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Square (SQ) to Report Q1 Earnings: What's in the Offing?

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Square, Inc. (SQ - Free Report) is scheduled to report first-quarter 2019 results on May 1.

The company surpassed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 16.01%.

Past-Quarter Peformance

In the last reported quarter, Square had delivered a positive earnings surprise of 7.69%. Adjusted earnings came in 14 cents, which grew 85.7% on a year-over-year basis and came ahead of management’s guided range of 12-13 cents per share. However, the figure came in line on a sequential basis..

Net revenues of $932.53 million surpassed the Zacks Consensus Estimate of $908.21 million and also came ahead of the guided range of $895-$905 million. The figure increased 51.4% from the year-ago quarter and 5.7% on a sequential basis.

Top-line growth was driven by acquisition benefits and strengthening presence in the bitcoin space. Further, robust Gross Payment Volume (GPV) growth and strong Cash App contributed well.

Q1 Expectations

For first-quarter 2019, management anticipates net revenues between $918 million and $938 million. The Zacks Consensus Estimate for revenues is pegged at $940.96 million.

Adjusted earnings are expected in the range of 6-8 cents per share. The Zacks Consensus Estimate for earnings is pegged at 8 cents per share.

Let’s see how things are shaping up prior to this announcement.

Square, Inc. Price and EPS Surprise

Square, Inc. Price and EPS Surprise | Square, Inc. Quote

Factors to Consider

Square continues to experience growth in its seller base on the back of its strengthening key offerings and comprehensive commerce ecosystem. This is likely to aid growth in the company’s GPV, which remains the key growth metric, in the to-be-reported quarter.

Square defines larger sellers as those which make more than $125,000 of annualized GPV and mid-market sellers as those which make more than $500,000 of annualized revenues.

The company continues to experience growing adoption of Square Card which is likely to accelerate GPV in the first quarter.

Further, its growing mobile initiatives also remain a major positive. During the first quarter, the company launched its in-app payments software development kit (SDK), which enables developers to process payments with Square through their own mobile apps. This is also likely to contribute well to the GPV growth in the quarter under review.

Moreover, the company’s strong focus toward strengthening its omni-channel offerings is likely to aid its momentum across larger sellers. Additionally, positive contributions from Weebly and Zesty acquisitions are expected to drive the top-line growth in the quarter under review.

Furthermore, well-performing CashApp is anticipated to continue aiding Square’s bitcoin revenues which has become a significant part of its business.

All these strong endeavours of the company are anticipated to benefit results in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Square has a Zacks Rank #2 and an Earnings ESP of +5.50%, which makes us reasonably confident of an earnings beat.

Other Stocks That Warrant a Look

Here are a few other stocks worth considering as our model shows that these too have the right combination of elements to deliver an earnings beat in the upcoming releases.

Paycom Software, Inc. (PAYC - Free Report) has an Earnings ESP of +3.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
    
Agilent Technologies, Inc. (A - Free Report) has an Earnings ESP of +2.10% and a Zacks Rank #2.

Ameren Corporation (AEE - Free Report) has an Earnings ESP of +3.70% and a Zacks Rank #3.

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