This is an excerpt from a story delivered exclusively to Business Insider Intelligence Payments Briefing subscribers. To receive the full story plus other insights each morning, click here.
Square saw strong growth across segments in Q4 2018, following its first quarter of company-wide profitability, just ahead of its 10-year anniversary. Square reached $933 million in revenue in Q4 2018, up 51% year-over-year (YoY) — marking an acceleration from Q4 2017, when it saw a 36% increase — consistent with growth in Q3 2018.
The acceleration was largely driven by Square's 28% YoY growth in gross payment volume (GPV), which reached $23 billion in the quarter.
In Square’s earnings call, CEO Jack Dorsey highlighted Square’s “ecosystem of financial tools for both individuals and sellers” as its core differentiator.
- Square’s larger seller segment now accounts for 51% of the firm’s overall GPV.Square has been focusing on growing its network of both micromerchants, its initial customer segment, and larger sellers, which it defines at merchants that process over $125,000 in annualized GPV. For instance, last December, Square integrated its Appointments product, which allows merchants to manage their business calendars, into Instagram and Google after finding that more than 50% of Appointments sellers didn't have their own websites. The integration allows Square to cater to companies of all sizes and onboard more sellers into its ecosystem, while merchants gain access to the two tech giants’ platforms to attract new customers.
- Square Cash helped drive the firm’s subscription and services-based revenue (SSR) segment. SSR reached $194 million in Q4 2018 — up 144% YoY — driven primarily by services, including instant deposit, Cash Card, Caviar, and Square Capital, its lending segment that facilitated $472 million in loans in Q4 2018 (+55% annually). Notably, Square Cash, Square’s peer-to-peer (P2P) payment app, grew more than double annually to reach more than 15 million monthly active users in December 2018. And during the quarter, Square Cash surpassed cryptocurrency trading app Coinbase as the most widely used Bitcoin trading app for iOS. Dorsey attributed the success of Square Cash to the network effect, which he said will continue to be an important driver going forward.
Recent initiatives across various segments are positioning Square for accelerated growth. In late December 2018, Square refiled its application for a US banking license for a bank it would call Square Financial Services. Being granted a banking license can boost Square's volume in key segments, including Square Capital, and allow the firm to better cater to businesses.
And, earlier this year, Square debuted a Mastercard-branded business debit card that allows its sellers to spend the money they earn through their Square payments, which Dorsey highlighted as a way for Square to reach underserved and unbanked sellers so that they can start businesses without going to a bank.
Square also introduced its first software development kit (SDK) for in-app payments, allowing app developers to integrate Square payments into their consumer-facing apps by entering lines of code. Continuing to innovate new solutions across a variety of platforms can allow Square to continue its upward momentum.
Interested in getting the full story? Here are two ways to get access:
1. Sign up for the Payments Briefing to get it delivered to your inbox 6x a week. >> Get Started
2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the Payments Briefing, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
SEE ALSO: The Payment Industry Ecosystem: The trend towards digital payments and key players moving markets