Financial services start-up Square files for IPO

Square intends to sell shares on the public stock market under the ticker symbol SQ for a proposed aggregate offering price of $275 million, according to an initial public offering filing with the U.S. Securities and Exchange Commission.

Square, a financial technology start-up, makes devices that facilitate credit card payments when inserted into tablets, and offers services such as restaurant delivery courier Caviar and peer-to-peer payment system Square Cash. The S-1 filing provides a first look at the financial state of the company for potential investors.

For instance, Square’s total net revenue grew 51 percent year on year to $560.6 million for the six months ending in June. But overall, the company posted a net loss of $77.6 million over that time, the filing said.

Square had pro forma cash and equivalents of $198 million, as of June 30. And Square’s already started tapping its credit facility: The S-1 said it’s drawn down $30 million as of June, with $195 million remaining.

Square Reader

Source: Smithsonian Institution

“The strength of this business is more than the money it generates,” CEO Jack Dorsey wrote in the filing. “As a public company, our decisions will continue to reflect what we’ve done as a private one. We put our customers first. That means constantly asking the question: How can the financial system better serve people? We’ll measure ourselves by our commitment to take the long view and focus on building a company that creates value over decades and not just a few fiscal quarters out.”

The official IPO filing comes after reports of a confidential filing sparked rumors this summer. It also means Dorsey could soon be running two publicly traded companies, after recently being named permanent leader of social media company Twitter, a factor that “may at times adversely affect his ability to devote time, attention and effort to Square,” the filing said.

Dorsey has 24.4 percent ownership of company in 71,124,082 shares, the filing said.

The filing also pulled back the curtain on the inner workings of the so-called “unicorn” start-up, including executive compensation, and pending litigation over intellectual property, and the transaction costs and benefits of Square’s payment processing agreement with coffee giant Starbucks.

Square currently generates 95 percent of revenue from payments and point-of-sale services, the filing said. In 2014, sellers using Square processed $23.8 billion, or 446 million card payments from 144 million payment cards, the company said in the S-1.

Before going public, the company was valued at over $6 billion, according to research firm CB Insights. Square had raised almost $600 million in private funding as of the end of September, according to database CrunchBase.

The company’s board will include heavy hitters like Larry Summers, David Viniar, Mary Meeker and Vinod Khosla, according to the filing. Non-executive investors include Khosla Ventures, JPMorgan Chase, Sequoia Capital and Rizvi Traverse, the filing revealed.

Goldman, Sachs & Co., Morgan Stanley and J.P. Morgan are managing the deal, along with Barclays, Deutsche Bank Securities, Jefferies, RBC Capital Markets and Stifel.

— CNBC’s Kayla Tausche contributed to this report.

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