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Mizuho Sets its Sights on Mobile Payments Pioneer Square

August 7, 2018         By: Steven Anderson

Mizuho’s string of analyses continues, as it recently dropped word our way about its recent analysis of Square, who got a lot of people started in the mobile payments frontier. From farmer’s markets to private schools and beyond, Square was, and is, a pretty big deal. Mizuho’s analysis, meanwhile, supports the idea that it will be a pretty big deal to come as well.

The word from Mizuho’s Thomas McCrohan noted that Square beat plenty of expectations. Net revenues, adjusted earnings per share (EPS) and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were all above expectations. McCrohan pins this on “ongoing development of the Square portfolio of services focused on smaller merchants.”

Given that larger merchants are 22 percent of Square’s volume, it’s clear that it’s been focusing on smaller merchants. Even here, though, larger merchants are up; in the first quarter of 2018, large merchants were 20 percent of volume, and represent the fastest-growing part of Square’s market despite a focus on the smaller merchant. So essentially, Square’s getting large merchants regardless of its own promotional paths. But since it’s focusing on the smaller merchant, it’s also getting expansion in that market as well.

Square’s cash card volume was up as well, tripling since December, and now represents a run rate of $3 billion. Mizuho upped its net revenue guidance to between $1.52 and $1.54 billion, up from $1.45 to $1.48 billion previously. Mizuho also expects revenue reinvestment to carry on for some time, expanding both locations available and services available.

With Square’s fortunes ramping up on every side, it’s no surprise that it’s seeing its guidance and estimates go up as well. Plenty of capital is already on its side, and it’s got aggressive expansion plans in the works; it’s gaining ground where it wasn’t really trying to, and it’s really trying to gain ground in others. That’s an impressive position to be in, and one that suggests Square will be on top of the market for a while.

Square was already doing well, but with the latest word, it’s got the necessary position to keep doing well, and that’s the best position to be in.