Fintech powerhouse Square rolled out a strong Q4 and FY 2017 earnings report yesterday, showing a strong move upmarket to serving larger retailers ($500K+), and greater traction among consumers with Cash App and Square Card, as well as an expanding product ecosystem for its core customer base of small business sellers.

The company reported net Q4 revenues of $616 million, a 36% growth rate over Q4 2016. Gross Payment Volume (GPV), a measure of the amount of commerce Square is enabling for merchants, was $17.9 billion in 2017, up 31% over the prior year. The aggressive rollout of new products is driving Square’s growth. In Q4, products launched since 2014 accounted for 22% of total net revenue, up from 14% the year before.

Square has moved well beyond its original mission of allowing very small business to accept credit cards via a mobile device. This was a transformative step for businesses like food trucks, art fairs and farmers’ markets that had largely been cash based businesses before Square.

Square has evolved into a commerce ecosystem for merchants, with payments, point of sale, HR and payroll, appointments (integrated with POS and payment processing), loyalty, CRM, access to capital, and for restaurants, a delivery service (Caviar). These multiple solutions gives Square ample opportunity to cross sell merchants who can come in through a variety of doors, not just point of sale.

Square is arguably furthest along in offering SMBs the fully integrating business operations platform that we talk about a lot at the Tech Adoption Index. Our TAI survey data shows about half of SMBs like the idea of buying all of their mission critical apps from a single source.

On the earnings call, CEO Jack Dorsey and CFO Sarah Friar walked analysts through a strategy that is expanding Square not just into new products but new markets. No longer strictly B2B, Square is in the peer to peer payments game with CashApp. And its increasingly sophisticated inventory system has helped move Square up-market into larger merchants.

Square has traditionally been a self-service business, but has added some tele-sales resources to work with bigger merchants, who need custom solutions and will negotiate for custom pricing as well. CFO Friar noted that Square keeps a close eye on efficiency, as measured by the payback period on each sale. She said the addition of live salespeople for larger accounts has not driven up this metric. To this end, Square has been mindful to keep its on-boarding process intuitive so that the company doesn’t have to waste resources on hand-holding frustrated merchants.

We asked Shubham Datta from SurePath Capital Partners for his take on Square’s results. SurePath is a financial advisory firm with a niche focus on the SMB SaaS industry. Like us, Shubham was struck by Square’s progress with larger merchants.

I continue to be impressed by their move up-market, with 20% of their GPV now coming from merchants with greater than $500K annualized revenue. While this has posed challenges on creating vertical specific solutions for larger merchants, Square’s focus on Retail, Food and Services are shining here.


Square Retail is helping larger retail customers manage multiple SKUs, inventory and manage gross margins.
On Food, Caviar has been great at providing restaurants a way to grow revenues (now doing delivery AND pickups)
On Services, Appointments are doing really well. This is impressive:


“During the fourth quarter, on average, 50% of reservations booked online with Square Appointments were made outside of a business’s hours. This also enables sellers to more effectively run their business: In the fourth quarter, sellers that use Square Appointments have seen, on average, a 24% year-over-year increase in reservations.”


Another thing that stuck out for me is that 80% of these larger customers are self-onboard.


Source: Square