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It's Hip To Be Square: Another Beat And Raise In Q2

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It's Hip To Be Square: Another Beat And Raise In Q2
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Square Inc (NYSE: SQ)'s earnings report Wednesday prompted analysts at Deutsche Bank to maintain a bullish stance. The firm's Bryan Keane maintains a Buy rating on Square's stock with an unchanged $28 price target as there were plenty of reasons for bulls to be happy.

One of the main highlighted of Square's report was a 41 percent year-over-year growth in revenue to $240 million, which marks an acceleration from the 39-percent growth recorded in the prior quarter, Keane stated. The strong revenue performance can be attributed to the company's "speed, simplicity, and brand strength," which is boosting overall gross payment volume gains.

Gross payment volume of $16.4 billion and transaction revenues grew 32 percent year over year while larger sellers (more than $125,000 in annualized GPV) outperformed with a 45 percent year-over-year growth, the analyst continued (see his track record here). Higher margin products like Invoices, Virtual Terminal and e-commerce APIs were also strong performers and helped to offset growth in lower priced regions such as the UK market, which the company expanded to earlier this year.

Also, Square's margin expansion in the quarter was "robust" as the company benefited through scale and automation, the analyst added. In fact, continued momentum could result in incremental margin expansion as the company continues to implement machine learning and product developments investments.

Finally, Square's one-time $2.7 million write off in the quarter from loan loss isn't a concern but worth monitoring as the company continues to extend large loans to sellers.

At time of publication, shares of Square were down 4.55 percent at $25.20.

Related Links:

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4 Reasons Square's Impressive Year Will Continue
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Latest Ratings for SQ

DateFirmActionFromTo
Jan 2019Raymond JamesDowngradesMarket PerformUnderperform
Jan 2019NomuraMaintainsBuyBuy
Nov 2018NomuraMaintainsBuyBuy

View More Analyst Ratings for SQ
View the Latest Analyst Ratings

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