share, both of which were basically flat with last year. Adjusted EBITDA rose to $41 million in Q4 2017, a 38% year-over-year increase from $30 million a year ago. The adjusted EBITDA margin stood at 15%, a slight decrease from the 15% margin recorded in the year-ago quarter.
Total payment volume grew 31% year over year to $17.9 billion. The company reported particular strength among bigger sellers as gross payment volume for them grew 44% year over year. Bigger customers completed 47% of Square’s total payment volume. Transaction-based revenue grew 30% year over year to $525 million. As a percentage of gross payment volume, transaction-based revenue ticked down to 2.93% from 2.94% in the year-ago quarter.
Subscription and services-based revenue jumped 96% year over year to $79 million, driven by revenue from Instant Deposit, Square Capital and Caviar. Square Capital served $305 million worth of business loans during Q4 2017, which amounted to 47,000 loans. Hardware revenue grew 36% year over year to $12 million as Square Stand sales grew, while demand for the company’s contactless and chip reader hardware in Canada was strong. Square Register preorders remained strong in Q4 as well, but that revenue won’t be recognized until the current quarter.
Looking into 2018, Square management said they’ll be focusing on three main goals: strengthening “omnichannel commerce,” expanding financial services and growing the international markets the company is already in, including the U.K., Canada, Australia and Japan.
