FORM 10-K
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(Mark One)
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2015
OR
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o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Commission File Number 001-37622
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SQUARE, INC.
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||
(Exact name of registrant as specified in its charter)
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||
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Delaware
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80-0429876
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(State or other jurisdiction of
incorporation or organization)
|
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(I.R.S. Employer
Identification Number)
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1455 Market Street, Suite 600
San Francisco, CA 94103
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(Address of principal executive offices, including zip code)
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(415) 375-3176
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(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Name of each exchange on which registered
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Class A Common Stock, $0.0000001 par value per share
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES
o
NO
ý
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES
o
NO
ý
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES
ý
NO
o
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES
ý
NO
o
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
ý
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b‑2 of the Exchange Act. (Check one):
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Large accelerated filer
o
Non-accelerated filer
ý
(Do not check if a smaller reporting company)
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Accelerated filer
o
Smaller reporting company
o
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES
o
NO
ý
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Page No
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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1.
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Once the Buyer is ready to make a purchase, the Seller inputs the transaction into the Square point-of-sale (POS) and presents the Buyer with the amount owed.
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2.
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The Buyer pays for the transaction by swiping or dipping their payment card, or by tapping their NFC-enabled mobile device on the Square Reader or Square Stand, which captures the Buyer’s account information.
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3.
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The Square POS sends the payment transaction information to Square, which acts as the Payment Service Provider (PSP).
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4.
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Square passes the payment transaction information to the Acquiring Processor via an internet connection. Square pays a small fixed fee per transaction to the Acquiring Processor.
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5.
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The Acquiring Processor routes the payment transaction to the appropriate Card Network affiliated with the Buyer’s card such as Visa, Mastercard, Discover, or American Express. Square pays a variety of fees to the Card Network, the most significant of which are assessment fees that are typically less than
0.15%
of the transaction amount.
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6.
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The Acquiring Processor then routes the payment transaction through the Card Network to the Issuing Bank, which authorizes or declines the payment transaction for the Buyer’s payment card.
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7.
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Upon authorization, the Issuing Bank sends a notification back through the Card Network to the Square POS to inform the Seller that the transaction has been successfully authorized.
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8.
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The Square POS sends a digital receipt for the transaction to the Buyer, enabling a persistent communication channel between the Seller and the Buyer. For example, this is how the Buyer can send feedback to the Seller about the service provided.
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9.
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The Issuing Bank then triggers a disbursement of funds to the Acquiring Bank through the Card Network for the transaction amount. Square will ultimately pay the Issuing Bank an interchange fee as a percentage of the amount of the transaction plus a fixed fee per transaction, which together average between
1.5%
to
2.0%
of the transaction amount. However, this percentage can vary significantly based on the card type, transaction type, and transaction size.
|
10.
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Square transfers the funds to the Seller’s bank account, net of the fee charged by Square (typically
2.75%
of payment volume for card present transactions or
3.5%
of payment volume plus
$0.15
per transaction for card not present transactions). Square provides sellers with fast access to funds, typically settling with them by the next business day after the date of the transaction via Automated Clearing House (ACH) transfers, or the same day via its Instant Deposit service for an additional fee. Square pays a very small fee for each ACH transfer.
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11.
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The funds are settled from the Acquiring Bank to Square, typically in one to two business days after the date of the transaction.
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12.
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At the end of the month, the Issuing Bank sends a statement to the Buyer showing their monthly charges. The statement includes a reference to Square as the merchant of record on the billing statement as a prefix to the Seller name (denoted as SQ).
|
•
|
price and volume fluctuations in the overall stock market from time to time;
|
•
|
volatility in the market prices and trading volumes of companies in our industry or companies that investors consider comparable;
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•
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changes in operating performance and stock market valuations of other companies generally or of those in our industry in particular;
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•
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sales of shares of our common stock by us or our stockholders;
|
•
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failure of securities analysts to maintain coverage and/or to provide accurate consensus results of us, changes in financial estimates by securities analysts who follow us, or our failure to meet these estimates or the expectations of investors;
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•
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the financial or other projections we may provide to the public, any changes in those projections, or our failure to meet those projections;
|
•
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announcements by us or our competitors of new products or services;
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•
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the public’s reaction to our press releases, other public announcements, and filings with the SEC;
|
•
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rumors and market speculation involving us or other companies in our industry;
|
•
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actual or anticipated changes in our results of operations;
|
•
|
changes in the regulatory environment;
|
•
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actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally;
|
•
|
litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;
|
•
|
announced or completed acquisitions of businesses or technologies by us or our competitors;
|
•
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
|
•
|
changes in accounting standards, policies, guidelines, interpretations, or principles;
|
•
|
any significant change in our management; and
|
•
|
general economic conditions and slow or negative growth of our markets.
|
Year Ended December 31, 2015
|
|
High
|
|
Low
|
||||
Fourth Quarter (from November 19, 2015)
|
|
$
|
14.78
|
|
|
$
|
9.00
|
|
|
Year Ended December 31,
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||
|
(in thousands)
|
||||||||||||||
Product development
|
$
|
54,738
|
|
|
$
|
24,758
|
|
|
$
|
8,820
|
|
|
$
|
3,984
|
|
Sales and marketing
|
7,360
|
|
|
3,738
|
|
|
1,235
|
|
|
668
|
|
||||
General and administrative
|
20,194
|
|
|
7,604
|
|
|
4,603
|
|
|
3,462
|
|
||||
Total share-based compensation
|
$
|
82,292
|
|
|
$
|
36,100
|
|
|
$
|
14,658
|
|
|
$
|
8,114
|
|
|
December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
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(in thousands)
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
470,775
|
|
|
$
|
225,300
|
|
|
$
|
166,176
|
|
Settlements receivable
|
142,727
|
|
|
115,481
|
|
|
64,968
|
|
|||
Working capital
|
371,361
|
|
|
218,761
|
|
|
124,061
|
|
|||
Total assets
|
894,772
|
|
|
541,888
|
|
|
318,341
|
|
|||
Customers payable
|
224,811
|
|
|
148,648
|
|
|
95,794
|
|
|||
Total stockholders' equity
|
508,048
|
|
|
273,672
|
|
|
162,294
|
|
|
Year Ended December 31,
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||
|
(in thousands, except GPV)
|
||||||||||||||
Gross Payment Volume (GPV) (in millions)
|
$
|
35,643
|
|
|
$
|
23,780
|
|
|
$
|
14,822
|
|
|
$
|
6,518
|
|
Adjusted Revenue
|
$
|
452,168
|
|
|
$
|
276,310
|
|
|
$
|
160,144
|
|
|
$
|
67,627
|
|
Adjusted EBITDA
|
$
|
(41,115
|
)
|
|
$
|
(67,741
|
)
|
|
$
|
(51,530
|
)
|
|
$
|
(70,579
|
)
|
•
|
Adjusted Revenue excludes transaction costs, which is our largest cost of revenue item; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted Revenue differently from how we calculate this measure or not at all, which reduces its usefulness as a comparative measure.
|
|
Year Ended December 31,
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||
|
(in thousands)
|
||||||||||||||
Total net revenue
|
$
|
1,267,118
|
|
|
$
|
850,192
|
|
|
$
|
552,433
|
|
|
$
|
203,449
|
|
Less: Starbucks transaction revenue
|
142,283
|
|
|
123,024
|
|
|
114,456
|
|
|
9,471
|
|
||||
Less: transaction costs
|
672,667
|
|
|
450,858
|
|
|
277,833
|
|
|
126,351
|
|
||||
Adjusted Revenue
|
$
|
452,168
|
|
|
$
|
276,310
|
|
|
$
|
160,144
|
|
|
$
|
67,627
|
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or other capital commitments;
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA does not reflect the effect of income taxes that may represent a reduction in cash available to us;
|
•
|
Adjusted EBITDA does not reflect the effect of foreign currency exchange gains or losses which is included in other income and expense; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted EBITDA differently from how we calculate this measure or not at all, which reduces its usefulness as a comparative measure.
|
|
Year Ended December 31,
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||
|
(in thousands)
|
||||||||||||||
Net loss
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
|
$
|
(85,199
|
)
|
Starbucks transaction revenue
|
(142,283
|
)
|
|
(123,024
|
)
|
|
(114,456
|
)
|
|
(9,471
|
)
|
||||
Starbucks transaction costs
|
165,438
|
|
|
150,955
|
|
|
139,803
|
|
|
12,547
|
|
||||
Share-based compensation expense
|
82,292
|
|
|
36,100
|
|
|
14,658
|
|
|
8,114
|
|
||||
Depreciation and amortization
|
27,626
|
|
|
18,586
|
|
|
8,272
|
|
|
3,579
|
|
||||
Interest (income) and expense
|
1,163
|
|
|
1,058
|
|
|
(12
|
)
|
|
5
|
|
||||
Other (income) and expense
|
450
|
|
|
1,104
|
|
|
(950
|
)
|
|
(167
|
)
|
||||
Provision for income taxes
|
3,746
|
|
|
1,440
|
|
|
513
|
|
|
—
|
|
||||
Loss on sale of property and equipment
|
270
|
|
|
133
|
|
|
2,705
|
|
|
13
|
|
||||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
2,430
|
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
(41,115
|
)
|
|
$
|
(67,741
|
)
|
|
$
|
(51,530
|
)
|
|
$
|
(70,579
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Consolidated Statement of Operations Data:
|
|||||||||||
Revenue:
|
|
|
|
|
|
||||||
Transaction revenue
|
$
|
1,050,445
|
|
|
$
|
707,799
|
|
|
$
|
433,737
|
|
Starbucks transaction revenue
|
142,283
|
|
|
123,024
|
|
|
114,456
|
|
|||
Software and data product revenue
|
58,013
|
|
|
12,046
|
|
|
—
|
|
|||
Hardware revenue
|
16,377
|
|
|
7,323
|
|
|
4,240
|
|
|||
Total net revenue
|
1,267,118
|
|
|
850,192
|
|
|
552,433
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Transaction costs
|
672,667
|
|
|
450,858
|
|
|
277,833
|
|
|||
Starbucks transaction costs
|
165,438
|
|
|
150,955
|
|
|
139,803
|
|
|||
Software and data product costs
|
22,470
|
|
|
2,973
|
|
|
—
|
|
|||
Hardware costs
|
30,874
|
|
|
18,330
|
|
|
6,012
|
|
|||
Amortization of acquired technology
|
5,639
|
|
|
1,002
|
|
|
—
|
|
|||
Total cost of revenue
|
897,088
|
|
|
624,118
|
|
|
423,648
|
|
|||
Gross profit
|
370,030
|
|
|
226,074
|
|
|
128,785
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Product development
|
199,638
|
|
|
144,637
|
|
|
82,864
|
|
|||
Sales and marketing
|
145,618
|
|
|
112,577
|
|
|
64,162
|
|
|||
General and administrative
|
143,466
|
|
|
94,220
|
|
|
68,942
|
|
|||
Transaction and advance losses
|
54,009
|
|
|
24,081
|
|
|
15,329
|
|
|||
Amortization of acquired customer assets
|
1,757
|
|
|
1,050
|
|
|
—
|
|
|||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
2,430
|
|
|||
Total operating expenses
|
544,488
|
|
|
376,565
|
|
|
233,727
|
|
|||
Operating loss
|
(174,458
|
)
|
|
(150,491
|
)
|
|
(104,942
|
)
|
|||
Interest (income) and expense
|
1,163
|
|
|
1,058
|
|
|
(12
|
)
|
|||
Other (income) and expense
|
450
|
|
|
1,104
|
|
|
(950
|
)
|
|||
Loss before income tax
|
(176,071
|
)
|
|
(152,653
|
)
|
|
(103,980
|
)
|
|||
Provision for income taxes
|
3,746
|
|
|
1,440
|
|
|
513
|
|
|||
Net loss
|
(179,817
|
)
|
|
(154,093
|
)
|
|
(104,493
|
)
|
|||
Deemed dividend on Series E preferred stock
|
(32,200
|
)
|
|
—
|
|
|
—
|
|
|||
Net loss attributable to common stockholders
|
$
|
(212,017
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Product development
|
$
|
54,738
|
|
|
$
|
24,758
|
|
|
$
|
8,820
|
|
Sales and marketing
|
7,360
|
|
|
3,738
|
|
|
1,235
|
|
|||
General and administrative
|
20,194
|
|
|
7,604
|
|
|
4,603
|
|
|||
Total share-based compensation
|
$
|
82,292
|
|
|
$
|
36,100
|
|
|
$
|
14,658
|
|
|
Year Ended December 31,
|
|
2014 to 2015
|
|
2013 to 2014
|
||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands)
|
|
|
|
|
||||||||||||
Transaction revenue
|
$
|
1,050,445
|
|
|
$
|
707,799
|
|
|
$
|
433,737
|
|
|
48
|
%
|
|
63
|
%
|
Starbucks transaction revenue
|
142,283
|
|
|
123,024
|
|
|
114,456
|
|
|
16
|
%
|
|
7
|
%
|
|||
Software and data product revenue
|
58,013
|
|
|
12,046
|
|
|
—
|
|
|
382
|
%
|
|
NM
|
|
|||
Hardware revenue
|
16,377
|
|
|
7,323
|
|
|
4,240
|
|
|
124
|
%
|
|
73
|
%
|
|||
Total net revenue
|
$
|
1,267,118
|
|
|
$
|
850,192
|
|
|
$
|
552,433
|
|
|
49
|
%
|
|
54
|
%
|
|
Year Ended December 31,
|
|
2014 to 2015
|
|
2013 to 2014
|
||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands)
|
|
|
|
|
||||||||||||
Transaction costs
|
$
|
672,667
|
|
|
$
|
450,858
|
|
|
$
|
277,833
|
|
|
49
|
%
|
|
62
|
%
|
Starbucks transaction costs
|
165,438
|
|
|
150,955
|
|
|
139,803
|
|
|
10
|
%
|
|
8
|
%
|
|||
Software and data product costs
|
22,470
|
|
|
2,973
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
|||
Hardware costs
|
30,874
|
|
|
18,330
|
|
|
6,012
|
|
|
68
|
%
|
|
205
|
%
|
|||
Amortization of acquired technology
|
5,639
|
|
|
1,002
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
|||
Total cost of revenue
|
$
|
897,088
|
|
|
$
|
624,118
|
|
|
$
|
423,648
|
|
|
44
|
%
|
|
47
|
%
|
|
Year Ended December 31,
|
|
2014 to 2015
|
|
2013 to 2014
|
||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands)
|
|
|
|
|
||||||||||||
Product development
|
$
|
199,638
|
|
|
$
|
144,637
|
|
|
$
|
82,864
|
|
|
38
|
%
|
|
75
|
%
|
Percentage of total net revenue
|
16
|
%
|
|
17
|
%
|
|
15
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
2014 to 2015
|
|
2013 to 2014
|
||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands)
|
|
|
|
|
||||||||||||
Sales and marketing
|
$
|
145,618
|
|
|
$
|
112,577
|
|
|
$
|
64,162
|
|
|
29
|
%
|
|
75
|
%
|
Percentage of total net revenue
|
11
|
%
|
|
13
|
%
|
|
12
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
2014 to 2015
|
|
2013 to 2014
|
||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands)
|
|
|
|
|
||||||||||||
General and administrative
|
$
|
143,466
|
|
|
$
|
94,220
|
|
|
$
|
68,942
|
|
|
52
|
%
|
|
37
|
%
|
Percentage of total net revenue
|
11
|
%
|
|
11
|
%
|
|
12
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
2014 to 2015
|
|
2013 to 2014
|
||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands)
|
|
|
|
|
||||||||||||
Transaction and advance losses
|
$
|
54,009
|
|
|
$
|
24,081
|
|
|
$
|
15,329
|
|
|
124
|
%
|
|
57
|
%
|
|
Year Ended December 31,
|
|
2014 to 2015
|
|
2013 to 2014
|
|||||||||||
|
2015
|
|
2014
|
|
2013
|
|
% Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|
|
|
|
|||||||||||
Amortization of acquired customer assets
|
$
|
1,757
|
|
|
$
|
1,050
|
|
|
$
|
—
|
|
|
67
|
%
|
|
NM
|
|
Year Ended December 31,
|
|
2014 to 2015
|
|
2013 to 2014
|
|||||||||||
|
2015
|
|
2014
|
|
2013
|
|
% Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|
|
|
|
|||||||||||
Interest (income) and expense
|
$
|
1,163
|
|
|
$
|
1,058
|
|
|
$
|
(12
|
)
|
|
10
|
%
|
|
NM
|
Other (income) and expense
|
$
|
450
|
|
|
$
|
1,104
|
|
|
$
|
(950
|
)
|
|
(59
|
)%
|
|
NM
|
|
Year Ended December 31,
|
|
2014 to 2015
|
|
2013 to 2014
|
||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
% Change
|
|
% Change
|
||||||||
|
(in thousands)
|
|
|
|
|
||||||||||||
Provision for income taxes
|
$
|
3,746
|
|
|
$
|
1,440
|
|
|
$
|
513
|
|
|
160
|
%
|
|
181
|
%
|
|
Year Ended December 31,
|
|
2014 to 2015
|
|
2013 to 2014
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
% Change
|
|
% Change
|
||||||
|
(in thousands)
|
|
|
|
|
||||||||||
Deemed dividend on Series E preferred stock
|
$
|
(32,200
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
NM
|
|
NM
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
|
Dec. 31,
2014 |
|
Sep. 30,
2014 |
|
Jun. 30,
2014 |
|
Mar. 31,
2014 |
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Transaction revenue
|
$
|
298,516
|
|
|
$
|
280,955
|
|
|
$
|
259,864
|
|
|
$
|
211,110
|
|
|
$
|
206,331
|
|
|
$
|
191,560
|
|
|
$
|
172,894
|
|
|
$
|
137,014
|
|
Starbucks transaction revenue
|
47,084
|
|
|
32,332
|
|
|
33,630
|
|
|
29,237
|
|
|
36,516
|
|
|
29,895
|
|
|
30,147
|
|
|
26,466
|
|
||||||||
Software and data product revenue
|
22,385
|
|
|
14,694
|
|
|
12,928
|
|
|
8,006
|
|
|
6,024
|
|
|
3,733
|
|
|
1,766
|
|
|
523
|
|
||||||||
Hardware revenue
|
6,375
|
|
|
4,207
|
|
|
3,591
|
|
|
2,204
|
|
|
2,023
|
|
|
2,232
|
|
|
1,989
|
|
|
1,079
|
|
||||||||
Total net revenue
|
374,360
|
|
|
332,188
|
|
|
310,013
|
|
|
250,557
|
|
|
250,894
|
|
|
227,420
|
|
|
206,796
|
|
|
165,082
|
|
||||||||
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Transaction costs
|
192,730
|
|
|
182,007
|
|
|
165,823
|
|
|
132,107
|
|
|
132,357
|
|
|
122,425
|
|
|
109,801
|
|
|
86,275
|
|
||||||||
Starbucks transaction costs
|
46,896
|
|
|
41,410
|
|
|
40,921
|
|
|
36,211
|
|
|
43,066
|
|
|
37,377
|
|
|
37,496
|
|
|
33,016
|
|
||||||||
Software and data product costs
|
8,650
|
|
|
5,593
|
|
|
5,072
|
|
|
3,155
|
|
|
1,941
|
|
|
987
|
|
|
31
|
|
|
14
|
|
||||||||
Hardware costs
|
14,238
|
|
|
5,726
|
|
|
6,713
|
|
|
4,197
|
|
|
4,803
|
|
|
5,162
|
|
|
4,924
|
|
|
3,441
|
|
||||||||
Amortization of acquired technology
|
2,753
|
|
|
1,142
|
|
|
1,142
|
|
|
602
|
|
|
400
|
|
|
330
|
|
|
192
|
|
|
80
|
|
||||||||
Total cost of revenue
|
265,267
|
|
|
235,878
|
|
|
219,671
|
|
|
176,272
|
|
|
182,567
|
|
|
166,281
|
|
|
152,444
|
|
|
122,826
|
|
||||||||
Gross profit
|
109,093
|
|
|
96,310
|
|
|
90,342
|
|
|
74,285
|
|
|
68,327
|
|
|
61,139
|
|
|
54,352
|
|
|
42,256
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product development
|
59,186
|
|
|
55,020
|
|
|
45,887
|
|
|
39,545
|
|
|
39,670
|
|
|
39,483
|
|
|
34,551
|
|
|
30,933
|
|
||||||||
Sales and marketing
|
38,448
|
|
|
39,259
|
|
|
31,730
|
|
|
36,181
|
|
|
30,873
|
|
|
25,914
|
|
|
29,720
|
|
|
26,070
|
|
||||||||
General and administrative
|
45,723
|
|
|
37,820
|
|
|
31,804
|
|
|
28,119
|
|
|
25,635
|
|
|
24,514
|
|
|
20,669
|
|
|
23,402
|
|
||||||||
Transaction and advance losses
|
13,169
|
|
|
16,005
|
|
|
8,513
|
|
|
16,322
|
|
|
6,255
|
|
|
6,858
|
|
|
4,840
|
|
|
6,128
|
|
||||||||
Amortization of acquired customer assets
|
384
|
|
|
423
|
|
|
482
|
|
|
468
|
|
|
459
|
|
|
361
|
|
|
162
|
|
|
68
|
|
||||||||
Total operating expenses
|
156,910
|
|
|
148,527
|
|
|
118,416
|
|
|
120,635
|
|
|
102,892
|
|
|
97,130
|
|
|
89,942
|
|
|
86,601
|
|
||||||||
Operating loss
|
(47,817
|
)
|
|
(52,217
|
)
|
|
(28,074
|
)
|
|
(46,350
|
)
|
|
(34,565
|
)
|
|
(35,991
|
)
|
|
(35,590
|
)
|
|
(44,345
|
)
|
||||||||
Interest (income) and expense
|
168
|
|
|
137
|
|
|
444
|
|
|
414
|
|
|
443
|
|
|
433
|
|
|
180
|
|
|
2
|
|
||||||||
Other (income) and expense
|
(940
|
)
|
|
644
|
|
|
(50
|
)
|
|
796
|
|
|
367
|
|
|
957
|
|
|
(674
|
)
|
|
454
|
|
||||||||
Loss before income tax
|
(47,045
|
)
|
|
(52,998
|
)
|
|
(28,468
|
)
|
|
(47,560
|
)
|
|
(35,375
|
)
|
|
(37,381
|
)
|
|
(35,096
|
)
|
|
(44,801
|
)
|
||||||||
Provision (benefit) for income taxes
|
1,244
|
|
|
932
|
|
|
1,152
|
|
|
418
|
|
|
1,697
|
|
|
285
|
|
|
268
|
|
|
(810
|
)
|
||||||||
Net loss
|
(48,289
|
)
|
|
(53,930
|
)
|
|
(29,620
|
)
|
|
(47,978
|
)
|
|
(37,072
|
)
|
|
(37,666
|
)
|
|
(35,364
|
)
|
|
(43,991
|
)
|
||||||||
Deemed dividend on Series E preferred stock
|
(32,200
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net loss attributable to common stockholders
|
$
|
(80,489
|
)
|
|
$
|
(53,930
|
)
|
|
$
|
(29,620
|
)
|
|
$
|
(47,978
|
)
|
|
$
|
(37,072
|
)
|
|
$
|
(37,666
|
)
|
|
$
|
(35,364
|
)
|
|
$
|
(43,991
|
)
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
(0.34
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.32
|
)
|
Diluted
|
$
|
(0.34
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.32
|
)
|
Weighted-average shares used to compute net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
234,548
|
|
|
152,334
|
|
|
149,253
|
|
|
145,069
|
|
|
148,031
|
|
|
143,671
|
|
|
140,821
|
|
|
135,417
|
|
||||||||
Diluted
|
234,548
|
|
|
152,334
|
|
|
149,253
|
|
|
145,069
|
|
|
148,031
|
|
|
143,671
|
|
|
140,821
|
|
|
135,417
|
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
|
Dec. 31,
2014 |
|
Sep. 30,
2014 |
|
Jun. 30,
2014 |
|
Mar. 31,
2014 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Share-Based Compensation
|
(unaudited)
|
||||||||||||||||||||||||||||||
Product development
|
$
|
21,451
|
|
|
$
|
13,938
|
|
|
$
|
10,391
|
|
|
$
|
8,958
|
|
|
$
|
7,851
|
|
|
$
|
7,086
|
|
|
$
|
5,556
|
|
|
$
|
4,265
|
|
Sales and marketing
|
2,836
|
|
|
1,750
|
|
|
1,345
|
|
|
1,429
|
|
|
1,185
|
|
|
1,070
|
|
|
839
|
|
|
644
|
|
||||||||
General and administrative
|
8,519
|
|
|
5,105
|
|
|
3,496
|
|
|
3,074
|
|
|
2,411
|
|
|
2,176
|
|
|
1,707
|
|
|
1,310
|
|
||||||||
Total share-based compensation
|
$
|
32,806
|
|
|
$
|
20,793
|
|
|
$
|
15,232
|
|
|
$
|
13,461
|
|
|
$
|
11,447
|
|
|
$
|
10,332
|
|
|
$
|
8,102
|
|
|
$
|
6,219
|
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
|
Dec. 31,
2014 |
|
Sep. 30,
2014 |
|
Jun. 30,
2014 |
|
Mar. 31,
2014 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Key Operating Metrics and non-GAAP Financial Measures
|
(unaudited)
|
||||||||||||||||||||||||||||||
GPV (in millions)
|
$
|
10,193
|
|
|
$
|
9,540
|
|
|
$
|
8,793
|
|
|
$
|
7,117
|
|
|
$
|
6,955
|
|
|
$
|
6,430
|
|
|
$
|
5,789
|
|
|
$
|
4,605
|
|
Adjusted Revenue
|
$
|
134,546
|
|
|
$
|
117,849
|
|
|
$
|
110,560
|
|
|
$
|
89,213
|
|
|
$
|
82,021
|
|
|
$
|
75,100
|
|
|
$
|
66,848
|
|
|
$
|
52,341
|
|
Adjusted EBITDA
|
$
|
(6,069
|
)
|
|
$
|
(15,776
|
)
|
|
$
|
859
|
|
|
$
|
(20,129
|
)
|
|
$
|
(10,692
|
)
|
|
$
|
(13,047
|
)
|
|
$
|
(16,220
|
)
|
|
$
|
(27,782
|
)
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
|
Dec. 31,
2014 |
|
Sep. 30,
2014 |
|
Jun. 30,
2014 |
|
Mar. 31,
2014 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Adjusted Revenue Reconciliation
|
(unaudited)
|
||||||||||||||||||||||||||||||
Total net revenue
|
$
|
374,360
|
|
|
$
|
332,188
|
|
|
$
|
310,013
|
|
|
$
|
250,557
|
|
|
$
|
250,894
|
|
|
$
|
227,420
|
|
|
$
|
206,796
|
|
|
$
|
165,082
|
|
Less: Starbucks transaction revenue
|
47,084
|
|
|
32,332
|
|
|
33,630
|
|
|
29,237
|
|
|
36,516
|
|
|
29,895
|
|
|
30,147
|
|
|
26,466
|
|
||||||||
Less: Transaction costs
|
192,730
|
|
|
182,007
|
|
|
165,823
|
|
|
132,107
|
|
|
132,357
|
|
|
122,425
|
|
|
109,801
|
|
|
86,275
|
|
||||||||
Adjusted Revenue
|
$
|
134,546
|
|
|
$
|
117,849
|
|
|
$
|
110,560
|
|
|
$
|
89,213
|
|
|
$
|
82,021
|
|
|
$
|
75,100
|
|
|
$
|
66,848
|
|
|
$
|
52,341
|
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
|
Dec. 31,
2014 |
|
Sep. 30,
2014 |
|
Jun. 30,
2014 |
|
Mar. 31,
2014 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Adjusted EBITDA Reconciliation
|
(unaudited)
|
||||||||||||||||||||||||||||||
Net loss
|
$
|
(48,289
|
)
|
|
$
|
(53,930
|
)
|
|
$
|
(29,620
|
)
|
|
$
|
(47,978
|
)
|
|
$
|
(37,072
|
)
|
|
$
|
(37,666
|
)
|
|
$
|
(35,364
|
)
|
|
$
|
(43,991
|
)
|
Starbucks transaction revenue
|
(47,084
|
)
|
|
(32,332
|
)
|
|
(33,630
|
)
|
|
(29,237
|
)
|
|
(36,516
|
)
|
|
(29,895
|
)
|
|
(30,147
|
)
|
|
(26,466
|
)
|
||||||||
Starbucks transaction costs
|
46,896
|
|
|
41,410
|
|
|
40,921
|
|
|
36,211
|
|
|
43,066
|
|
|
37,377
|
|
|
37,496
|
|
|
33,016
|
|
||||||||
Share-based compensation expense
|
32,806
|
|
|
20,793
|
|
|
15,232
|
|
|
13,461
|
|
|
11,447
|
|
|
10,332
|
|
|
8,102
|
|
|
6,219
|
|
||||||||
Depreciation and amortization
|
9,100
|
|
|
6,570
|
|
|
6,410
|
|
|
5,546
|
|
|
5,743
|
|
|
5,130
|
|
|
3,919
|
|
|
3,794
|
|
||||||||
Interest (income) and expense
|
168
|
|
|
137
|
|
|
444
|
|
|
414
|
|
|
443
|
|
|
433
|
|
|
180
|
|
|
2
|
|
||||||||
Other (income) and expense
|
(940
|
)
|
|
644
|
|
|
(50
|
)
|
|
796
|
|
|
367
|
|
|
957
|
|
|
(674
|
)
|
|
454
|
|
||||||||
Provision (benefit) for income taxes
|
1,244
|
|
|
932
|
|
|
1,152
|
|
|
418
|
|
|
1,697
|
|
|
285
|
|
|
268
|
|
|
(810
|
)
|
||||||||
Loss on sale of property and equipment
|
30
|
|
|
—
|
|
|
—
|
|
|
240
|
|
|
133
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Adjusted EBITDA
|
$
|
(6,069
|
)
|
|
$
|
(15,776
|
)
|
|
$
|
859
|
|
|
$
|
(20,129
|
)
|
|
$
|
(10,692
|
)
|
|
$
|
(13,047
|
)
|
|
$
|
(16,220
|
)
|
|
$
|
(27,782
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
470,775
|
|
|
$
|
225,300
|
|
|
$
|
166,176
|
|
Short-term restricted cash
|
13,537
|
|
|
11,950
|
|
|
10,000
|
|
|||
Long-term restricted cash
|
14,686
|
|
|
14,394
|
|
|
9,270
|
|
|||
Net loss
|
(179,817
|
)
|
|
(154,093
|
)
|
|
(104,493
|
)
|
|||
Net cash (used in) / provided by operating activities
|
27,584
|
|
|
(109,394
|
)
|
|
(60,577
|
)
|
|||
Net cash used in investing activities
|
(45,096
|
)
|
|
(24,554
|
)
|
|
(10,803
|
)
|
|||
Net cash provided by financing activities
|
264,763
|
|
|
194,152
|
|
|
18,907
|
|
•
|
Timing of period end
. For periods that end on a weekend or a bank holiday our cash and cash equivalents, settlements receivable and customers payable amounts typically will be more than for periods ending on a weekday, as we settle to our sellers for payment processing activity on business days; and
|
•
|
Fluctuations in daily GPV
. When daily GPV increases, our cash and cash equivalents, settlements receivable, and customers payable amounts increase. Typically our cash, cash equivalents, settlements receivable, and customers payable balances at period end represent one to three days of receivables and disbursements to be made in the subsequent period. Customers payable and settlements receivable balances typically move in tandem, as pay-out and pay-in largely occur on the same business day. However, customers payable balances will be greater in amount than settlements receivable due to the fact that a subset of funds are held due to unlinked bank accounts, risk holds and chargebacks. Holidays and day-of-week may also cause significant volatility in daily GPV amounts.
|
|
Payments due by period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating leases
|
128,974
|
|
|
15,437
|
|
|
30,906
|
|
|
31,002
|
|
|
51,629
|
|
|||||
Capital leases
|
114
|
|
|
62
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|||||
Purchase commitments
|
27,307
|
|
|
27,307
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
156,395
|
|
|
$
|
42,806
|
|
|
$
|
30,958
|
|
|
$
|
31,002
|
|
|
$
|
51,629
|
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Risk-free interest rate
|
1.73
|
%
|
|
1.85
|
%
|
|
1.55
|
%
|
Expected volatility
|
47.68
|
%
|
|
46.95
|
%
|
|
46.47
|
%
|
Expected term (years)
|
6.02
|
|
|
6.06
|
|
|
6.09
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Share-based compensation expense:
|
|
|
|
|
|
||||||
Product development
|
$
|
54,738
|
|
|
$
|
24,758
|
|
|
$
|
8,820
|
|
Sales and marketing
|
7,360
|
|
|
3,738
|
|
|
1,235
|
|
|||
General and administrative
|
20,194
|
|
|
7,604
|
|
|
4,603
|
|
|||
Total
|
$
|
82,292
|
|
|
$
|
36,100
|
|
|
$
|
14,658
|
|
Page No
|
|
|
|
|
|
||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
470,775
|
|
|
$
|
225,300
|
|
Restricted cash
|
13,537
|
|
|
11,950
|
|
||
Settlements receivable
|
142,727
|
|
|
115,481
|
|
||
Merchant cash advance receivable, net
|
36,473
|
|
|
29,302
|
|
||
Other current assets
|
42,051
|
|
|
27,834
|
|
||
Total current assets
|
705,563
|
|
|
409,867
|
|
||
Property and equipment, net
|
87,222
|
|
|
63,733
|
|
||
Goodwill
|
56,699
|
|
|
40,267
|
|
||
Acquired intangible assets, net
|
26,776
|
|
|
10,279
|
|
||
Restricted cash
|
14,686
|
|
|
14,394
|
|
||
Other assets
|
3,826
|
|
|
3,348
|
|
||
Total assets
|
$
|
894,772
|
|
|
$
|
541,888
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
18,869
|
|
|
$
|
5,436
|
|
Customers payable
|
224,811
|
|
|
148,648
|
|
||
Accrued transaction losses
|
17,176
|
|
|
8,452
|
|
||
Accrued expenses
|
44,401
|
|
|
17,368
|
|
||
Other current liabilities
|
28,945
|
|
|
11,202
|
|
||
Total current liabilities
|
334,202
|
|
|
191,106
|
|
||
Debt
|
—
|
|
|
30,000
|
|
||
Other liabilities
|
52,522
|
|
|
47,110
|
|
||
Total liabilities
|
386,724
|
|
|
268,216
|
|
||
Commitments and contingencies (Note 16)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.0000001 par value: 100,000,000 and 135,339,499 shares authorized at December 31, 2015 and December 31, 2014, respectively. None issued and outstanding at December 31, 2015 and 135,252,809 shares issued and outstanding at December 31, 2014.
|
—
|
|
|
514,945
|
|
||
Common stock, $0.0000001 par value: 1,000,000,000 Class A shares authorized; 31,717,133 issued and outstanding at December 31, 2015. No Class A shares authorized, issued, and outstanding at December 31, 2014. 500,000,000 and 445,000,000 Class B shares authorized; 303,232,312 and 154,603,683 issued and outstanding at December 31, 2015 and December 31, 2014, respectively.
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,116,882
|
|
|
155,166
|
|
||
Accumulated other comprehensive loss
|
(1,185
|
)
|
|
(807
|
)
|
||
Accumulated deficit
|
(607,649
|
)
|
|
(395,632
|
)
|
||
Total stockholders’ equity
|
508,048
|
|
|
273,672
|
|
||
Total liabilities and stockholders’ equity
|
$
|
894,772
|
|
|
$
|
541,888
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Transaction revenue
|
$
|
1,050,445
|
|
|
$
|
707,799
|
|
|
$
|
433,737
|
|
Starbucks transaction revenue
|
142,283
|
|
|
123,024
|
|
|
114,456
|
|
|||
Software and data product revenue
|
58,013
|
|
|
12,046
|
|
|
—
|
|
|||
Hardware revenue
|
16,377
|
|
|
7,323
|
|
|
4,240
|
|
|||
Total net revenue
|
1,267,118
|
|
|
850,192
|
|
|
552,433
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Transaction costs
|
672,667
|
|
|
450,858
|
|
|
277,833
|
|
|||
Starbucks transaction costs
|
165,438
|
|
|
150,955
|
|
|
139,803
|
|
|||
Software and data product costs
|
22,470
|
|
|
2,973
|
|
|
—
|
|
|||
Hardware costs
|
30,874
|
|
|
18,330
|
|
|
6,012
|
|
|||
Amortization of acquired technology
|
5,639
|
|
|
1,002
|
|
|
—
|
|
|||
Total cost of revenue
|
897,088
|
|
|
624,118
|
|
|
423,648
|
|
|||
Gross profit
|
370,030
|
|
|
226,074
|
|
|
128,785
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Product development
|
199,638
|
|
|
144,637
|
|
|
82,864
|
|
|||
Sales and marketing
|
145,618
|
|
|
112,577
|
|
|
64,162
|
|
|||
General and administrative
|
143,466
|
|
|
94,220
|
|
|
68,942
|
|
|||
Transaction and advance losses
|
54,009
|
|
|
24,081
|
|
|
15,329
|
|
|||
Amortization of acquired customer assets
|
1,757
|
|
|
1,050
|
|
|
—
|
|
|||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
2,430
|
|
|||
Total operating expenses
|
544,488
|
|
|
376,565
|
|
|
233,727
|
|
|||
Operating loss
|
(174,458
|
)
|
|
(150,491
|
)
|
|
(104,942
|
)
|
|||
Interest (income) and expense
|
1,163
|
|
|
1,058
|
|
|
(12
|
)
|
|||
Other (income) and expense
|
450
|
|
|
1,104
|
|
|
(950
|
)
|
|||
Loss before income tax
|
(176,071
|
)
|
|
(152,653
|
)
|
|
(103,980
|
)
|
|||
Provision for income taxes
|
3,746
|
|
|
1,440
|
|
|
513
|
|
|||
Net loss
|
(179,817
|
)
|
|
(154,093
|
)
|
|
(104,493
|
)
|
|||
Deemed dividend on Series E preferred stock
|
(32,200
|
)
|
|
—
|
|
|
—
|
|
|||
Net loss attributable to common stockholders
|
$
|
(212,017
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.24
|
)
|
|
$
|
(1.08
|
)
|
|
$
|
(0.82
|
)
|
Diluted
|
$
|
(1.24
|
)
|
|
$
|
(1.08
|
)
|
|
$
|
(0.82
|
)
|
Weighted-average shares used to compute net loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
170,498
|
|
|
142,042
|
|
|
127,845
|
|
|||
Diluted
|
170,498
|
|
|
142,042
|
|
|
127,845
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net loss
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
Net foreign currency translation adjustments
|
(378
|
)
|
|
(114
|
)
|
|
(689
|
)
|
|||
Total comprehensive loss
|
$
|
(180,195
|
)
|
|
$
|
(154,207
|
)
|
|
$
|
(105,182
|
)
|
|
|
Convertible preferred stock
|
|
Class A and B Common stock
|
|
Additional paid-in
|
|
Accumulated other comprehensive
|
|
Accumulated
|
|
Total stockholders’
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
capital
|
|
loss
|
|
deficit
|
|
equity
|
||||||||||||||
Balance at December 31, 2012
|
134,528,520
|
|
|
$
|
366,196
|
|
|
132,969,970
|
|
|
$
|
—
|
|
|
$
|
14,719
|
|
|
$
|
(4
|
)
|
|
$
|
(137,046
|
)
|
|
$
|
243,865
|
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(104,493
|
)
|
|
(104,493
|
)
|
||||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
7,900,670
|
|
|
—
|
|
|
4,858
|
|
|
—
|
|
|
—
|
|
|
4,858
|
|
||||||
|
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,052
|
|
|
—
|
|
|
—
|
|
|
3,052
|
|
||||||
|
Issuance of common stock
|
—
|
|
|
—
|
|
|
50,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Issuance of common stock in connection with business combination
|
—
|
|
|
—
|
|
|
242,700
|
|
|
—
|
|
|
278
|
|
|
—
|
|
|
—
|
|
|
278
|
|
||||||
|
Starbucks common stock warrant
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
764
|
|
|
—
|
|
|
—
|
|
|
764
|
|
||||||
|
Series D preferred stock financing
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(3,145,840
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Change in foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(689
|
)
|
|
—
|
|
|
(689
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,658
|
|
|
—
|
|
|
—
|
|
|
14,658
|
|
|||||||
Balance at December 31, 2013
|
134,528,520
|
|
|
$
|
366,197
|
|
|
138,017,900
|
|
|
$
|
—
|
|
|
$
|
38,329
|
|
|
$
|
(693
|
)
|
|
$
|
(241,539
|
)
|
|
$
|
162,294
|
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(154,093
|
)
|
|
(154,093
|
)
|
||||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
9,403,147
|
|
|
—
|
|
|
8,685
|
|
|
—
|
|
|
—
|
|
|
8,685
|
|
||||||
|
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,128
|
|
|
—
|
|
|
—
|
|
|
11,128
|
|
||||||
|
Issuance of common stock in connection with business combinations
|
—
|
|
|
—
|
|
|
8,384,156
|
|
|
—
|
|
|
59,576
|
|
|
—
|
|
|
—
|
|
|
59,576
|
|
||||||
|
Issuance of common stock
|
—
|
|
|
—
|
|
|
24,220
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Series E preferred stock financing
|
9,700,289
|
|
|
148,748
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
148,748
|
|
||||||
Contribution of preferred stock
|
(8,976,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(1,225,740
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Change in foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(114
|
)
|
|
—
|
|
|
(114
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,100
|
|
|
—
|
|
|
—
|
|
|
36,100
|
|
|||||||
Tax benefit from share-based award activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,348
|
|
|
—
|
|
|
—
|
|
|
1,348
|
|
|||||||
Balance at December 31, 2014
|
135,252,809
|
|
|
$
|
514,945
|
|
|
154,603,683
|
|
|
$
|
—
|
|
|
$
|
155,166
|
|
|
$
|
(807
|
)
|
|
$
|
(395,632
|
)
|
|
$
|
273,672
|
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(179,817
|
)
|
|
(179,817
|
)
|
||||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Issuance of common stock upon initial public offering, net of issuance costs
|
—
|
|
|
—
|
|
|
29,700,000
|
|
|
|
|
|
245,726
|
|
|
—
|
|
|
—
|
|
|
245,726
|
|
||||||
|
Series E preferred stock financing
|
1,940,058
|
|
|
29,952
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,952
|
|
||||||
|
Conversion of Series A, B, C, D & E preferred stock upon initial public offering to common stock
|
(137,192,867
|
)
|
|
(544,897
|
)
|
|
137,192,867
|
|
|
|
|
|
544,897
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Convertible preferred stock
|
|
Class A and B Common stock
|
|
Additional paid-in
|
|
Accumulated other comprehensive
|
|
Accumulated
|
|
Total stockholders’
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
capital
|
|
loss
|
|
deficit
|
|
equity
|
||||||||||||||
|
Deemed dividend on Series E preferred stock
|
—
|
|
|
—
|
|
|
10,299,696
|
|
|
—
|
|
|
32,200
|
|
|
—
|
|
|
(32,200
|
)
|
|
—
|
|
||||||
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
5,544,785
|
|
|
—
|
|
|
14,766
|
|
|
—
|
|
|
—
|
|
|
14,766
|
|
||||||
|
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,958
|
|
|
—
|
|
|
—
|
|
|
4,958
|
|
||||||
|
Issuance of common stock related to acquisitions
|
—
|
|
|
—
|
|
|
3,591,014
|
|
|
—
|
|
|
35,776
|
|
|
—
|
|
|
—
|
|
|
35,776
|
|
||||||
|
Issuance of common stock
|
—
|
|
|
—
|
|
|
3,777
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Contribution of common stock
|
—
|
|
|
—
|
|
|
(5,068,238
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(918,139
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Change in foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(378
|
)
|
|
—
|
|
|
(378
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
82,292
|
|
|
—
|
|
|
—
|
|
|
82,292
|
|
|||||||
Tax benefit from share-based award activity
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
1,101
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,101
|
|
|
Balance at December 31, 2015
|
—
|
|
|
$
|
—
|
|
|
334,949,445
|
|
|
$
|
—
|
|
|
$
|
1,116,882
|
|
|
$
|
(1,185
|
)
|
|
$
|
(607,649
|
)
|
|
$
|
508,048
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
27,626
|
|
|
18,586
|
|
|
8,272
|
|
|||
Share-based compensation
|
82,292
|
|
|
36,100
|
|
|
14,658
|
|
|||
Excess tax benefit from share-based payment activity
|
(1,101
|
)
|
|
(1,348
|
)
|
|
—
|
|
|||
Provision for transaction losses
|
43,379
|
|
|
18,478
|
|
|
15,080
|
|
|||
Provision for uncollectible receivables related to merchant cash advances
|
6,240
|
|
|
2,431
|
|
|
—
|
|
|||
Deferred provision for income taxes
|
26
|
|
|
(2,664
|
)
|
|
—
|
|
|||
Loss on disposal of property and equipment
|
270
|
|
|
133
|
|
|
2,705
|
|
|||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
2,430
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Settlements receivable
|
(27,420
|
)
|
|
(50,361
|
)
|
|
(27,704
|
)
|
|||
Merchant cash advance receivable
|
(13,411
|
)
|
|
(31,733
|
)
|
|
—
|
|
|||
Other current assets
|
(13,225
|
)
|
|
(14,323
|
)
|
|
(2,384
|
)
|
|||
Other assets
|
1,220
|
|
|
(636
|
)
|
|
(37
|
)
|
|||
Accounts payable
|
7,831
|
|
|
179
|
|
|
(942
|
)
|
|||
Customers payable
|
76,008
|
|
|
52,956
|
|
|
21,148
|
|
|||
Charge-offs and recoveries to accrued transaction losses
|
(34,655
|
)
|
|
(17,514
|
)
|
|
(13,613
|
)
|
|||
Accrued expenses
|
21,450
|
|
|
8,113
|
|
|
9,912
|
|
|||
Other current liabilities
|
19,760
|
|
|
3,007
|
|
|
103
|
|
|||
Other liabilities
|
11,111
|
|
|
23,295
|
|
|
14,288
|
|
|||
Net cash (used in) provided by operating activities
|
27,584
|
|
|
(109,394
|
)
|
|
(60,577
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchase of property and equipment
|
(37,432
|
)
|
|
(28,794
|
)
|
|
(47,931
|
)
|
|||
Payment for acquisition of intangible assets
|
(1,286
|
)
|
|
(400
|
)
|
|
—
|
|
|||
(Increases) decreases in restricted cash
|
(1,878
|
)
|
|
(7,075
|
)
|
|
40,000
|
|
|||
Business acquisitions (net of cash acquired)
|
(4,500
|
)
|
|
11,715
|
|
|
(2,872
|
)
|
|||
Net cash used in investing activities:
|
(45,096
|
)
|
|
(24,554
|
)
|
|
(10,803
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of preferred stock, net
|
29,952
|
|
|
148,748
|
|
|
1
|
|
|||
Proceeds from issuance of common stock upon initial public offering, net of offering costs
|
251,257
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from debt
|
—
|
|
|
30,000
|
|
|
—
|
|
|||
Principal payments on debt
|
(30,000
|
)
|
|
—
|
|
|
—
|
|
|||
Payments of debt issuance costs
|
(1,387
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from the exercise of stock options
|
13,840
|
|
|
14,056
|
|
|
18,906
|
|
|||
Excess tax benefit from share-based payment award
|
1,101
|
|
|
1,348
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
264,763
|
|
|
194,152
|
|
|
18,907
|
|
|||
Effect of foreign exchange rate on cash and cash equivalents
|
(1,776
|
)
|
|
(1,080
|
)
|
|
(760
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
245,475
|
|
|
59,124
|
|
|
(53,233
|
)
|
|||
Cash and cash equivalents, beginning of the year
|
225,300
|
|
|
166,176
|
|
|
219,409
|
|
|||
Cash and cash equivalents, end of the year
|
$
|
470,775
|
|
|
$
|
225,300
|
|
|
$
|
166,176
|
|
•
|
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date
|
•
|
Level 2 Inputs: Other than quoted prices included in Level 1 Inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability
|
•
|
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
|
Property and Equipment
|
|
Useful Life
|
Capitalized software
|
|
18 to 36 months
|
Computer and data center equipment
|
|
Three years
|
Furniture and fixtures
|
|
Seven years
|
Leasehold improvements
|
|
Lesser of estimated useful life or remaining lease term
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Cash and Cash Equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
337,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
132,217
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
337,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
132,217
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||
|
2015
|
|
2014
|
||||
Allowance for uncollectible receivables, beginning of the year
|
$
|
2,431
|
|
|
$
|
—
|
|
Provision for uncollectible receivables
|
6,240
|
|
|
2,431
|
|
||
Receivables charged off
|
(1,228
|
)
|
|
—
|
|
||
Allowance for uncollectible receivables, end of the year
|
$
|
7,443
|
|
|
$
|
2,431
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
Computer equipment
|
$
|
43,531
|
|
|
$
|
31,596
|
|
Office furniture and equipment
|
9,339
|
|
|
6,488
|
|
||
Leasehold improvements
|
65,298
|
|
|
40,771
|
|
||
Capitalized software
|
14,533
|
|
|
10,034
|
|
||
Construction in process
|
490
|
|
|
1,391
|
|
||
Total
|
133,191
|
|
|
90,280
|
|
||
Less: Accumulated depreciation and amortization
|
(45,969
|
)
|
|
(26,547
|
)
|
||
Property and equipment, net
|
$
|
87,222
|
|
|
$
|
63,733
|
|
Consideration:
|
|
||
Stock (4,926,701 shares of common stock)
|
$
|
44,143
|
|
Options (49,425 common stock options)
|
173
|
|
|
|
$
|
44,316
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed:
|
|
||
Current assets (inclusive of cash acquired of $11,644)
|
$
|
11,823
|
|
Non-current assets
|
667
|
|
|
Intangible customer assets
|
5,300
|
|
|
Intangible technology assets
|
2,500
|
|
|
Total liabilities assumed
|
(3,026
|
)
|
|
Total identifiable net assets acquired
|
17,264
|
|
|
Goodwill
|
27,052
|
|
|
Total
|
$
|
44,316
|
|
Consideration:
|
|
||
Stock (2,103,560 shares of common stock)
|
$
|
15,259
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed:
|
|
||
Current assets (inclusive of cash acquired of $71)
|
$
|
128
|
|
Non-current assets
|
9
|
|
|
Intangible customer assets
|
1,300
|
|
|
Intangible technology assets
|
2,300
|
|
|
Total liabilities assumed
|
(1,091
|
)
|
|
Total identifiable net assets assumed
|
2,646
|
|
|
Goodwill
|
12,613
|
|
|
Total
|
$
|
15,259
|
|
Consideration:
|
|
||
Cash
|
$
|
2,872
|
|
Stock (63,680 shares of common stock)
|
278
|
|
|
Fair value of total consideration transferred
|
$
|
3,150
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed:
|
|
||
Current assets
|
$
|
91
|
|
Property and equipment
|
27
|
|
|
Intangible assets
|
2,430
|
|
|
Total identifiable net assets assumed
|
2,548
|
|
|
Goodwill
|
602
|
|
|
Total
|
$
|
3,150
|
|
Balance at December 31, 2012
|
$
|
—
|
|
Acquisition of Minetta, LLC
|
602
|
|
|
Balance at December 31, 2013
|
$
|
602
|
|
Acquisition of BookFresh, LLC
|
12,613
|
|
|
Acquisition of Caviar, Inc.
|
27,052
|
|
|
Balance at December 31, 2014
|
$
|
40,267
|
|
Acquisitions completed during the year ended December 31, 2015
|
16,432
|
|
|
Balance at December 31, 2015
|
$
|
56,699
|
|
|
Balance at December 31, 2015
|
||||||||||
Cost
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Patents
|
$
|
1,285
|
|
|
$
|
(348
|
)
|
|
$
|
937
|
|
Technology Assets
|
28,645
|
|
|
(6,644
|
)
|
|
22,001
|
|
|||
Customer Assets
|
6,645
|
|
|
(2,807
|
)
|
|
3,838
|
|
|||
Total
|
$
|
36,575
|
|
|
$
|
(9,799
|
)
|
|
$
|
26,776
|
|
|
Balance at December 31, 2014
|
||||||||||
Cost
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Patents
|
$
|
1,175
|
|
|
$
|
(244
|
)
|
|
$
|
931
|
|
Technology Assets
|
4,800
|
|
|
(1,002
|
)
|
|
3,798
|
|
|||
Customer Assets
|
6,600
|
|
|
(1,050
|
)
|
|
5,550
|
|
|||
Total
|
$
|
12,575
|
|
|
$
|
(2,296
|
)
|
|
$
|
10,279
|
|
2016
|
|
$
|
9,790
|
|
2017
|
|
7,087
|
|
|
2018
|
|
4,686
|
|
|
2019
|
|
2,883
|
|
|
2020
|
|
1,070
|
|
|
Thereafter
|
1,260
|
|
||
Total
|
$
|
26,776
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
Accounts receivable
|
$
|
4,808
|
|
|
$
|
1,784
|
|
Prepaid expenses
|
7,101
|
|
|
5,108
|
|
||
Deferred reader costs
|
4,018
|
|
|
2,488
|
|
||
Inventory
|
11,864
|
|
|
2,991
|
|
||
Tenant improvement reimbursement receivable
|
1,788
|
|
|
10,139
|
|
||
Deferred hardware costs
|
1,709
|
|
|
2,265
|
|
||
Processing costs receivable
|
7,847
|
|
|
896
|
|
||
Other
|
2,916
|
|
|
2,163
|
|
||
Total
|
$
|
42,051
|
|
|
$
|
27,834
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
Accrued hardware costs
|
$
|
11,622
|
|
|
$
|
2,744
|
|
Processing costs payable
|
11,417
|
|
|
—
|
|
||
Accrued professional fees
|
7,642
|
|
|
2,703
|
|
||
Accrued payroll
|
2,660
|
|
|
547
|
|
||
Other accrued liabilities
|
11,060
|
|
|
11,374
|
|
||
Total
|
$
|
44,401
|
|
|
$
|
17,368
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
Settlements payable
|
$
|
13,105
|
|
|
$
|
—
|
|
Employee early exercised stock options
|
2,141
|
|
|
5,827
|
|
||
Accrued redemptions
|
1,066
|
|
|
2,020
|
|
||
Current portion of deferred rent
|
2,393
|
|
|
1,567
|
|
||
Deferred tax liabilities
|
—
|
|
|
454
|
|
||
Deferred revenue
|
6,623
|
|
|
909
|
|
||
Other
|
3,617
|
|
|
425
|
|
||
Total
|
$
|
28,945
|
|
|
$
|
11,202
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
Deposits
|
$
|
1,993
|
|
|
$
|
2,663
|
|
Deferred tax assets
|
188
|
|
|
454
|
|
||
Other
|
1,645
|
|
|
231
|
|
||
Total
|
$
|
3,826
|
|
|
$
|
3,348
|
|
|
December 31,
2015 |
|
December 31,
2014 |
||||
Deferred rent
|
$
|
25,543
|
|
|
$
|
26,625
|
|
Employee early exercised stock options
|
1,128
|
|
|
3,363
|
|
||
Deferred tax liabilities
|
299
|
|
|
—
|
|
||
Statutory liabilities
|
25,492
|
|
|
17,000
|
|
||
Other
|
60
|
|
|
122
|
|
||
Total
|
$
|
52,522
|
|
|
$
|
47,110
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Accrued transaction losses, beginning of the year
|
$
|
8,452
|
|
|
$
|
7,488
|
|
|
$
|
6,021
|
|
Provision for transaction losses
|
43,379
|
|
|
18,478
|
|
|
15,080
|
|
|||
Charge-offs and recoveries to accrued transaction losses
|
(34,655
|
)
|
|
(17,514
|
)
|
|
(13,613
|
)
|
|||
Accrued transaction losses, end of the year
|
$
|
17,176
|
|
|
$
|
8,452
|
|
|
$
|
7,488
|
|
|
Year Ended December 31,
|
||||||||||
2015
|
|
2014
|
|
2013
|
|||||||
Domestic
|
$
|
(157,229
|
)
|
|
$
|
(139,675
|
)
|
|
$
|
(69,980
|
)
|
Foreign
|
(18,842
|
)
|
|
(12,978
|
)
|
|
(34,000
|
)
|
|||
Loss before income taxes
|
$
|
(176,071
|
)
|
|
$
|
(152,653
|
)
|
|
$
|
(103,980
|
)
|
|
Year Ended December 31,
|
||||||||||
2015
|
|
2014
|
|
2013
|
|||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
1,662
|
|
|
$
|
2,746
|
|
|
$
|
—
|
|
State
|
836
|
|
|
531
|
|
|
263
|
|
|||
Foreign
|
1,222
|
|
|
827
|
|
|
250
|
|
|||
Total current provision for income taxes
|
3,720
|
|
|
4,104
|
|
|
513
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
67
|
|
|
(2,503
|
)
|
|
—
|
|
|||
State
|
11
|
|
|
(161
|
)
|
|
—
|
|
|||
Foreign
|
(52
|
)
|
|
—
|
|
|
—
|
|
|||
Total deferred provision for income taxes
|
26
|
|
|
(2,664
|
)
|
|
—
|
|
|||
Total provision for income taxes
|
$
|
3,746
|
|
|
$
|
1,440
|
|
|
$
|
513
|
|
|
Balance at December 31,
|
||||||||||
2015
|
|
2014
|
|
2013
|
|||||||
Deferred tax assets:
|
|
|
|
|
|
||||||
Capitalized costs
|
$
|
67,051
|
|
|
$
|
28,102
|
|
|
$
|
468
|
|
Accrued expenses
|
27,964
|
|
|
19,714
|
|
|
5,746
|
|
|||
Net operating loss carryforwards
|
36,633
|
|
|
54,528
|
|
|
53,505
|
|
|||
Tax credit carryforwards
|
25,349
|
|
|
11,662
|
|
|
7,699
|
|
|||
Property, equipment and intangible assets
|
—
|
|
|
—
|
|
|
2,381
|
|
|||
Share-based compensation
|
36,689
|
|
|
13,153
|
|
|
5,085
|
|
|||
Other
|
1,469
|
|
|
542
|
|
|
—
|
|
|||
Total deferred tax assets
|
195,155
|
|
|
127,701
|
|
|
74,884
|
|
|||
Valuation allowance
|
(195,103
|
)
|
|
(125,368
|
)
|
|
(74,884
|
)
|
|||
Total deferred tax assets, net of valuation allowance
|
52
|
|
|
2,333
|
|
|
—
|
|
|||
Deferred tax liabilities:
|
|
|
|
|
|
||||||
Property, equipment and intangible assets
|
(163
|
)
|
|
(2,333
|
)
|
|
—
|
|
|||
Total deferred tax liabilities
|
(163
|
)
|
|
(2,333
|
)
|
|
—
|
|
|||
Net deferred tax liabilities
|
$
|
(111
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||||||||
2015
|
|
2014
|
|
2013
|
|||||||
Balance at the beginning of the year
|
$
|
78,031
|
|
|
$
|
14,152
|
|
|
$
|
105
|
|
Gross increases and decreases related to prior period tax positions
|
—
|
|
|
26,690
|
|
|
513
|
|
|||
Gross increases and decreases related to current period tax positions
|
12,341
|
|
|
37,189
|
|
|
13,534
|
|
|||
Reductions related to settlements with taxing authorities
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reductions related to lapse of statute of limitations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at the end of the year
|
$
|
90,372
|
|
|
$
|
78,031
|
|
|
$
|
14,152
|
|
|
Shares
|
||||
|
Authorized
|
|
Outstanding
|
||
Series A
|
46,787,400
|
|
|
46,700,710
|
|
Series B-1
|
13,893,330
|
|
|
13,893,330
|
|
Series B-2
|
27,030,040
|
|
|
27,030,040
|
|
Series C
|
17,764,230
|
|
|
17,764,230
|
|
Series D
|
20,164,210
|
|
|
20,164,210
|
|
Series E
|
11,640,347
|
|
|
11,640,347
|
|
Total convertible preferred stock
|
137,279,557
|
|
|
137,192,867
|
|
|
Number of stock options outstanding
|
|
Weighted
average exercise price |
|
Weighted
average remaining contractual term (in years) |
|
Aggregate
intrinsic value |
||||||
Balance at December 31, 2014
|
87,471,413
|
|
|
$
|
4.46
|
|
|
8.36
|
|
|
$
|
490,227
|
|
Granted
|
35,402,035
|
|
|
12.57
|
|
|
|
|
|
||||
Exercised
|
(5,544,785
|
)
|
|
3.15
|
|
|
|
|
|
||||
Forfeited and canceled
|
(9,813,109
|
)
|
|
6.71
|
|
|
|
|
|
||||
Balance at December 31, 2015
|
107,515,554
|
|
|
$
|
6.99
|
|
|
7.87
|
|
|
$
|
656,194
|
|
Options vested and expected to vest at
|
|
|
|
|
|
|
|
||||||
December 31, 2015
|
92,280,637
|
|
|
$
|
6.38
|
|
|
7.56
|
|
|
$
|
635,422
|
|
Options exercisable at
|
|
|
|
|
|
|
|
||||||
December 31, 2015
|
104,699,454
|
|
|
$
|
6.93
|
|
|
7.81
|
|
|
$
|
644,676
|
|
|
Number of
RSUs |
|
Weighted
average grant date fair value |
|||
Unvested at December 31, 2014
|
—
|
|
|
$
|
—
|
|
Granted
|
3,636,365
|
|
|
13.14
|
|
|
Forfeited
|
(3,600
|
)
|
|
$
|
13.44
|
|
Unvested at December 31, 2015
|
3,632,765
|
|
|
$
|
13.14
|
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Fair value of common stock
|
$10.06 - $15.39
|
|
|
$7.25 - $10.06
|
|
|
$2.80 - $5.26
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Risk-free interest rate
|
1.73
|
%
|
|
1.85
|
%
|
|
1.55
|
%
|
Expected volatility
|
47.68
|
%
|
|
46.95
|
%
|
|
46.47
|
%
|
Expected term (years)
|
6.02
|
|
|
6.06
|
|
|
6.09
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Product development
|
$
|
54,738
|
|
|
$
|
24,758
|
|
|
$
|
8,820
|
|
Sales and marketing
|
7,360
|
|
|
3,738
|
|
|
1,235
|
|
|||
General and administrative
|
20,194
|
|
|
7,604
|
|
|
4,603
|
|
|||
Total
|
$
|
82,292
|
|
|
$
|
36,100
|
|
|
$
|
14,658
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net loss
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
Deemed dividend on Series E preferred stock
|
(32,200
|
)
|
|
—
|
|
|
—
|
|
|||
Net loss attributable to common stockholders
|
$
|
(212,017
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
Basic shares:
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding
|
175,139
|
|
|
148,876
|
|
|
132,562
|
|
|||
Weighted-average unvested shares
|
(4,641
|
)
|
|
(6,834
|
)
|
|
(4,717
|
)
|
|||
Weighted-average shares used to compute basic net loss per share
|
170,498
|
|
|
142,042
|
|
|
127,845
|
|
|||
Diluted shares:
|
|
|
|
|
|
||||||
Weighted-average shares used to compute diluted net loss per share
|
170,498
|
|
|
142,042
|
|
|
127,845
|
|
|||
|
|
|
|
|
|
||||||
Loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.24
|
)
|
|
$
|
(1.08
|
)
|
|
$
|
(0.82
|
)
|
Diluted
|
$
|
(1.24
|
)
|
|
$
|
(1.08
|
)
|
|
$
|
(0.82
|
)
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Stock options and restricted stock units
|
111,148
|
|
|
87,471
|
|
|
71,463
|
|
Common stock warrants
|
9,544
|
|
|
15,762
|
|
|
15,762
|
|
Preferred stock warrants
|
—
|
|
|
87
|
|
|
87
|
|
Convertible preferred stock
|
—
|
|
|
135,253
|
|
|
134,529
|
|
Unvested shares
|
3,420
|
|
|
6,443
|
|
|
6,379
|
|
Employee stock purchase plan
|
172
|
|
|
—
|
|
|
—
|
|
Total anti-dilutive securities
|
124,284
|
|
|
245,016
|
|
|
228,220
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net (gain) loss on foreign exchange
|
$
|
1,823
|
|
|
$
|
1,116
|
|
|
$
|
283
|
|
Starbucks share-based instruments
|
(1,485
|
)
|
|
—
|
|
|
(1,235
|
)
|
|||
Other
|
112
|
|
|
(12
|
)
|
|
2
|
|
|||
Total other (income) and expense
|
$
|
450
|
|
|
$
|
1,104
|
|
|
$
|
(950
|
)
|
|
Capital
|
|
Operating
|
||||
Year:
|
|
|
|
||||
2016
|
$
|
62
|
|
|
$
|
15,437
|
|
2017
|
47
|
|
|
15,550
|
|
||
2018
|
5
|
|
|
15,356
|
|
||
2019
|
—
|
|
|
15,412
|
|
||
2020
|
—
|
|
|
15,590
|
|
||
Thereafter
|
—
|
|
|
51,629
|
|
||
Total
|
$
|
114
|
|
|
$
|
128,974
|
|
Less amount representing interest
|
(7
|
)
|
|
|
|||
Present value of capital lease obligations
|
107
|
|
|
|
|||
Less current portion of capital lease obligation
|
(58
|
)
|
|
|
|||
Non-current portion of capital lease obligation
|
$
|
49
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Revenue
|
|
|
|
|
|
||||||
United States
|
$
|
1,224,566
|
|
|
$
|
825,578
|
|
|
$
|
546,553
|
|
International
|
42,552
|
|
|
24,614
|
|
|
5,880
|
|
|||
Total net revenue
|
$
|
1,267,118
|
|
|
$
|
850,192
|
|
|
$
|
552,433
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Long-lived assets
|
|
|
|
||||
United States
|
$
|
168,583
|
|
|
$
|
112,988
|
|
International
|
2,114
|
|
|
1,291
|
|
||
Total long-lived assets
|
$
|
170,697
|
|
|
$
|
114,279
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Supplemental Cash Flow Data:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
981
|
|
|
$
|
940
|
|
|
$
|
3
|
|
Cash paid for income taxes
|
1,916
|
|
|
2,442
|
|
|
25
|
|
|||
Supplemental disclosures of non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment in accounts payable and accrued expenses
|
5,593
|
|
|
—
|
|
|
215
|
|
|||
Conversion of Series A, B, C, D & E preferred stock upon initial public offering to common stock
|
544,897
|
|
|
—
|
|
|
—
|
|
|||
Unpaid offering costs related to initial public offering
|
5,530
|
|
|
—
|
|
|
—
|
|
|||
Deemed dividend on Series E preferred stock
|
32,200
|
|
|
—
|
|
|
—
|
|
|||
Fair value of shares issued related to acquisitions
|
35,776
|
|
|
59,576
|
|
|
278
|
|
|||
Reclassification of customer common stock warrants to permanent equity
|
—
|
|
|
—
|
|
|
764
|
|
Signature
|
Title
|
Date
|
/s/ Jack Dorsey
Jack Dorsey
|
President, Chief Executive Officer, and Chairman(Principal Executive Officer)
|
March 10, 2016
|
/s/ Sarah Friar
Sarah Friar
|
Chief Financial Officer (Principal Accounting and Financial Officer)
|
March 10, 2016
|
/s/ Roelof Botha
Roelof Botha
|
Director
|
March 10, 2016
|
/s/ Earvin Johnson
Earvin Johnson
|
Director
|
March 10, 2016
|
/s/ Jim McKelvey
Jim McKelvey
|
Director
|
March 10, 2016
|
/s/ Mary Meeker
Mary Meeker
|
Director
|
March 10, 2016
|
/s/ Ruth Simmons
Ruth Simmons
|
Director
|
March 10, 2016
|
/s/ Lawrence Summers
Lawrence Summers
|
Director
|
March 10, 2016
|
/s/ David Viniar
David Viniar
|
Director
|
March 10, 2016
|
|
|
|
Incorporated by Reference
|
|||
Exhibit Number
|
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
3.1
|
|
Amended and Restated Certificate of Incorporation of the Registrant.
|
8-K
|
001-37622
|
3.1
|
November 24, 2015
|
3.2
|
|
Amended and Restated Bylaws of the Registrant.
|
8-K
|
001-37622
|
3.2
|
November 24, 2015
|
4.1
|
|
Form of Class A common stock certificate of the Registrant.
|
S-1/A
|
333-207411
|
4.1
|
November 6, 2015
|
4.2
|
|
Fifth Amended and Restated Investors’ Rights Agreement among the Registrant and certain holders of its capital stock, dated as of September 9, 2014.
|
S-1
|
333-207411
|
4.2
|
October 14, 2015
|
4.3
|
|
Warrant to purchase shares of convertible preferred stock issued to TriplePoint Capital LLC, dated as of March 17, 2010.
|
S-1
|
333-207411
|
4.3
|
October 14, 2015
|
4.4
|
|
Warrant to purchase shares of common stock issued to Starbucks Corporation, dated as of August 7, 2012, as amended on September 30, 2013.
|
S-1
|
333-207411
|
4.4
|
October 14, 2015
|
10.1
+
|
|
Form of Indemnification Agreement between the Registrant and each of its directors and executive officers.
|
S-1/A
|
333-207411
|
10.1
|
November 6, 2015
|
10.2
+
|
|
Square, Inc. 2015 Equity Incentive Plan and related form agreements.
|
S-1/A
|
333-207411
|
10.2
|
November 6, 2015
|
10.3
+
|
|
Square, Inc. 2015 Employee Stock Purchase Plan, as amended, and related form agreements.
|
|
|
|
|
10.4
+
|
|
Square, Inc. 2009 Stock Plan and related form agreements.
|
S-1
|
333-207411
|
10.4
|
October 14, 2015
|
10.5
+
|
|
Square, Inc. Executive Incentive Compensation Plan.
|
S-1
|
333-207411
|
10.5
|
October 14, 2015
|
10.6
+
|
|
Square, Inc. Outside Director Compensation Policy.
|
S-1/A
|
333-207411
|
10.6
|
October 26, 2015
|
10.7
+
|
|
Form of Change of Control and Severance Agreement between the Registrant and certain of its executive officers.
|
S-1
|
333-207411
|
10.7
|
October 14, 2015
|
10.8
+
|
|
Offer Letter between the Registrant and Jack Dorsey, dated as of March 7, 2016.
|
|
|
|
|
10.9
+
|
|
Offer Letter between the Registrant and Sarah Friar, dated as of October 1, 2015.
|
S-1/A
|
333-207411
|
10.9
|
November 6, 2015
|
10.10
+
|
|
Offer Letter between the Registrant and Dana R. Wagner, dated as of October 1, 2015.
|
S-1/A
|
333-207411
|
10.10
|
November 6, 2015
|
10.11
+
|
|
Offer Letter between the Registrant and Françoise Brougher, dated as of October 1, 2015.
|
S-1/A
|
333-207411
|
10.11
|
November 6, 2015
|
10.12
+
|
|
Offer Letter between the Registrant and Alyssa Henry, dated as of October 1, 2015.
|
S-1/A
|
333-207411
|
10.12
|
November 6, 2015
|
10.13
|
|
Office Lease by and between the Registrant and Hudson 1455 Market, LLC, dated as of October 17, 2012, as amended on March 22, 2013, January 22, 2014, and June 6, 2014.
|
S-1
|
333-207411
|
10.13
|
October 14, 2015
|
10.14
|
|
Revolving Credit Agreement dated as of November 2, 2015 among the Registrant, the Lenders Party Thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
|
S-1/A
|
333-207411
|
10.14
|
November 6, 2015
|
10.15
|
|
Commitment Letter dated October 30, 2015 by Goldman Sachs Lending Partners LLC.
|
S-1/A
|
333-207411
|
10.14A
|
November 16, 2015
|
10.16#
|
|
Master Development and Supply Agreement by and between the Registrant and TDK Corporation, dated as of October 1, 2013.
|
S-1
|
333-207411
|
10.15
|
October 14, 2015
|
10.17#
|
|
Master Manufacturing Agreement by and between the Registrant and Cheng Uei Precision Industry Co., Ltd., dated as of June 27, 2012.
|
S-1
|
333-207411
|
10.16
|
October 14, 2015
|
10.18#
|
|
ASIC Development and Supply Agreement by and between the Registrant, Semiconductor Components Industries, LLC (d/b/a ON Semiconductor) and ON Semiconductor Trading, Ltd., dated as of March 25, 2013.
|
S-1
|
333-207411
|
10.17
|
October 14, 2015
|
21.1
|
|
List of subsidiaries of the Registrant.
|
S-1
|
333-207411
|
21.1
|
October 14, 2015
|
23.1
|
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm.
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.1†
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
+
|
Indicates management contract or compensatory plan.
|
#
|
The Registrant has omitted portions of the relevant exhibit and filed such exhibit separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 406 of the Securities Act of 1933, as amended.
|
†
|
The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
|
1.
|
Position
. Your position will continue to be Chief Executive Officer, and you will continue to report to the Company’s Board of Directors, with responsibilities as defined in the job description previously provided to you or as otherwise reasonably assigned to you. During your employment with the Company, you will perform your duties faithfully and to the best of your ability and will devote your full business efforts and time to the Company, other than with respect to your work with Twitter, Inc. in accordance with guidelines that may be developed by the Company’s Board of Directors from time to time.
|
2.
|
Compensation
.
|
a.
|
Base Salary
: Starting January 1, 2016, your current base salary is $2.75 annually, payable on the Company’s regular payroll dates and subject to the usual, required withholdings and deductions. Your base salary will be subject to review and adjustments will be made based upon the Company’s normal performance review practices.
|
b.
|
Benefits
: You will continue to be eligible to participate in all of the Company benefit plans as available, including group health insurance and paid time off, based on policies in effect during your employment. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.
|
3.
|
Severance
. You will be eligible to enter into a Change of Control and Severance Agreement (the “Severance Agreement”) applicable to you based on your senior position within the Company. The Severance Agreement will specify the severance payments and benefits you would be entitled to in connection with a change of control transaction and certain terminations of employment. These protections will supersede all other severance or other benefits you would otherwise be entitled to under any plan, program or policy that the Company may have in effect from time to time.
|
4.
|
Employment Relationship
. Your employment with the Company continues to be for no specific period of time and is "at will," meaning that either you or the Company may terminate your employment at any time and for any reason, without prior notice and with or without cause. Any contrary representations which may have been made to you are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Further, your participation in any equity-based or benefit program is not to be regarded as assuring you of continuing employment for any particular period of time. Although your job duties, title, compensation and benefits, as well as the Company's personnel policies and procedures, may change from time to time, the "at will" nature of your employment may only be changed in an express written agreement signed by you and the Company's People Lead.
|
5.
|
Other Agreements
. As an employee of the Company, you will continue to have access to certain confidential information of the Company and you may, during the course of your employment, develop certain information or inventions that will be the property of the Company. To protect the interests of the Company, your acceptance of this letter confirms that the terms of the Company’s Confidential Information and Invention Assignment Agreement (the “Confidentiality Agreement”) and other compliance agreements that you executed when you joined the Company.
|
6.
|
Outside Activities
.
While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the written consent of the Company. In addition, while you render services
|
7.
|
Arbitration
.
You and the Company shall submit to mandatory and exclusive binding arbitration of any controversy or claim arising out of, or relating to, this Agreement or any breach hereof, provided, however, that the parties retain their right to, and shall not be prohibited, limited or in any other way restricted from, seeking or obtaining equitable relief from a court having jurisdiction over the parties. Such arbitration shall be governed by the Federal Arbitration Act and conducted through the American Arbitration Association in the State of California, San Francisco County, before a single neutral arbitrator, in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association in effect at that time. The parties may conduct only essential discovery prior to the hearing, as defined by the AAA arbitrator. The arbitrator shall issue a written decision that contains the essential findings and conclusions on which the decision is based. You shall bear only those costs of arbitration you would otherwise bear had you brought a claim covered by this Agreement in court. Judgment upon the determination or award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
|
8.
|
Entire Agreement
. This Agreement, along with the Confidentiality Agreement and Severance Agreement, constitute the entire agreement between you and the Company regarding the subject matters discussed herein, and they supersede all prior negotiations, representations or agreements between you and the Company. This Agreement may only be modified by a written agreement signed by you and the Company’s People Lead.
|