Square issues Q1 profit warning due to COVID-19
Square Inc. said it expected to report lower-than-expected revenue and earnings for the first quarter due to the COVID-19 pandemic, according to a presentation to investors.
The payments processing firm said the outbreak starting earlier this month had led to a slowdown in gross processing volume for its seller ecosystem. The beginning of the month was in line with expectations, but the company has seen a 25% reduction in seller GPV over 10 days and steeper declines in recent days.
Square officials said they expect to report revenue of $1.30 billion to $1.34 billion and gross profit of $515 million to $525 million. The company expects to report lower-than-expected net income, adjusted EBITDA and earnings per share than previous forecasts.
Square is now withdrawing its full-year 2020 financial estimates and will provide a new update in May when it reports quarterly earnings.
Square said prior to the COViD-19 impact, gross profit in January and February was up 47%, or 51% after excluding Caviar from the 2019 period. The growth was driven mainly by momentum across its Seller and Cash App ecosystems. Seller gross profit was up 32% over the year-ago period in January and February, while Cash App gross profit was up 118%, compared with a year ago.