Square to Sell Caviar to DoorDash for $410 Million

Square not only delivered second quarter financial results on Thursday but also announced that it is selling Caviar, its food-delivery service to DoorDash for a cool $410 million.

According to a securities filing, Square purchased the company for only $44.3 million five years ago.Nice return for just five years.

The payments company’s CEO Jack Dorsey, who also heads Twitter, says selling Caviar will let Square double down on investments and focus also on its core payments businesses.
The acquisition will combine cash and DoorDash preferred stock, and is expected to close at the end of this year.

“We have seen a lot of opportunity to strengthen both these ecosystems but those opportunities require more focus and more investment,” said Dorsey. “To increase our focus, we decided to sell our Caviar business to DoorDash.”

“We are increasing our focus on and investment in our two large, growing ecosystems — one for businesses and one for individuals,” explained Dorsey. “This transaction furthers that effort, and we believe partnering with DoorDash provides valuable and strategic opportunities for Square.”

Shares of Square were down as much as 8% after delivering worse than expected guidance for the third quarter. The company expects adjusted revenue between $590 million to $600 million. The midpoint of this range represents 38% growth. Adjusted earnings per share for the period is expected to be between $0.18 and 0.20, up from $0.13 in the second quarter of 2018.

Second quarter results were better than expected.

For the second-quarter, Square saw revenue jump 44% year over year to $1.17 billion. Adjusted revenue saw a growth of 46% year over year to $563 million. Management had guided for a range for adjusted revenue to be between $545 million and $555 million.

Subscription and services-based revenue also saw a growth of 87% YOY.

Adjusted EBITDA soared 54% year over year to $105 million.

“Our Cash App ecosystem has reached significant scale, generating $260 million in total net revenue in the second quarter of 2019. Excluding bitcoin, Cash App revenue was $135 million,” the company said.
The company remarked that its subscription and services-based revenue’s “growth was driven primarily by Cash App, Square Capital, Caviar, and Instant Deposit for sellers.”

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