FAQ

Investors looking into Square Inc. should monitor several key financial metrics and performance indicators to evaluate the company’s health and growth potential. These metrics provide insights into key aspects of the company’s operations, including revenue growth, profitability, operational efficiency, and financial stability.

Gross Payment Volume (GPV)

The total dollar amount of all card payments processed by sellers using Square is known as Gross Payment Volume or GPV. This is a crucial metric for Square because it reveals how much transactional activity is happening across its platform. A rising GPV indicates increased usage of Square’s services, which leads to higher transaction-based revenues.

Transaction-Based Revenue

Transaction-based revenue refers to the fees Square collects from merchants each time a transaction is processed. Increases in this revenue type demonstrate that Square’s core payment processing business is growing.

Subscription and Services-Based Revenue

This revenue stream includes earnings from software and data product services, such as Square Capital, Instant Deposit, and Cash App. Growth in this area suggests that Square is effectively diversifying its revenue sources and adding value for its users beyond basic payment processing.

Net Income and Earnings Per Share (EPS)

Net income and EPS are important indicators of Square’s profitability. Positive net income and growing EPS mean that Square is not only generating revenue but is also able to keep a portion of it as profit after covering all expenses.

Operating Expenses

Operating expenses include the cost of revenue, product development, sales and marketing, and general and administrative expenses. Monitoring these expenses can give investors insights into Square’s operational efficiency and cost management strategies.

Keep in mind that these are just a few of the many financial metrics that can be used to evaluate Square’s performance. Always consider these figures in the context of the company’s overall strategic goals and the broader market conditions.