Square recorded Net Loss in 2021 Q3 Financial Results

Square (NYSE: SQ) announced its 2021 Q3 financial results on November 4, 2021. According to the announcement, total net revenue was up 27% (3 months, YoY). On the other hand, operating income was down 53% . In addition, Square recorded a net loss of 2.9 million USD in the three months ending September 30, 2021.

According to the announcement, its net loss and decreased operating income were partially due to the increase in general & administrative as well as share-based compensation. Square is continuing to invest in building out its teams, including attracting, hiring, and retaining talented employees. 

As for revenue growth, subscription & service based revenue was recorded the highest growth of up 55% (3 months, YoY). It was followed by transaction-based revenue of up 40%. Bitcoin revenue was up 11%.

According to the announcement, Square and Afterpay Limited (ASX: APT) have entered into a Scheme Implementation Deed. Under the deed, Square has agreed to acquire all of the issued shares in Afterpay. The closing of the transaction is expected in the first quarter of calendar year 2022.

In this regard, the implied transaction price would be approximately 126.21 AUD per Afterpay share with an estimated premium of approximately 30.6% to Afterpay’s closing price at the time of announcement. This implies that depreciation and amortization of Afterpay’s goodwill could cause Square’s EPS to be declined causing its stock price to be sluggish after the acquisition.  

Square, Inc. (NYSE: SQ) stock chart

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  1. Watanabe & Brothers’ Investment is holding shares of Square, Inc. 
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