Last year, I spent significant time inside Jack Dorsey’s payments company. What I learned tells us how to read its IPO filing.
This week Square filed for its long-rumored and long-anticipated IPO, and the public finally got a look at how Square’s business is actually performing. All the pundits, anonymous sources, and leaked documents could now be considered in light of the actual facts. Did Square’s S-1 prove the press had served up some scolding cups of claim chowder? Not exactly. Square’s story has always been a nuanced one that defied simplistic narratives, and its business can be looked at from a number of perspectives. The company reported revenue of $560 million for the first half of 2015, up 50% during the same period last year, but it also recorded a $78 million net loss, following losses of $154 million in 2014 and $104 million the year prior. It has built out a growing payments processing business but has made product stumbles along the way in trying to expand its portfolio of services and boost margins. Its high-profile deal with Starbucks proved to be expensive, but was it seriously costly? Like most IPO prospectuses, Square’s S-1 presents a portrait of a promising future that could be derailed by significant risks.
