Square: Just 1% Of A $60 Billion Dollar Market

Quick Summary

Square provides small businesses an easy solution for handling electronic payments. Square's core product is a mobile application and simple card-reading device that attaches to a mobile device, allowing it to be turned into an instant point-of-sale terminal, and accept a variety of electronic payments. The firm has since branched out with additional services, including: Cash App, peer-to-peer payment service with ancillary features such as stock investing and crypto-currency trading; Square Capital, a micro-lending service; and various software products including online store builders and expanded point-of-sale (POS) software solutions. 73% of revenues are from transaction fees, where Square takes a percentage cut of every transaction processed through the platform. 25% are from subscriptions and service fees to its various service offerings mentioned above. Finally, 2% of sales are from point-of-sale card swipe hardware rentals. Square is largely a domestic firm, with only 5% of revenues coming from outside the U.S.

Does The Company Have Recurring And/Or Rising Revenues?

YES. Square's growth has been robust, with a 3-year average annual revenue growth rate exceeding 40%. Square continues to see impressive growth across all of its verticals, with gross payment volume and transaction revenue growing at 25%, and services revenues (led by Cash App, now a $1 billion business with 24 million users) growing at over 70%. The market opportunity is enormous. Digital payment processing at large is is massive $60 billion dollar market, growing at nearly 10% annually, and Square has captured only about 1% of it. Peer-to-peer payments is another large sector, expected to reach over $600 billion in volume by 2023 (a growth rate of 23% annually), a small percentage of which is Square's opportunity. The firm has barely begun to expand internationally. On the recurring side, payment processing is a "toll booth" business, with customers paying Square numerous times a day to process payments. Additionally, services like Cash App and store website software are subscription-based, another recurring model. There is not much to complain about here, Square's revenue characteristics are outstanding.

1 2
View single page >> |

Disclaimer: The content is provided by Alexander Online Properties LLC (AOP LLC) for informational purposes only. The material should not be considered as investment advice or used as the basis ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.