Square Tanks After Company Reports Financial Results

Shares of Square, led by Jack Dorsey, were falling on Wednesday after the company turned in financial results that were better than expected but failed to meet gross payment volume expectations.

The San-Francisco based company, which is known for its popular peer-to-peer Cash app, saw its shares fall 8% in after-hours trading as traders digested the numbers.

For the first quarter, Square reported adjusted earnings of 11 cents while analysts expected just 8 cents according to Refinitiv consensus estimates.

Revenue at $489 million was also better than the $478 million that was expected.

Gross payments volume was $22.6 billion which was under the $22.8 billion expected. This may be the part that spooked investors.

Transaction-based revenue was $657 million, showing a growth of 26%. Subscription and services-based revenue soared 126% to $219 million, which was essentially driven by the company’s Cash App, Caviar, Square Capital, and Instant Deposit for sellers.

Within Cash App, the company continued to grow the number of monthly active Cash Card customers and saw an increase in transaction frequency per customer. Square Capital facilitated about 70,000 loans totaling $508 million, up 50% year-over-year in the quarter.

“We have seen meaningful traction with the Cash App and believe we are just at the beginning with our seller ecosystem,” Square CFO Amrita Ahuja said. “Not only are we growing the base of monthly active users, but we’re growing the engagement per user — those have compounding effects in the results of our business.”

Disclaimer: We have no position in Square Inc. (NYSE: SQ) and have not been compensated for this article.