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, 2017
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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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
ý
NO
o
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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.
o
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b‑2 of the Exchange Act. (Check one):
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Large accelerated filer
ý
Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Accelerated filer
o
Smaller reporting company
o
Emerging growth company
o
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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
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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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Item 16.
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Year Ended December 31,
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2016 to 2017
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2015 to 2016
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2017
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2016
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2015
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% Change
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% Change
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||||||||
Gross Payment Volume (GPV) (in millions)
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$
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65,343
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$
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49,683
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$
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35,643
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32
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%
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39
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%
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Total net revenue
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$
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2,214,253
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$
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1,708,721
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$
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1,267,118
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30
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%
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35
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%
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Adjusted Revenue
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$
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983,963
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$
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686,618
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$
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452,168
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43
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%
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52
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%
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Net loss attributable to common stockholders
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$
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(62,813
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)
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$
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(171,590
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)
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$
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(212,017
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)
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Adjusted EBITDA
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$
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139,009
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$
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44,887
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$
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(41,115
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)
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Net loss per share attributable to common stockholders:
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||||||||
Basic
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$
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(0.17
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)
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$
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(0.50
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)
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$
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(1.24
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)
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Diluted
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$
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(0.17
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)
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$
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(0.50
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)
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$
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(1.24
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)
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Adjusted Net Income (Loss) Per Share:
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Basic
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$
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0.30
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$
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0.04
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$
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(0.39
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)
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Diluted
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$
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0.27
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$
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0.04
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$
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(0.39
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)
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•
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Magstripe reader: Our magstripe reader enables swiped transactions of magnetic stripe cards by connecting with an iOS or Android smartphone or tablet.
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•
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Contactless and chip reader: This reader accepts EMV chip cards and NFC payments, enabling acceptance via Apple Pay, Android Pay, and other mobile wallets. The reader connects wirelessly or via USB.
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•
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Chip card reader: Our chip card reader accepts EMV chip cards and enables swiped transactions of magnetic stripe cards by connecting with an iOS or Android smartphone or tablet.
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•
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Square Stand: This hardware enables an iPad to be used as a payment terminal or full point of sale solution. It features an integrated magnetic stripe reader, provides power to a connected iPad, and can connect to the contactless and chip reader wirelessly or via USB. Square Stand also connects to various peripheral devices that brick-and-mortar businesses need, such as barcode scanners and receipt printers.
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•
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Square Register: During the fourth quarter of 2017, we launched Square Register, our first all-in-one offering that combines our hardware, point-of-sale software, and payments technology. Square Register does not require a third-
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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 and presents the buyer with the amount owed.
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2.
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For in-person transactions, the buyer pays by swiping or dipping their payment card, or by tapping their NFC-enabled payment card or mobile device on a Square Reader, Square Stand or Square Register, as applicable, which captures the buyer’s account information. For card not present transactions the seller can either use the customers' card on file or the card information is keyed in manually by either the buyer or seller into the Square Point of Sale app, Square Invoices, Square Virtual Terminal, or the seller's e-commerce website.
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3.
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The Square Point of Sale sends the transaction information to Square, which acts as the PSP.
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4.
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Square passes the 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 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 transaction through the Card Network to the Issuing Bank, which authorizes or declines the 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 Point of Sale to inform the seller that the transaction has been successfully authorized.
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8.
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The Square Point of Sale 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 buyer's card type, transaction type, and transaction size.
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10.
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Square transfers the funds to the seller’s bank account, net of the fee charged by Square. Square provides sellers with fast access to funds, typically settling with them by the 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 transaction 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 each monthly billing cycle, 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).
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•
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Business software providers such as those that provide inventory management, analytics, customer management and marketing, e-commerce, and appointment solutions;
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•
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Established or new alternative lenders;
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•
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Delivery service providers; and
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•
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Peer-to-peer payment providers.
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improving and implementing existing and developing new internal administrative infrastructure, particularly our operational, financial, communications and other internal systems and procedures;
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installing enhanced management information and control system; and
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preserving our core values, strategies, and goals and effectively communicating these to our employees worldwide.
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difficulty in attracting a sufficient number of sellers;
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failure to anticipate competitive conditions;
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conformity with applicable business customs, including translation into foreign languages and associated expenses;
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increased costs and difficulty in protecting intellectual property and sensitive data;
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changes to the way we do business as compared with our current operations or a lack of acceptance of our products and services;
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the ability to support and integrate with local third-party service providers;
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competition with service providers or other entrenched market-players that have greater experience in the local markets than we do;
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difficulties in staffing and managing foreign operations in an environment of diverse culture, laws and customs, challenges caused by distance, language, and cultural differences, and the increased travel, infrastructure and legal and compliance costs associated with global operations;
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difficulties in recruiting and retaining qualified employees and maintaining our company culture;
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difficulty in gaining acceptance from industry self-regulatory bodies;
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compliance with multiple, potentially conflicting and changing governmental laws and regulations, including with respect to data privacy, data protection and information security;
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compliance with U.S. and foreign anti-corruption, anti-bribery and anti-money laundering laws;
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potential tariffs, sanctions, fines or other trade barriers;
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exchange rate risk;
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compliance with potentially conflicting and changing laws of taxing jurisdictions where we conduct business and applicable U.S. tax laws, the complexity and adverse consequences of such tax laws and potentially adverse tax consequences due to changes in such tax laws; and
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regional economic and political instability.
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the transaction may not advance our business strategy;
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we may be unable to identify opportunities on terms acceptable to us;
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we may not realize a satisfactory return or increase our revenue;
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we may experience disruptions on our ongoing operations and divert management’s attention;
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we may be unable to retain key personnel;
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we may experience difficulty in integrating technologies, IT systems, accounting systems, culture, or personnel;
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acquired businesses may not have adequate controls, processes and procedures to ensure compliance with laws and regulations, and our due diligence process may not identify compliance issues or other liabilities;
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we may assume additional financial or legal exposure, including exposure that is known to us;
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we may have difficulty entering new market segments;
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we may be unable to retain the customers and partners of acquired businesses;
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there may be unknown, underestimated, or undisclosed commitments or liabilities, including actual or threatened litigation;
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there may be regulatory constraints, particularly competition regulations that may affect the extent to which we can maximize the value of our acquisitions or investments; and
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acquisitions could result in dilutive issuances of equity securities or the incurrence of debt.
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price and volume fluctuations in the overall stock market from time to time;
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volatility in the market prices and trading volumes of companies in our industry or companies that investors consider comparable;
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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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sales of shares of our common stock by us or our stockholders;
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issuance of shares of our Class A common stock, whether in connection with an acquisition or upon conversion of some or all of our outstanding Notes;
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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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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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public 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;
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changes in the regulatory environment;
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actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally;
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litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;
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announced or completed acquisitions of businesses or technologies by us or our competitors;
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new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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changes in accounting standards, policies, guidelines, interpretations, or principles;
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actual or perceived data security incidents that we or our service providers may suffer;
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any significant change in our management; and
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general economic conditions and slow or negative growth of our markets.
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Year Ended December 31, 2017
|
|
High
|
|
Low
|
||||
First Quarter
|
|
$
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18.17
|
|
|
$
|
13.66
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|
Second Quarter
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|
$
|
24.97
|
|
|
$
|
16.66
|
|
Third Quarter
|
|
$
|
29.00
|
|
|
$
|
22.66
|
|
Fourth Quarter
|
|
$
|
49.56
|
|
|
$
|
28.78
|
|
Year Ended December 31, 2016
|
|
|
|
|
||||
First Quarter
|
|
$
|
15.91
|
|
|
$
|
8.06
|
|
Second Quarter
|
|
$
|
15.87
|
|
|
$
|
8.42
|
|
Third Quarter
|
|
$
|
12.54
|
|
|
$
|
8.78
|
|
Fourth Quarter
|
|
$
|
14.82
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|
|
$
|
10.88
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Company/Index
|
|
11/19/2015
|
|
|
12/31/2015
|
|
|
12/31/2016
|
|
|
12/31/2017
|
|
Square, Inc.
|
|
100
|
|
|
100.15
|
|
|
104.28
|
|
|
265.26
|
|
S&P 500
|
|
100
|
|
|
98.72
|
|
|
110.52
|
|
|
134.65
|
|
S&P North American Technology
|
|
100
|
|
|
99.20
|
|
|
111.15
|
|
|
151.43
|
|
|
Year Ended December 31,
|
||||||||||||||||||
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2017
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|
2016
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|
2015
|
|
2014
|
|
2013
|
||||||||||
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(in thousands)
|
||||||||||||||||||
Cost of revenue
|
$
|
77
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Product development
|
98,310
|
|
|
91,404
|
|
|
54,738
|
|
|
24,758
|
|
|
8,820
|
|
|||||
Sales and marketing
|
17,568
|
|
|
14,122
|
|
|
7,360
|
|
|
3,738
|
|
|
1,235
|
|
|||||
General and administrative
|
39,881
|
|
|
33,260
|
|
|
20,194
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|
|
7,604
|
|
|
4,603
|
|
|||||
Total share-based compensation
|
$
|
155,836
|
|
|
$
|
138,786
|
|
|
$
|
82,292
|
|
|
$
|
36,100
|
|
|
$
|
14,658
|
|
|
December 31,
|
|
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands)
|
|
|
||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
696,474
|
|
|
$
|
452,030
|
|
|
$
|
461,329
|
|
|
$
|
222,315
|
|
|
$
|
166,176
|
|
Settlements receivable
|
620,523
|
|
|
321,102
|
|
|
142,727
|
|
|
115,481
|
|
|
64,968
|
|
|||||
Working capital
|
805,467
|
|
|
423,961
|
|
|
371,361
|
|
|
218,761
|
|
|
124,061
|
|
|||||
Total assets
|
2,187,270
|
|
|
1,211,362
|
|
|
894,772
|
|
|
541,888
|
|
|
318,341
|
|
|||||
Customers payable
|
733,736
|
|
|
431,632
|
|
|
224,811
|
|
|
148,648
|
|
|
95,794
|
|
|||||
Long-term debt (Note 9)
|
358,572
|
|
|
—
|
|
|
—
|
|
|
30,000
|
|
|
—
|
|
|||||
Total stockholders’ equity
|
786,333
|
|
|
576,153
|
|
|
508,048
|
|
|
273,672
|
|
|
162,294
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(
in thousands, except for GPV and per share data)
|
||||||||||||||||||
Gross Payment Volume (GPV) (in millions)
|
$
|
65,343
|
|
|
$
|
49,683
|
|
|
$
|
35,643
|
|
|
$
|
23,780
|
|
|
$
|
14,822
|
|
Adjusted Revenue
|
$
|
983,963
|
|
|
$
|
686,618
|
|
|
$
|
452,168
|
|
|
$
|
276,310
|
|
|
$
|
160,144
|
|
Adjusted EBITDA
|
$
|
139,009
|
|
|
$
|
44,887
|
|
|
$
|
(41,115
|
)
|
|
$
|
(67,741
|
)
|
|
$
|
(51,530
|
)
|
Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.30
|
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.46
|
)
|
Diluted
|
$
|
0.27
|
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.46
|
)
|
•
|
Adjusted Revenue is net of transaction-based costs, which is our largest cost of revenue item; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted Revenue differently or not at all, which reduces its usefulness as a comparative measure.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Total net revenue
|
$
|
2,214,253
|
|
|
$
|
1,708,721
|
|
|
$
|
1,267,118
|
|
|
$
|
850,192
|
|
|
$
|
552,433
|
|
Less: Starbucks transaction-based revenue
|
—
|
|
|
78,903
|
|
|
142,283
|
|
|
123,024
|
|
|
114,456
|
|
|||||
Less: transaction-based costs
|
1,230,290
|
|
|
943,200
|
|
|
672,667
|
|
|
450,858
|
|
|
277,833
|
|
|||||
Adjusted Revenue
|
$
|
983,963
|
|
|
$
|
686,618
|
|
|
$
|
452,168
|
|
|
$
|
276,310
|
|
|
$
|
160,144
|
|
•
|
We exclude Starbucks transaction-based revenue and Starbucks transaction-based costs. As described above, Starbucks completed its previously announced transition to another payments solution provider and has ceased using our payments
|
•
|
We believe it is useful to exclude non-cash charges, such as amortization of intangible assets, and share-based compensation expenses, from our non-GAAP financial measures because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations.
|
•
|
In connection with the issuance of our convertible senior notes (as described in Note
9
), we are required to recognize non-cash interest expense related to amortization of debt discount and issuance costs. We believe that excluding these expenses from our non-GAAP measures is useful to investors because such incremental non-cash interest expense does not represent a current or future cash outflow for the Company and is therefore not indicative of our continuing operations or meaningful when comparing current results to past results.
|
•
|
We exclude the litigation settlement with Robert E. Morley (as described in Note 1), gain or loss on the sale of property and equipment, and impairment of intangible assets from non-GAAP financial measures because we do not believe that these items are reflective of our ongoing business operations.
|
•
|
share-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy;
|
•
|
the intangible assets being amortized may have to be replaced in the future, and the non-GAAP financial measures do not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or other capital commitments; and
|
•
|
non-GAAP measures do not reflect changes in, or cash requirements for, our working capital needs.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Net loss
|
$
|
(62,813
|
)
|
|
$
|
(171,590
|
)
|
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
Starbucks transaction-based revenue
|
—
|
|
|
(78,903
|
)
|
|
(142,283
|
)
|
|
(123,024
|
)
|
|
(114,456
|
)
|
|||||
Starbucks transaction-based costs
|
—
|
|
|
69,761
|
|
|
165,438
|
|
|
150,955
|
|
|
139,803
|
|
|||||
Share-based compensation expense
|
155,836
|
|
|
138,786
|
|
|
82,292
|
|
|
36,100
|
|
|
14,658
|
|
|||||
Depreciation and amortization
|
37,279
|
|
|
37,745
|
|
|
27,626
|
|
|
18,586
|
|
|
8,272
|
|
|||||
Litigation settlement expense
|
—
|
|
|
48,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest and other (income) expense, net
|
8,458
|
|
|
(780
|
)
|
|
1,613
|
|
|
2,162
|
|
|
(962
|
)
|
|||||
Provision for income taxes
|
149
|
|
|
1,917
|
|
|
3,746
|
|
|
1,440
|
|
|
513
|
|
|||||
Loss (gain) on sale of property and equipment
|
100
|
|
|
(49
|
)
|
|
270
|
|
|
133
|
|
|
2,705
|
|
|||||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,430
|
|
|||||
Adjusted EBITDA
|
$
|
139,009
|
|
|
$
|
44,887
|
|
|
$
|
(41,115
|
)
|
|
$
|
(67,741
|
)
|
|
$
|
(51,530
|
)
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Net loss
|
$
|
(62,813
|
)
|
|
$
|
(171,590
|
)
|
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
Starbucks transaction-based revenue
|
—
|
|
|
(78,903
|
)
|
|
(142,283
|
)
|
|
(123,024
|
)
|
|
(114,456
|
)
|
|||||
Starbucks transaction-based costs
|
—
|
|
|
69,761
|
|
|
165,438
|
|
|
150,955
|
|
|
139,803
|
|
|||||
Share-based compensation expense
|
155,836
|
|
|
138,786
|
|
|
82,292
|
|
|
36,100
|
|
|
14,658
|
|
|||||
Amortization of intangible assets
|
7,615
|
|
|
9,013
|
|
|
7,503
|
|
|
2,133
|
|
|
54
|
|
|||||
Litigation settlement expense
|
—
|
|
|
48,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Amortization of debt discount and issuance costs
|
14,223
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Loss (gain) on sale of property and equipment
|
100
|
|
|
(49
|
)
|
|
270
|
|
|
133
|
|
|
2,705
|
|
|||||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,430
|
|
|||||
Adjusted Net Income (Loss)
|
$
|
114,961
|
|
|
$
|
15,018
|
|
|
$
|
(66,597
|
)
|
|
$
|
(87,796
|
)
|
|
$
|
(59,299
|
)
|
Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.30
|
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.46
|
)
|
Diluted
|
$
|
0.27
|
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.46
|
)
|
Weighted-average shares used to compute Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
379,344
|
|
|
341,555
|
|
|
170,498
|
|
|
142,042
|
|
|
127,845
|
|
|||||
Diluted
|
426,519
|
|
|
370,258
|
|
|
170,498
|
|
|
142,042
|
|
|
127,845
|
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Gross Payment Volume (GPV) (in millions)
|
$
|
65,343
|
|
|
$
|
49,683
|
|
|
$
|
35,643
|
|
|
32
|
%
|
|
39
|
%
|
Total net revenue
|
$
|
2,214,253
|
|
|
$
|
1,708,721
|
|
|
$
|
1,267,118
|
|
|
30
|
%
|
|
35
|
%
|
Adjusted Revenue
|
$
|
983,963
|
|
|
$
|
686,618
|
|
|
$
|
452,168
|
|
|
43
|
%
|
|
52
|
%
|
Net loss attributable to common stockholders
|
$
|
(62,813
|
)
|
|
$
|
(171,590
|
)
|
|
$
|
(212,017
|
)
|
|
|
|
|
||
Adjusted EBITDA
|
$
|
139,009
|
|
|
$
|
44,887
|
|
|
$
|
(41,115
|
)
|
|
|
|
|
||
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.17
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
|
|
|
|
||
Diluted
|
$
|
(0.17
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
|
|
|
|
||
Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.30
|
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
|
|
|
||
Diluted
|
$
|
0.27
|
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
|
|
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Transaction-based revenue
|
$
|
1,920,174
|
|
|
$
|
1,456,160
|
|
|
$
|
1,050,445
|
|
|
32
|
%
|
|
39
|
%
|
Starbucks transaction-based revenue
|
—
|
|
|
78,903
|
|
|
142,283
|
|
|
(100
|
)%
|
|
(45
|
)%
|
|||
Subscription and services-based revenue
|
252,664
|
|
|
129,351
|
|
|
58,013
|
|
|
95
|
%
|
|
123
|
%
|
|||
Hardware revenue
|
41,415
|
|
|
44,307
|
|
|
16,377
|
|
|
(7
|
)%
|
|
171
|
%
|
|||
Total net revenue
|
$
|
2,214,253
|
|
|
$
|
1,708,721
|
|
|
$
|
1,267,118
|
|
|
30
|
%
|
|
35
|
%
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Transaction-based costs
|
$
|
1,230,290
|
|
|
$
|
943,200
|
|
|
$
|
672,667
|
|
|
30
|
%
|
|
40
|
%
|
Starbucks transaction-based costs
|
—
|
|
|
69,761
|
|
|
165,438
|
|
|
(100
|
)%
|
|
(58
|
)%
|
|||
Subscription and services-based costs
|
75,720
|
|
|
43,132
|
|
|
22,470
|
|
|
76
|
%
|
|
92
|
%
|
|||
Hardware costs
|
62,393
|
|
|
68,562
|
|
|
30,874
|
|
|
(9
|
)%
|
|
122
|
%
|
|||
Amortization of acquired technology
|
6,544
|
|
|
8,028
|
|
|
5,639
|
|
|
(18
|
)%
|
|
42
|
%
|
|||
Total cost of revenue
|
$
|
1,374,947
|
|
|
$
|
1,132,683
|
|
|
$
|
897,088
|
|
|
21
|
%
|
|
26
|
%
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Product development
|
$
|
321,888
|
|
|
$
|
268,537
|
|
|
$
|
199,638
|
|
|
20
|
%
|
|
35
|
%
|
Percentage of total net revenue
|
15
|
%
|
|
16
|
%
|
|
16
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Sales and marketing
|
$
|
253,170
|
|
|
$
|
173,876
|
|
|
$
|
145,618
|
|
|
46
|
%
|
|
19
|
%
|
Percentage of total net revenue
|
11
|
%
|
|
10
|
%
|
|
11
|
%
|
|
|
|
|
•
|
an increase of $25.2 million in costs associated with our Cash App peer-to-peer transfer service as result of continued growth and expansion of this product;
|
•
|
an increase of
$23.6 million
in advertising costs primarily from increased online, direct mail and mobile marketing campaigns during the year; and
|
•
|
an increase of $22.4 million in sales and marketing personnel costs to enable growth initiatives. The increase in personnel related costs includes an increase in share-based compensation expense of
$3.4 million
.
|
•
|
an increase of $17.8 million in sales and marketing personnel costs to support growth in the business. The increase in personnel related costs includes an increase in share-based compensation expense of $6.8 million.
|
•
|
an increase of $4.7 million in costs associated with our Cash App peer-to-peer transfer service; and
|
•
|
paid marketing expenditures were stable compared to the prior year.
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
General and administrative
|
$
|
250,553
|
|
|
$
|
251,993
|
|
|
$
|
143,466
|
|
|
(1
|
)%
|
|
76
|
%
|
Percentage of total net revenue
|
11
|
%
|
|
15
|
%
|
|
11
|
%
|
|
|
|
|
•
|
an increase of $24.8 million in general and administrative personnel costs, mainly as a result of additions to our finance, legal, compliance, customer success, Square Capital operations, Caviar operations and internal business systems personnel as we continue to add resources and skills as our business scales and drive long-term growth. The increase in personnel related costs includes an increase in share-based compensation expense of
$6.6 million
; and
|
•
|
the remaining increase is primarily due to increased third-party legal, finance, consulting, and corporate level expenses such as facilities expansion as our business and personnel continue to scale and diversify.
|
•
|
a $48.0 million non-recurring expense related to the settlement of legal proceedings with Robert E. Morley, with no similar activity in the prior year;
|
•
|
an increase $37.5 million in general and administrative personnel costs, mainly customer success, legal, compliance, risk, finance, Square Capital operations, and Caviar operations personnel that together will drive long-term operating efficiencies as our business scales. The increase in personnel related costs includes an increase in share-based compensation expense of $13.1 million; and
|
•
|
the remaining increase primarily due to increased third-party legal, finance, consulting, and certain software license expenses primarily related to our first year of operations as a public company.
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Transaction, loan and advance losses
|
$
|
67,018
|
|
|
$
|
51,235
|
|
|
$
|
54,009
|
|
|
31
|
%
|
|
(5
|
)%
|
•
|
an
$8.0 million
charge recorded to loan losses in
year ended December 31, 2017
, with no similar charges during the prior year, as a result of the growth and increasing maturity of our Square Capital loan portfolio, and continued refinement of inputs to our loan loss estimation methodology. We record loan losses when the amortized cost of a loan exceeds the estimated fair value of the loan, as determined at the individual loan level;
|
•
|
an out of period adjustment of $5.5 million recorded in the
year ended December 31, 2016
, as a result of a correction to the calculation of our reserve for transaction losses, with no similar charges during the current year.
|
•
|
an $8.5 million charge recorded in the year ended December 31, 2015, comprised of a $4.4 million charge related to fraud loss from a single seller and an increase of $4.1 million loss provision made to reflect updates to our risk model; and
|
•
|
an out of period adjustment of $5.5 million recorded in the year ended December 31, 2016, as a result of a correction to the calculation of our reserve for transaction losses.
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Amortization of acquired customer assets
|
$
|
883
|
|
|
$
|
850
|
|
|
$
|
1,757
|
|
|
4
|
%
|
|
(52
|
)%
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
|||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
|||||||
Interest and other (income) expense, net
|
$
|
8,458
|
|
|
$
|
(780
|
)
|
|
$
|
1,613
|
|
|
NM
|
|
(148
|
)%
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Provision for income taxes
|
$
|
149
|
|
|
$
|
1,917
|
|
|
$
|
3,746
|
|
|
(92
|
)%
|
|
(49
|
)%
|
|
Year Ended December 31,
|
|
2016 to 2017
|
|
2015 to 2016
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||
Deemed dividend on Series E preferred stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(32,200
|
)
|
|
NM
|
|
NM
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2017 |
|
Sep. 30,
2017 |
|
Jun. 30,
2017 |
|
Mar. 31,
2017 |
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Transaction-based revenue
|
$
|
524,612
|
|
|
$
|
510,019
|
|
|
$
|
482,065
|
|
|
$
|
403,478
|
|
|
$
|
402,496
|
|
|
$
|
388,347
|
|
|
$
|
364,864
|
|
|
$
|
300,453
|
|
Starbucks transaction-based revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
7,164
|
|
|
32,867
|
|
|
38,838
|
|
||||||||
Subscription and services-based revenue
|
79,402
|
|
|
65,051
|
|
|
59,151
|
|
|
49,060
|
|
|
40,518
|
|
|
35,320
|
|
|
29,717
|
|
|
23,796
|
|
||||||||
Hardware revenue
|
12,021
|
|
|
10,089
|
|
|
10,289
|
|
|
9,016
|
|
|
8,869
|
|
|
8,171
|
|
|
11,085
|
|
|
16,182
|
|
||||||||
Total net revenue
|
616,035
|
|
|
585,159
|
|
|
551,505
|
|
|
461,554
|
|
|
451,917
|
|
|
439,002
|
|
|
438,533
|
|
|
379,269
|
|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Transaction-based costs
|
333,377
|
|
|
328,043
|
|
|
311,092
|
|
|
257,778
|
|
|
260,006
|
|
|
254,061
|
|
|
234,857
|
|
|
194,276
|
|
||||||||
Starbucks transaction-based costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
4,528
|
|
|
28,672
|
|
|
36,610
|
|
||||||||
Subscription and services-based costs
|
24,559
|
|
|
18,169
|
|
|
17,116
|
|
|
15,876
|
|
|
11,431
|
|
|
12,524
|
|
|
10,144
|
|
|
9,033
|
|
||||||||
Hardware costs
|
16,783
|
|
|
18,775
|
|
|
14,173
|
|
|
12,662
|
|
|
12,118
|
|
|
15,689
|
|
|
14,015
|
|
|
26,740
|
|
||||||||
Amortization of acquired technology
|
1,486
|
|
|
1,556
|
|
|
1,695
|
|
|
1,807
|
|
|
1,886
|
|
|
1,886
|
|
|
1,886
|
|
|
2,370
|
|
||||||||
Total cost of revenue
|
376,205
|
|
|
366,543
|
|
|
344,076
|
|
|
288,123
|
|
|
285,392
|
|
|
288,688
|
|
|
289,574
|
|
|
269,029
|
|
||||||||
Gross profit
|
239,830
|
|
|
218,616
|
|
|
207,429
|
|
|
173,431
|
|
|
166,525
|
|
|
150,314
|
|
|
148,959
|
|
|
110,240
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product development
|
92,633
|
|
|
82,547
|
|
|
78,126
|
|
|
68,582
|
|
|
64,889
|
|
|
70,418
|
|
|
68,638
|
|
|
64,592
|
|
||||||||
Sales and marketing
|
76,821
|
|
|
66,533
|
|
|
59,916
|
|
|
49,900
|
|
|
49,406
|
|
|
46,754
|
|
|
39,220
|
|
|
38,496
|
|
||||||||
General and administrative
|
66,318
|
|
|
64,312
|
|
|
62,988
|
|
|
56,935
|
|
|
53,027
|
|
|
52,075
|
|
|
50,784
|
|
|
96,107
|
|
||||||||
Transaction, loan and advance losses
|
16,833
|
|
|
19,893
|
|
|
18,401
|
|
|
11,891
|
|
|
13,034
|
|
|
12,885
|
|
|
17,455
|
|
|
7,861
|
|
||||||||
Amortization of acquired customer assets
|
234
|
|
|
222
|
|
|
222
|
|
|
205
|
|
|
147
|
|
|
164
|
|
|
222
|
|
|
317
|
|
||||||||
Total operating expenses
|
252,839
|
|
|
233,507
|
|
|
219,653
|
|
|
187,513
|
|
|
180,503
|
|
|
182,296
|
|
|
176,319
|
|
|
207,373
|
|
||||||||
Operating loss
|
(13,009
|
)
|
|
(14,891
|
)
|
|
(12,224
|
)
|
|
(14,082
|
)
|
|
(13,978
|
)
|
|
(31,982
|
)
|
|
(27,360
|
)
|
|
(97,133
|
)
|
||||||||
Interest and other (income) expense, net
|
2,839
|
|
|
1,854
|
|
|
3,266
|
|
|
499
|
|
|
153
|
|
|
111
|
|
|
(327
|
)
|
|
(717
|
)
|
||||||||
Loss before income tax
|
(15,848
|
)
|
|
(16,745
|
)
|
|
(15,490
|
)
|
|
(14,581
|
)
|
|
(14,131
|
)
|
|
(32,093
|
)
|
|
(27,033
|
)
|
|
(96,416
|
)
|
||||||||
Provision (benefit) for income taxes
|
(185
|
)
|
|
(647
|
)
|
|
472
|
|
|
509
|
|
|
1,036
|
|
|
230
|
|
|
312
|
|
|
339
|
|
||||||||
Net loss
|
(15,663
|
)
|
|
(16,098
|
)
|
|
(15,962
|
)
|
|
(15,090
|
)
|
|
(15,167
|
)
|
|
(32,323
|
)
|
|
(27,345
|
)
|
|
(96,755
|
)
|
||||||||
Deemed dividend on Series E preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net loss attributable to common stockholders
|
$
|
(15,663
|
)
|
|
$
|
(16,098
|
)
|
|
$
|
(15,962
|
)
|
|
$
|
(15,090
|
)
|
|
$
|
(15,167
|
)
|
|
$
|
(32,323
|
)
|
|
$
|
(27,345
|
)
|
|
$
|
(96,755
|
)
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.29
|
)
|
Diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.29
|
)
|
Weighted-average shares used to compute net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
390,030
|
|
|
383,951
|
|
|
376,357
|
|
|
366,737
|
|
|
356,343
|
|
|
343,893
|
|
|
334,488
|
|
|
331,324
|
|
||||||||
Diluted
|
390,030
|
|
|
383,951
|
|
|
376,357
|
|
|
366,737
|
|
|
356,343
|
|
|
343,893
|
|
|
334,488
|
|
|
331,324
|
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2017 |
|
Sep. 30,
2017 |
|
Jun. 30,
2017 |
|
Mar. 31,
2017 |
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Share-Based Compensation
|
(unaudited)
|
||||||||||||||||||||||||||||||
Cost of revenue
|
$
|
30
|
|
|
$
|
29
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Product development
|
28,564
|
|
|
25,254
|
|
|
25,136
|
|
|
19,356
|
|
|
21,340
|
|
|
23,949
|
|
|
24,168
|
|
|
21,947
|
|
||||||||
Sales and marketing
|
4,699
|
|
|
4,579
|
|
|
4,355
|
|
|
3,935
|
|
|
4,159
|
|
|
3,697
|
|
|
3,363
|
|
|
2,903
|
|
||||||||
General and administrative
|
11,232
|
|
|
10,186
|
|
|
10,084
|
|
|
8,379
|
|
|
8,388
|
|
|
9,133
|
|
|
9,391
|
|
|
6,348
|
|
||||||||
Total share-based compensation
|
$
|
44,525
|
|
|
$
|
40,048
|
|
|
$
|
39,593
|
|
|
$
|
31,670
|
|
|
$
|
33,887
|
|
|
$
|
36,779
|
|
|
$
|
36,922
|
|
|
$
|
31,198
|
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2017 |
|
Sep. 30,
2017 |
|
Jun. 30,
2017 |
|
Mar. 31,
2017 |
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
||||||||||||||||
|
(in thousands, except for GPV and per share data)
|
||||||||||||||||||||||||||||||
Key Operating Metrics and non-GAAP Financial Measures
|
(unaudited)
|
||||||||||||||||||||||||||||||
GPV (in millions)
|
$
|
17,888
|
|
|
$
|
17,386
|
|
|
$
|
16,421
|
|
|
$
|
13,647
|
|
|
$
|
13,694
|
|
|
$
|
13,248
|
|
|
$
|
12,451
|
|
|
$
|
10,290
|
|
Adjusted Revenue
|
$
|
282,658
|
|
|
$
|
257,116
|
|
|
$
|
240,413
|
|
|
$
|
203,776
|
|
|
$
|
191,877
|
|
|
$
|
177,777
|
|
|
$
|
170,809
|
|
|
$
|
146,155
|
|
Adjusted EBITDA
|
$
|
41,184
|
|
|
$
|
34,304
|
|
|
$
|
36,496
|
|
|
$
|
27,025
|
|
|
$
|
29,793
|
|
|
$
|
11,623
|
|
|
$
|
12,554
|
|
|
$
|
(9,083
|
)
|
Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.05
|
)
|
Diluted
|
$
|
0.08
|
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.05
|
)
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2017 |
|
Sep. 30,
2017 |
|
Jun. 30,
2017 |
|
Mar. 31,
2017 |
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Adjusted Revenue Reconciliation
|
(unaudited)
|
||||||||||||||||||||||||||||||
Total net revenue
|
$
|
616,035
|
|
|
$
|
585,159
|
|
|
$
|
551,505
|
|
|
$
|
461,554
|
|
|
$
|
451,917
|
|
|
$
|
439,002
|
|
|
$
|
438,533
|
|
|
$
|
379,269
|
|
Less: Starbucks transaction-based revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
7,164
|
|
|
32,867
|
|
|
38,838
|
|
||||||||
Less: transaction-based costs
|
333,377
|
|
|
328,043
|
|
|
311,092
|
|
|
257,778
|
|
|
260,006
|
|
|
254,061
|
|
|
234,857
|
|
|
194,276
|
|
||||||||
Adjusted Revenue
|
$
|
282,658
|
|
|
$
|
257,116
|
|
|
$
|
240,413
|
|
|
$
|
203,776
|
|
|
$
|
191,877
|
|
|
$
|
177,777
|
|
|
$
|
170,809
|
|
|
$
|
146,155
|
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2017 |
|
Sep. 30,
2017 |
|
Jun. 30,
2017 |
|
Mar. 31,
2017 |
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Adjusted EBITDA Reconciliation
|
(unaudited)
|
||||||||||||||||||||||||||||||
Net loss
|
$
|
(15,663
|
)
|
|
$
|
(16,098
|
)
|
|
$
|
(15,962
|
)
|
|
$
|
(15,090
|
)
|
|
$
|
(15,167
|
)
|
|
$
|
(32,323
|
)
|
|
$
|
(27,345
|
)
|
|
$
|
(96,755
|
)
|
Starbucks transaction-based revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
(7,164
|
)
|
|
(32,867
|
)
|
|
(38,838
|
)
|
||||||||
Starbucks transaction-based costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
4,528
|
|
|
28,672
|
|
|
36,610
|
|
||||||||
Share-based compensation expense
|
44,525
|
|
|
40,048
|
|
|
39,593
|
|
|
31,670
|
|
|
33,887
|
|
|
36,779
|
|
|
36,922
|
|
|
31,198
|
|
||||||||
Depreciation and amortization
|
9,632
|
|
|
9,085
|
|
|
9,125
|
|
|
9,437
|
|
|
9,928
|
|
|
9,681
|
|
|
9,018
|
|
|
9,118
|
|
||||||||
Litigation settlement (benefit) expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,000
|
)
|
|
50,000
|
|
||||||||
Interest and other (income) expense, net
|
2,839
|
|
|
1,854
|
|
|
3,266
|
|
|
499
|
|
|
153
|
|
|
111
|
|
|
(327
|
)
|
|
(717
|
)
|
||||||||
Provision (benefit) for income taxes
|
(185
|
)
|
|
(647
|
)
|
|
472
|
|
|
509
|
|
|
1,036
|
|
|
230
|
|
|
312
|
|
|
339
|
|
||||||||
Loss (gain) on sale of property and equipment
|
36
|
|
|
62
|
|
|
2
|
|
|
—
|
|
|
39
|
|
|
(219
|
)
|
|
169
|
|
|
(38
|
)
|
||||||||
Adjusted EBITDA
|
$
|
41,184
|
|
|
$
|
34,304
|
|
|
$
|
36,496
|
|
|
$
|
27,025
|
|
|
$
|
29,793
|
|
|
$
|
11,623
|
|
|
$
|
12,554
|
|
|
$
|
(9,083
|
)
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2017 |
|
Sep. 30,
2017 |
|
Jun. 30,
2017 |
|
Mar. 31,
2017 |
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Adjusted Net Income (Loss) Per Share:
|
(unaudited)
|
||||||||||||||||||||||||||||||
Net loss
|
$
|
(15,663
|
)
|
|
$
|
(16,098
|
)
|
|
$
|
(15,962
|
)
|
|
$
|
(15,090
|
)
|
|
$
|
(15,167
|
)
|
|
$
|
(32,323
|
)
|
|
$
|
(27,345
|
)
|
|
$
|
(96,755
|
)
|
Starbucks transaction-based revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
(7,164
|
)
|
|
(32,867
|
)
|
|
(38,838
|
)
|
||||||||
Starbucks transaction-based costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
4,528
|
|
|
28,672
|
|
|
36,610
|
|
||||||||
Share-based compensation expense
|
44,525
|
|
|
40,048
|
|
|
39,593
|
|
|
31,670
|
|
|
33,887
|
|
|
36,779
|
|
|
36,922
|
|
|
31,198
|
|
||||||||
Amortization of intangible assets
|
1,747
|
|
|
1,804
|
|
|
1,943
|
|
|
2,121
|
|
|
2,090
|
|
|
2,076
|
|
|
2,134
|
|
|
2,713
|
|
||||||||
Litigation settlement expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,000
|
)
|
|
50,000
|
|
||||||||
Amortization of debt discount and issuance costs
|
4,335
|
|
|
4,277
|
|
|
4,221
|
|
|
1,390
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Loss (gain) on sale of property and equipment
|
$
|
36
|
|
|
$
|
62
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
39
|
|
|
$
|
(219
|
)
|
|
$
|
169
|
|
|
$
|
(38
|
)
|
Adjusted Net Income (Loss)
|
$
|
34,980
|
|
|
$
|
30,093
|
|
|
$
|
29,797
|
|
|
$
|
20,091
|
|
|
$
|
20,766
|
|
|
$
|
3,677
|
|
|
$
|
5,685
|
|
|
$
|
(15,110
|
)
|
Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.05
|
)
|
Diluted
|
$
|
0.08
|
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.05
|
)
|
Weighted-average shares used to compute Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
390,030
|
|
|
383,951
|
|
|
376,357
|
|
|
366,737
|
|
|
356,343
|
|
|
343,893
|
|
|
334,488
|
|
|
331,324
|
|
||||||||
Diluted
|
450,703
|
|
|
432,284
|
|
|
418,468
|
|
|
404,319
|
|
|
382,531
|
|
|
370,746
|
|
|
365,731
|
|
|
331,324
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash and cash equivalents
|
$
|
696,474
|
|
|
$
|
452,030
|
|
|
$
|
461,329
|
|
Short-term restricted cash
|
28,805
|
|
|
22,131
|
|
|
13,537
|
|
|||
Long-term restricted cash
|
9,802
|
|
|
14,584
|
|
|
14,686
|
|
|||
Cash, cash equivalents, and restricted cash
|
735,081
|
|
|
488,745
|
|
|
489,552
|
|
|||
Short-term investments
|
169,576
|
|
|
59,901
|
|
|
—
|
|
|||
Long-term investments
|
203,667
|
|
|
27,366
|
|
|
—
|
|
|||
Cash, cash equivalents, restricted cash and investments in marketable securities
|
1,108,324
|
|
|
576,012
|
|
|
489,552
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by operating activities
|
$
|
127,711
|
|
|
$
|
23,131
|
|
|
$
|
21,123
|
|
Net cash used in investing activities:
|
(340,611
|
)
|
|
(114,241
|
)
|
|
(43,218
|
)
|
|||
Net cash provided by financing activities
|
454,933
|
|
|
90,741
|
|
|
264,763
|
|
|||
Effect of foreign exchange rate on cash and cash equivalents
|
4,303
|
|
|
(438
|
)
|
|
(1,775
|
)
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
246,336
|
|
|
$
|
(807
|
)
|
|
$
|
240,893
|
|
•
|
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 settlements receivable, and customers payable balances at period end represent one to four 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 balances 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.
|
•
|
Net loss of
$62.8 million
, offset by non-cash items consisting primarily of share-based compensation of
$155.8 million
, transaction, loan and advance losses of
$67.0 million
, and depreciation and amortization of
$37.3 million
. These items are largely driven by growth and expansion of our business activities.
|
•
|
Additional cash provided from changes in operating assets and liabilities, including increases in customers payable of
$301.8 million
, and increases in settlements payable of
$63.6 million
. Customers payable and settlements payable balances increased significantly as the year ended on a Sunday and transactions over a weekend will not settle until the following week. These balances are largely offset by settlements receivable, described below, which moves in tandem.
|
•
|
These were offset in part by cash used from changes in operating assets and liabilities, including increases in settlements receivable of
$305.8 million
for reasons aforementioned, increases in customer funds of
$59.5 million
as result of an increasing customer base with stored funds on the Cash App, charge-offs to accrued transaction losses of
$46.1 million
arising as a result of growth in GPV, and due to the net activity related to loans held for sale of
$39.3 million
arising from increased loan purchases.
|
•
|
Net loss of
$171.6 million
, offset by non-cash items consisting primarily of share-based compensation of
$138.8 million
, transaction, loan and advance losses of
$51.2 million
, and depreciation and amortization of
$37.7 million
.
|
•
|
Additional cash provided from changes in operating assets and liabilities, including increases in customers payable of
$206.6 million
, increases in settlements payable of
$38.0 million
and decreases in other current assets of
$16.1 million
.
|
•
|
These were offset in part by cash used from changes in operating assets and liabilities, including increases in settlements receivable of
$177.7 million
, charge-offs to accrued transaction losses of
$47.9 million
, the net activity related to loans held for sale of
$41.3 million
and increases in customer funds of
$34.1 million
.
|
•
|
Net loss of
$179.8 million
, offset by non-cash items consisting primarily of share-based compensation of
$82.3 million
, transaction, loan and advance losses of
$54.0 million
, and depreciation and amortization of
$27.6 million
.
|
•
|
Additional cash provided from changes in operating assets and liabilities, including increases in customers payable of
$76.0 million
, increases in settlements payable of
$13.1 million
and increases in accrued expenses of
$21.5 million
.
|
•
|
These were offset in part by cash used from changes in operating assets and liabilities, including increases in settlements receivable of
$31.8 million
, charge-offs to accrued transaction losses of
$34.7 million
and increases in other current assets of
$25.8 million
.
|
|
Payments due by period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Convertible senior notes, including interest
|
$
|
446,738
|
|
|
$
|
1,650
|
|
|
$
|
3,300
|
|
|
$
|
441,788
|
|
|
$
|
—
|
|
Operating leases
|
106,890
|
|
|
18,740
|
|
|
34,812
|
|
|
33,955
|
|
|
19,383
|
|
|||||
Capital leases
|
6,496
|
|
|
2,656
|
|
|
3,805
|
|
|
35
|
|
|
—
|
|
|||||
Purchase commitments
|
20,387
|
|
|
20,387
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
580,511
|
|
|
$
|
43,433
|
|
|
$
|
41,917
|
|
|
$
|
475,778
|
|
|
$
|
19,383
|
|
Page No
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
696,474
|
|
|
$
|
452,030
|
|
Short-term investments
|
169,576
|
|
|
59,901
|
|
||
Restricted cash
|
28,805
|
|
|
22,131
|
|
||
Settlements receivable
|
620,523
|
|
|
321,102
|
|
||
Customer funds
|
103,042
|
|
|
43,574
|
|
||
Loans held for sale
|
73,420
|
|
|
42,144
|
|
||
Other current assets
|
86,454
|
|
|
60,543
|
|
||
Total current assets
|
1,778,294
|
|
|
1,001,425
|
|
||
Property and equipment, net
|
91,496
|
|
|
88,328
|
|
||
Goodwill
|
58,327
|
|
|
57,173
|
|
||
Acquired intangible assets, net
|
14,334
|
|
|
19,292
|
|
||
Long-term investments
|
203,667
|
|
|
27,366
|
|
||
Restricted cash
|
9,802
|
|
|
14,584
|
|
||
Other non-current assets
|
31,350
|
|
|
3,194
|
|
||
Total assets
|
$
|
2,187,270
|
|
|
$
|
1,211,362
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
16,763
|
|
|
$
|
12,602
|
|
Customers payable
|
733,736
|
|
|
431,632
|
|
||
Settlements payable
|
114,788
|
|
|
51,151
|
|
||
Accrued transaction losses
|
26,893
|
|
|
20,064
|
|
||
Accrued expenses
|
52,280
|
|
|
39,543
|
|
||
Other current liabilities
|
28,367
|
|
|
22,472
|
|
||
Total current liabilities
|
972,827
|
|
|
577,464
|
|
||
Long-term debt (Note 9)
|
358,572
|
|
|
—
|
|
||
Other non-current liabilities
|
69,538
|
|
|
57,745
|
|
||
Total liabilities
|
1,400,937
|
|
|
635,209
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.0000001 par value: 100,000,000 shares authorized at December 31, 2017 and December 31, 2016. None issued and outstanding at December 31, 2017 and December 31, 2016.
|
—
|
|
|
—
|
|
||
Class A common stock, $0.0000001 par value: 1,000,000,000 shares authorized at December 31, 2017 and December 31, 2016; 280,400,813 and 198,746,620 issued and outstanding at December 31, 2017 and December 31, 2016, respectively.
|
—
|
|
|
—
|
|
||
Class B common stock, $0.0000001 par value: 500,000,000 shares authorized at December 31, 2017 and December 31, 2016; 114,793,262 and 165,800,756 issued and outstanding at December 31, 2017 and December 31, 2016, respectively.
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,630,386
|
|
|
1,357,381
|
|
||
Accumulated other comprehensive loss
|
(1,318
|
)
|
|
(1,989
|
)
|
||
Accumulated deficit
|
(842,735
|
)
|
|
(779,239
|
)
|
||
Total stockholders’ equity
|
786,333
|
|
|
576,153
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,187,270
|
|
|
$
|
1,211,362
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Transaction-based revenue
|
$
|
1,920,174
|
|
|
$
|
1,456,160
|
|
|
$
|
1,050,445
|
|
Starbucks transaction-based revenue
|
—
|
|
|
78,903
|
|
|
142,283
|
|
|||
Subscription and services-based revenue
|
252,664
|
|
|
129,351
|
|
|
58,013
|
|
|||
Hardware revenue
|
41,415
|
|
|
44,307
|
|
|
16,377
|
|
|||
Total net revenue
|
2,214,253
|
|
|
1,708,721
|
|
|
1,267,118
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Transaction-based costs
|
1,230,290
|
|
|
943,200
|
|
|
672,667
|
|
|||
Starbucks transaction-based costs
|
—
|
|
|
69,761
|
|
|
165,438
|
|
|||
Subscription and services-based costs
|
75,720
|
|
|
43,132
|
|
|
22,470
|
|
|||
Hardware costs
|
62,393
|
|
|
68,562
|
|
|
30,874
|
|
|||
Amortization of acquired technology
|
6,544
|
|
|
8,028
|
|
|
5,639
|
|
|||
Total cost of revenue
|
1,374,947
|
|
|
1,132,683
|
|
|
897,088
|
|
|||
Gross profit
|
839,306
|
|
|
576,038
|
|
|
370,030
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Product development
|
321,888
|
|
|
268,537
|
|
|
199,638
|
|
|||
Sales and marketing
|
253,170
|
|
|
173,876
|
|
|
145,618
|
|
|||
General and administrative
|
250,553
|
|
|
251,993
|
|
|
143,466
|
|
|||
Transaction, loan and advance losses
|
67,018
|
|
|
51,235
|
|
|
54,009
|
|
|||
Amortization of acquired customer assets
|
883
|
|
|
850
|
|
|
1,757
|
|
|||
Total operating expenses
|
893,512
|
|
|
746,491
|
|
|
544,488
|
|
|||
Operating loss
|
(54,206
|
)
|
|
(170,453
|
)
|
|
(174,458
|
)
|
|||
Interest and other (income) expense, net
|
8,458
|
|
|
(780
|
)
|
|
1,613
|
|
|||
Loss before income tax
|
(62,664
|
)
|
|
(169,673
|
)
|
|
(176,071
|
)
|
|||
Provision for income taxes
|
149
|
|
|
1,917
|
|
|
3,746
|
|
|||
Net loss
|
(62,813
|
)
|
|
(171,590
|
)
|
|
(179,817
|
)
|
|||
Deemed dividend on Series E preferred stock
|
—
|
|
|
—
|
|
|
(32,200
|
)
|
|||
Net loss attributable to common stockholders
|
$
|
(62,813
|
)
|
|
$
|
(171,590
|
)
|
|
$
|
(212,017
|
)
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.17
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
Diluted
|
$
|
(0.17
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
Weighted-average shares used to compute net loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
379,344
|
|
|
341,555
|
|
|
170,498
|
|
|||
Diluted
|
379,344
|
|
|
341,555
|
|
|
170,498
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss
|
$
|
(62,813
|
)
|
|
$
|
(171,590
|
)
|
|
$
|
(179,817
|
)
|
Net foreign currency translation adjustments
|
1,900
|
|
|
(716
|
)
|
|
(356
|
)
|
|||
Net unrealized gain (loss) on revaluation of intercompany loans
|
385
|
|
|
(11
|
)
|
|
(22
|
)
|
|||
Net unrealized loss on marketable securities
|
(1,614
|
)
|
|
(77
|
)
|
|
—
|
|
|||
Total comprehensive loss
|
$
|
(62,142
|
)
|
|
$
|
(172,394
|
)
|
|
$
|
(180,195
|
)
|
|
|
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, 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
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
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
|
|
||||||
|
Issuance of common stock related to acquisitions
|
—
|
|
|
—
|
|
|
3,591,014
|
|
|
—
|
|
|
35,776
|
|
|
—
|
|
|
—
|
|
|
35,776
|
|
||||||
|
Issuance of common stock
|
—
|
|
|
—
|
|
|
3,777
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,958
|
|
|
—
|
|
|
—
|
|
|
4,958
|
|
|||||||
Contribution of common stock
|
—
|
|
|
—
|
|
|
(5,068,238
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(918,139
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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
|
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(171,590
|
)
|
|
(171,590
|
)
|
||||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Exercise of stock options and warrants
|
—
|
|
|
—
|
|
|
24,413,821
|
|
|
—
|
|
|
82,438
|
|
|
—
|
|
|
—
|
|
|
82,438
|
|
||||||
|
Purchases under employee stock purchase plan
|
—
|
|
|
—
|
|
|
1,852,900
|
|
|
—
|
|
|
14,201
|
|
|
—
|
|
|
—
|
|
|
14,201
|
|
||||||
|
Vesting of restricted stock units
|
—
|
|
|
—
|
|
|
3,392,726
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,313
|
|
|
—
|
|
|
—
|
|
|
2,313
|
|
|||||||
Cancellation of shares related to business combinations
|
—
|
|
|
—
|
|
|
(228
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(61,288
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(804
|
)
|
|
—
|
|
|
(804
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141,547
|
|
|
—
|
|
|
—
|
|
|
141,547
|
|
|||||||
Balance at December 31, 2016
|
—
|
|
|
$
|
—
|
|
|
364,547,376
|
|
|
$
|
—
|
|
|
$
|
1,357,381
|
|
|
$
|
(1,989
|
)
|
|
$
|
(779,239
|
)
|
|
$
|
576,153
|
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62,813
|
)
|
|
(62,813
|
)
|
||||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
24,510,745
|
|
|
—
|
|
|
144,774
|
|
|
—
|
|
|
—
|
|
|
144,774
|
|
||||||
|
Purchases under employee stock purchase plan
|
—
|
|
|
—
|
|
|
1,670,045
|
|
|
—
|
|
|
17,859
|
|
|
—
|
|
|
—
|
|
|
17,859
|
|
||||||
|
Vesting of restricted stock units
|
—
|
|
|
—
|
|
|
5,964,153
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
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
|
||||||||||||||
Vesting of early exercised stock options and other
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
661
|
|
|
—
|
|
|
—
|
|
|
661
|
|
||||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(24,209
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
671
|
|
|
—
|
|
|
671
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
159,509
|
|
|
—
|
|
|
—
|
|
|
159,509
|
|
|||||||
Tax withholding related to vesting of restricted stock units
|
—
|
|
|
—
|
|
|
(1,474,035
|
)
|
|
—
|
|
|
(44,682
|
)
|
|
—
|
|
|
—
|
|
|
(44,682
|
)
|
|||||||
Conversion feature of convertible senior notes, due 2022, net of allocated debt issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83,901
|
|
|
—
|
|
|
—
|
|
|
83,901
|
|
|||||||
Purchase of bond hedges in conjunction with issuance of convertible senior notes, due 2022
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(92,136
|
)
|
|
—
|
|
|
—
|
|
|
(92,136
|
)
|
|||||||
Sale of warrants in conjunction with issuance of convertible senior notes, due 2022
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,244
|
|
|
—
|
|
|
—
|
|
|
57,244
|
|
|||||||
Payment for termination of Starbucks warrant
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54,808
|
)
|
|
—
|
|
|
—
|
|
|
(54,808
|
)
|
|||||||
Cumulative adjustment due to adoption of new standard (Note 12)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
683
|
|
|
—
|
|
|
(683
|
)
|
|
—
|
|
|||||||
Balance at December 31, 2017
|
—
|
|
|
—
|
|
|
395,194,075
|
|
|
—
|
|
|
1,630,386
|
|
|
(1,318
|
)
|
|
(842,735
|
)
|
|
786,333
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(62,813
|
)
|
|
$
|
(171,590
|
)
|
|
$
|
(179,817
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
37,279
|
|
|
37,745
|
|
|
27,626
|
|
|||
Non-cash interest and other expense
|
14,421
|
|
|
(49
|
)
|
|
270
|
|
|||
Share-based compensation
|
155,836
|
|
|
138,786
|
|
|
82,292
|
|
|||
Excess tax benefit from share-based payment activity
|
—
|
|
|
—
|
|
|
(1,101
|
)
|
|||
Transaction, loan and advance losses
|
67,018
|
|
|
51,235
|
|
|
54,009
|
|
|||
Deferred provision (benefit) for income taxes
|
(1,385
|
)
|
|
58
|
|
|
26
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Settlements receivable
|
(305,831
|
)
|
|
(177,662
|
)
|
|
(31,810
|
)
|
|||
Customer funds
|
(59,468
|
)
|
|
(34,128
|
)
|
|
(6,462
|
)
|
|||
Purchase of loans held for sale
|
(1,184,630
|
)
|
|
(668,976
|
)
|
|
(816
|
)
|
|||
Sales and principal payments of loans held for sale
|
1,145,314
|
|
|
627,627
|
|
|
21
|
|
|||
Other current assets
|
(26,119
|
)
|
|
16,116
|
|
|
(25,841
|
)
|
|||
Other non-current assets
|
(3,274
|
)
|
|
631
|
|
|
1,220
|
|
|||
Accounts payable
|
4,515
|
|
|
(2,147
|
)
|
|
7,831
|
|
|||
Customers payable
|
301,778
|
|
|
206,574
|
|
|
76,009
|
|
|||
Settlements payable
|
63,637
|
|
|
38,046
|
|
|
13,105
|
|
|||
Charge-offs to accrued transaction losses
|
(46,148
|
)
|
|
(47,931
|
)
|
|
(34,655
|
)
|
|||
Accrued expenses
|
12,207
|
|
|
(409
|
)
|
|
21,450
|
|
|||
Other current liabilities
|
3,683
|
|
|
6,056
|
|
|
6,655
|
|
|||
Other non-current liabilities
|
11,691
|
|
|
3,149
|
|
|
11,111
|
|
|||
Net cash provided by operating activities
|
127,711
|
|
|
23,131
|
|
|
21,123
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchase of marketable securities
|
(544,910
|
)
|
|
(164,766
|
)
|
|
—
|
|
|||
Proceeds from maturities of marketable securities
|
168,224
|
|
|
43,200
|
|
|
—
|
|
|||
Proceeds from sale of marketable securities
|
89,087
|
|
|
34,222
|
|
|
—
|
|
|||
Purchase of property and equipment
|
(26,097
|
)
|
|
(25,433
|
)
|
|
(37,432
|
)
|
|||
Proceeds from sale of property and equipment
|
—
|
|
|
296
|
|
|
—
|
|
|||
Payments for investment in privately held entity
|
(25,000
|
)
|
|
—
|
|
|
—
|
|
|||
Payment for acquisition of intangible assets
|
—
|
|
|
(400
|
)
|
|
(1,286
|
)
|
|||
Business acquisitions, net of cash acquired
|
(1,915
|
)
|
|
(1,360
|
)
|
|
(4,500
|
)
|
|||
Net cash used in investing activities:
|
(340,611
|
)
|
|
(114,241
|
)
|
|
(43,218
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of convertible senior notes, net
|
428,250
|
|
|
—
|
|
|
—
|
|
|||
Purchase of convertible senior note hedges
|
(92,136
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of warrants
|
57,244
|
|
|
—
|
|
|
—
|
|
|||
Payment for termination of Starbucks warrant
|
(54,808
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of preferred stock, net
|
—
|
|
|
—
|
|
|
29,952
|
|
|||
Proceeds from issuance of common stock upon initial public offering, net of offering costs
|
|
|
—
|
|
|
251,257
|
|
||||
Payments of offering costs related to initial public offering
|
—
|
|
|
(5,530
|
)
|
|
—
|
|
|||
Principal payments on debt
|
—
|
|
|
—
|
|
|
(30,000
|
)
|
|||
Payments of debt issuance costs
|
—
|
|
|
—
|
|
|
(1,387
|
)
|
|||
Principal payments on capital lease obligation
|
(1,439
|
)
|
|
(168
|
)
|
|
—
|
|
|||
Proceeds from the exercise of stock options and purchases under the employee stock purchase plan, net
|
162,504
|
|
|
96,439
|
|
|
13,840
|
|
|||
Payments for tax withholding related to vesting of restricted stock units
|
(44,682
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefit from share-based payment award
|
—
|
|
|
—
|
|
|
1,101
|
|
Net cash provided by financing activities
|
454,933
|
|
|
90,741
|
|
|
264,763
|
|
|||
Effect of foreign exchange rate on cash and cash equivalents
|
4,303
|
|
|
(438
|
)
|
|
(1,775
|
)
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
246,336
|
|
|
(807
|
)
|
|
240,893
|
|
|||
Cash, cash equivalents and restricted cash, beginning of the year
|
488,745
|
|
|
489,552
|
|
|
248,659
|
|
|||
Cash, cash equivalents and restricted cash, end of the year
|
$
|
735,081
|
|
|
$
|
488,745
|
|
|
$
|
489,552
|
|
•
|
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 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, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
387,698
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
207,168
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
—
|
|
|
24,695
|
|
|
—
|
|
|
—
|
|
|
7,496
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
||||||
Short-term securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency securities
|
—
|
|
|
15,083
|
|
|
—
|
|
|
—
|
|
|
9,055
|
|
|
—
|
|
||||||
Corporate bonds
|
—
|
|
|
57,798
|
|
|
—
|
|
|
—
|
|
|
6,980
|
|
|
—
|
|
||||||
Commercial paper
|
—
|
|
|
17,428
|
|
|
—
|
|
|
—
|
|
|
17,298
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
23,700
|
|
|
—
|
|
|
—
|
|
|
8,028
|
|
|
—
|
|
||||||
U.S. government securities
|
55,567
|
|
|
—
|
|
|
—
|
|
|
18,540
|
|
|
—
|
|
|
—
|
|
||||||
Long-term securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency securities
|
—
|
|
|
20,169
|
|
|
—
|
|
|
—
|
|
|
3,502
|
|
|
—
|
|
||||||
Corporate bonds
|
—
|
|
|
91,413
|
|
|
—
|
|
|
—
|
|
|
12,914
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
26,224
|
|
|
—
|
|
|
—
|
|
|
2,492
|
|
|
—
|
|
||||||
U.S. government securities
|
65,861
|
|
|
—
|
|
|
—
|
|
|
8,458
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
509,126
|
|
|
$
|
276,510
|
|
|
$
|
—
|
|
|
$
|
234,166
|
|
|
$
|
68,765
|
|
|
$
|
—
|
|
|
December 31, 2017
|
||||||
|
Carrying Value
|
|
Fair Value (Level 2)
|
||||
Convertible senior notes
|
$
|
358,572
|
|
|
$
|
719,356
|
|
Total
|
$
|
358,572
|
|
|
$
|
719,356
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying Value
|
|
Fair Value (Level 3)
|
|
Carrying Value
|
|
Fair Value (Level 3)
|
||||||||
Loans held for sale
|
$
|
73,420
|
|
|
$
|
76,070
|
|
|
$
|
42,144
|
|
|
$
|
42,633
|
|
Total
|
$
|
73,420
|
|
|
$
|
76,070
|
|
|
$
|
42,144
|
|
|
$
|
42,633
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Short-term securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
15,122
|
|
|
$
|
—
|
|
|
$
|
(39
|
)
|
|
$
|
15,083
|
|
Corporate bonds
|
57,855
|
|
|
22
|
|
|
(79
|
)
|
|
57,798
|
|
||||
Commercial paper
|
17,428
|
|
|
—
|
|
|
—
|
|
|
17,428
|
|
||||
Municipal securities
|
23,743
|
|
|
8
|
|
|
(51
|
)
|
|
23,700
|
|
||||
U.S. government securities
|
55,729
|
|
|
1
|
|
|
(163
|
)
|
|
55,567
|
|
||||
Total
|
$
|
169,877
|
|
|
$
|
31
|
|
|
$
|
(332
|
)
|
|
$
|
169,576
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
20,288
|
|
|
$
|
2
|
|
|
$
|
(121
|
)
|
|
$
|
20,169
|
|
Corporate bonds
|
91,959
|
|
|
25
|
|
|
(571
|
)
|
|
91,413
|
|
||||
Municipal securities
|
26,371
|
|
|
13
|
|
|
(160
|
)
|
|
26,224
|
|
||||
U.S. government securities
|
66,362
|
|
|
19
|
|
|
(520
|
)
|
|
65,861
|
|
||||
Total
|
$
|
204,980
|
|
|
$
|
59
|
|
|
$
|
(1,372
|
)
|
|
$
|
203,667
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Short-term securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
9,048
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
9,055
|
|
Corporate bonds
|
17,318
|
|
|
—
|
|
|
(20
|
)
|
|
17,298
|
|
||||
Commercial paper
|
6,980
|
|
|
—
|
|
|
—
|
|
|
6,980
|
|
||||
Municipal securities
|
8,037
|
|
|
—
|
|
|
(9
|
)
|
|
8,028
|
|
||||
U.S. government securities
|
18,537
|
|
|
3
|
|
|
—
|
|
|
18,540
|
|
||||
Total
|
$
|
59,920
|
|
|
$
|
10
|
|
|
$
|
(29
|
)
|
|
$
|
59,901
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
3,502
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,502
|
|
Corporate bonds
|
12,939
|
|
|
—
|
|
|
(25
|
)
|
|
12,914
|
|
||||
Municipal securities
|
2,505
|
|
|
—
|
|
|
(13
|
)
|
|
2,492
|
|
||||
U.S. government securities
|
8,478
|
|
|
—
|
|
|
(20
|
)
|
|
8,458
|
|
||||
Total
|
$
|
27,424
|
|
|
$
|
—
|
|
|
$
|
(58
|
)
|
|
$
|
27,366
|
|
|
Amortized Cost
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
169,877
|
|
|
$
|
169,576
|
|
Due in one to five years
|
204,980
|
|
|
203,667
|
|
||
Total
|
$
|
374,857
|
|
|
$
|
373,243
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Computer equipment
|
$
|
66,186
|
|
|
$
|
52,915
|
|
Office furniture and equipment
|
14,490
|
|
|
10,737
|
|
||
Leasehold improvements
|
77,073
|
|
|
73,366
|
|
||
Capitalized software
|
35,063
|
|
|
24,642
|
|
||
Total
|
192,812
|
|
|
161,660
|
|
||
Less: Accumulated depreciation and amortization
|
(101,316
|
)
|
|
(73,332
|
)
|
||
Property and equipment, net
|
$
|
91,496
|
|
|
$
|
88,328
|
|
|
Balance at December 31, 2017
|
||||||||||
Cost
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Patents
|
$
|
1,285
|
|
|
$
|
(559
|
)
|
|
$
|
726
|
|
Technology Assets
|
29,158
|
|
|
(21,329
|
)
|
|
7,829
|
|
|||
Customer Assets
|
10,319
|
|
|
(4,540
|
)
|
|
5,779
|
|
|||
Total
|
$
|
40,762
|
|
|
$
|
(26,428
|
)
|
|
$
|
14,334
|
|
|
Balance at December 31, 2016
|
||||||||||
Cost
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Patents
|
$
|
1,285
|
|
|
$
|
(454
|
)
|
|
$
|
831
|
|
Technology Assets
|
29,075
|
|
|
(14,702
|
)
|
|
14,373
|
|
|||
Customer Assets
|
7,745
|
|
|
(3,657
|
)
|
|
4,088
|
|
|||
Total
|
$
|
38,105
|
|
|
$
|
(18,813
|
)
|
|
$
|
19,292
|
|
2018
|
|
$
|
6,226
|
|
2019
|
|
3,442
|
|
|
2020
|
|
1,479
|
|
|
2021
|
|
846
|
|
|
2022
|
|
611
|
|
|
Thereafter
|
1,730
|
|
||
Total
|
$
|
14,334
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Inventory, net
|
$
|
16,777
|
|
|
$
|
13,724
|
|
Processing costs receivable
|
21,083
|
|
|
10,049
|
|
||
Prepaid expenses
|
14,473
|
|
|
7,365
|
|
||
Accounts receivable, net
|
8,606
|
|
|
6,191
|
|
||
Deferred hardware costs
|
7,931
|
|
|
4,546
|
|
||
Deferred magstripe reader costs
|
2,469
|
|
|
3,911
|
|
||
Merchant cash advance receivable, net
|
125
|
|
|
4,212
|
|
||
Other
|
14,990
|
|
|
10,545
|
|
||
Total
|
$
|
86,454
|
|
|
$
|
60,543
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Accrued payroll
|
$
|
9,103
|
|
|
$
|
5,799
|
|
Accrued professional fees
|
5,638
|
|
|
5,788
|
|
||
Accrued advertising and other marketing
|
6,723
|
|
|
5,008
|
|
||
Processing costs payable
|
10,145
|
|
|
10,871
|
|
||
Accrued non income tax liabilities
|
6,155
|
|
|
3,562
|
|
||
Accrued hardware costs
|
2,496
|
|
|
3,148
|
|
||
Other accrued liabilities
|
$
|
12,020
|
|
|
$
|
5,367
|
|
Total
|
$
|
52,280
|
|
|
$
|
39,543
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Square Capital payable
(i)
|
$
|
7,671
|
|
|
$
|
4,907
|
|
Square Payroll payable
(ii)
|
2,850
|
|
|
4,769
|
|
||
Deferred revenue
|
5,893
|
|
|
5,407
|
|
||
Current portion of deferred rent
|
3,311
|
|
|
2,862
|
|
||
Accrued redemptions
|
1,036
|
|
|
1,628
|
|
||
Other
|
7,606
|
|
|
2,899
|
|
||
Total
|
$
|
28,367
|
|
|
$
|
22,472
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Investment in privately held entity
(i)
|
$
|
25,000
|
|
|
$
|
—
|
|
Deposits
|
2,738
|
|
|
1,775
|
|
||
Debt issuance costs
|
788
|
|
|
1,063
|
|
||
Deferred tax assets
|
519
|
|
|
306
|
|
||
Other
|
2,305
|
|
|
50
|
|
||
Total
|
$
|
31,350
|
|
|
$
|
3,194
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Statutory liabilities
(ii)
|
$
|
40,768
|
|
|
$
|
29,497
|
|
Deferred rent
|
20,349
|
|
|
23,119
|
|
||
Deferred tax liabilities
|
644
|
|
|
476
|
|
||
Other
|
7,777
|
|
|
4,653
|
|
||
Total
|
$
|
69,538
|
|
|
$
|
57,745
|
|
|
December 31, 2017
|
||
Principal
|
$
|
440,000
|
|
Less: unamortized debt discount
|
(73,384
|
)
|
|
Less: unamortized debt issuance costs
|
(8,044
|
)
|
|
Net carrying amount
|
$
|
358,572
|
|
|
December 31, 2017
|
||
Debt discount related to value of conversion option
|
$
|
86,203
|
|
Less: allocated debt issuance costs
|
(2,302
|
)
|
|
Equity component, net
|
$
|
83,901
|
|
|
Year Ended December 31,
|
|
|
2017
|
|
Contractual interest expense based on 0.375% per annum
|
1,351
|
|
Amortization of debt discount and issuance costs
|
14,223
|
|
Total
|
15,574
|
|
Effective interest rate of the liability component
|
5.34
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Accrued transaction losses, beginning of the year
|
$
|
20,064
|
|
|
$
|
17,176
|
|
|
$
|
8,452
|
|
Provision for transaction losses
|
52,977
|
|
|
50,819
|
|
|
43,379
|
|
|||
Charge-offs to accrued transaction losses
|
(46,148
|
)
|
|
(47,931
|
)
|
|
(34,655
|
)
|
|||
Accrued transaction losses, end of the year
|
$
|
26,893
|
|
|
$
|
20,064
|
|
|
$
|
17,176
|
|
|
Year Ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
|||||||
Domestic
|
$
|
(10,900
|
)
|
|
$
|
(145,499
|
)
|
|
$
|
(157,229
|
)
|
Foreign
|
(51,764
|
)
|
|
(24,174
|
)
|
|
(18,842
|
)
|
|||
Loss before income taxes
|
$
|
(62,664
|
)
|
|
$
|
(169,673
|
)
|
|
$
|
(176,071
|
)
|
|
Year Ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
|||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(1,192
|
)
|
|
$
|
63
|
|
|
$
|
1,662
|
|
State
|
739
|
|
|
527
|
|
|
836
|
|
|||
Foreign
|
1,987
|
|
|
1,269
|
|
|
1,222
|
|
|||
Total current provision for income taxes
|
1,534
|
|
|
1,859
|
|
|
3,720
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(1,169
|
)
|
|
173
|
|
|
67
|
|
|||
State
|
57
|
|
|
18
|
|
|
11
|
|
|||
Foreign
|
(273
|
)
|
|
(133
|
)
|
|
(52
|
)
|
|||
Total deferred provision for income taxes
|
(1,385
|
)
|
|
58
|
|
|
26
|
|
|||
Total provision for income taxes
|
$
|
149
|
|
|
$
|
1,917
|
|
|
$
|
3,746
|
|
|
Balance at December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
|||||||
Deferred tax assets:
|
|
|
|
|
|
||||||
Capitalized costs
|
$
|
35,608
|
|
|
$
|
61,897
|
|
|
$
|
67,051
|
|
Accrued expenses
|
23,553
|
|
|
29,421
|
|
|
27,964
|
|
|||
Net operating loss carryforwards
|
244,197
|
|
|
65,507
|
|
|
36,633
|
|
|||
Tax credit carryforwards
|
60,567
|
|
|
38,927
|
|
|
25,349
|
|
|||
Property, equipment and intangible assets
|
7,390
|
|
|
5,721
|
|
|
—
|
|
|||
Share-based compensation
|
35,728
|
|
|
52,091
|
|
|
36,689
|
|
|||
Other
|
2,519
|
|
|
1,640
|
|
|
1,469
|
|
|||
Total deferred tax assets
|
409,562
|
|
|
255,204
|
|
|
195,155
|
|
|||
Valuation allowance
|
(409,043
|
)
|
|
(254,898
|
)
|
|
(195,103
|
)
|
|||
Total deferred tax assets, net of valuation allowance
|
519
|
|
|
306
|
|
|
52
|
|
|||
Deferred tax liabilities:
|
|
|
|
|
|
||||||
Property, equipment and intangible assets
|
(644
|
)
|
|
(476
|
)
|
|
(163
|
)
|
|||
Total deferred tax liabilities
|
(644
|
)
|
|
(476
|
)
|
|
(163
|
)
|
|||
Net deferred tax liabilities
|
$
|
(125
|
)
|
|
$
|
(170
|
)
|
|
$
|
(111
|
)
|
|
Year Ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
|||||||
Balance at the beginning of the year
|
$
|
92,134
|
|
|
$
|
90,372
|
|
|
$
|
78,031
|
|
Gross increases and decreases related to prior period tax positions
|
—
|
|
|
5,190
|
|
|
—
|
|
|||
Gross increases and decreases related to current period tax positions
|
4,193
|
|
|
(3,428
|
)
|
|
12,341
|
|
|||
Reductions related to lapse of statute of limitations
|
(91
|
)
|
|
—
|
|
|
—
|
|
|||
Gross increases and decreases related to U.S. tax reform
|
(25,437
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at the end of the year
|
$
|
70,799
|
|
|
$
|
92,134
|
|
|
$
|
90,372
|
|
|
Number of stock options outstanding
|
|
Weighted
average exercise price |
|
Weighted
average remaining contractual term (in years) |
|
Aggregate
intrinsic value |
|||||
Balance at December 31, 2016
|
73,261,562
|
|
|
$
|
7.70
|
|
|
7.28
|
|
$
|
443,711
|
|
Granted
|
1,216,959
|
|
|
17.2
|
|
|
|
|
|
|||
Exercised
|
(24,510,745
|
)
|
|
5.91
|
|
|
|
|
|
|||
Forfeited and canceled
|
(2,697,685
|
)
|
|
11.36
|
|
|
|
|
|
|||
Balance at December 31, 2017
|
47,270,091
|
|
|
$
|
8.67
|
|
|
6.52
|
|
$
|
1,229,103
|
|
Options vested and expected to vest at
|
|
|
|
|
|
|
|
|||||
December 31, 2017
|
47,270,091
|
|
|
$
|
8.67
|
|
|
6.52
|
|
$
|
1,229,103
|
|
Options exercisable at
|
|
|
|
|
|
|
|
|||||
December 31, 2017
|
44,252,865
|
|
|
$
|
8.37
|
|
|
6.38
|
|
$
|
1,163,690
|
|
|
Number of
RSUs |
|
Weighted
average grant date fair value |
|||
Unvested at December 31, 2016
|
15,443,391
|
|
|
$
|
12.09
|
|
Granted
|
14,256,257
|
|
|
21.21
|
|
|
Vested
|
(5,964,153
|
)
|
|
12.83
|
|
|
Forfeited
|
(2,417,970
|
)
|
|
13.29
|
|
|
Unvested at December 31, 2017
|
21,317,525
|
|
|
$
|
17.84
|
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Risk-free interest rate
|
1.88
|
%
|
|
1.54
|
%
|
|
1.73
|
%
|
Expected volatility
|
32.22
|
%
|
|
42.74
|
%
|
|
47.68
|
%
|
Expected term (years)
|
6.02
|
|
|
6.08
|
|
|
6.02
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cost of revenue
|
$
|
77
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Product development
|
98,310
|
|
|
91,404
|
|
|
54,738
|
|
|||
Sales and marketing
|
17,568
|
|
|
14,122
|
|
|
7,360
|
|
|||
General and administrative
|
39,881
|
|
|
33,260
|
|
|
20,194
|
|
|||
Total
|
$
|
155,836
|
|
|
$
|
138,786
|
|
|
$
|
82,292
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss
|
$
|
(62,813
|
)
|
|
$
|
(171,590
|
)
|
|
$
|
(179,817
|
)
|
Deemed dividend on Series E preferred stock
|
—
|
|
|
—
|
|
|
(32,200
|
)
|
|||
Net loss attributable to common stockholders
|
$
|
(62,813
|
)
|
|
$
|
(171,590
|
)
|
|
$
|
(212,017
|
)
|
Basic shares:
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding
|
380,921
|
|
|
344,393
|
|
|
175,139
|
|
|||
Weighted-average unvested shares
|
(1,577
|
)
|
|
(2,838
|
)
|
|
(4,641
|
)
|
|||
Weighted-average shares used to compute basic net loss per share
|
379,344
|
|
|
341,555
|
|
|
170,498
|
|
|||
Diluted shares:
|
|
|
|
|
|
||||||
Weighted-average shares used to compute diluted net loss per share
|
379,344
|
|
|
341,555
|
|
|
170,498
|
|
|||
|
|
|
|
|
|
||||||
Loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.17
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
Diluted
|
$
|
(0.17
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Stock options and restricted stock units
|
68,588
|
|
|
88,705
|
|
|
111,148
|
|
Common stock warrants
|
19,173
|
|
|
9,457
|
|
|
9,544
|
|
Unvested shares
|
1,300
|
|
|
1,892
|
|
|
3,420
|
|
Employee stock purchase plan
|
157
|
|
|
216
|
|
|
172
|
|
Total anti-dilutive securities
|
89,218
|
|
|
100,270
|
|
|
124,284
|
|
|
Capital
|
|
Operating
|
||||
Year:
|
|
|
|
||||
2018
|
$
|
2,656
|
|
|
$
|
18,740
|
|
2019
|
2,540
|
|
|
17,438
|
|
||
2020
|
1,265
|
|
|
17,374
|
|
||
2021
|
35
|
|
|
16,968
|
|
||
2022
|
—
|
|
|
16,987
|
|
||
Thereafter
|
—
|
|
|
19,383
|
|
||
Total
|
$
|
6,496
|
|
|
$
|
106,890
|
|
Less amount representing interest
|
(14
|
)
|
|
|
|||
Present value of capital lease obligations
|
6,482
|
|
|
|
|||
Less current portion of capital lease obligation
|
(2,650
|
)
|
|
|
|||
Non-current portion of capital lease obligation
|
$
|
3,832
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
|
|
|
|
|
||||||
United States
|
$
|
2,120,088
|
|
|
$
|
1,643,852
|
|
|
$
|
1,224,566
|
|
International
|
94,165
|
|
|
64,869
|
|
|
42,552
|
|
|||
Total net revenue
|
$
|
2,214,253
|
|
|
$
|
1,708,721
|
|
|
$
|
1,267,118
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Long-lived assets
|
|
|
|
||||
United States
|
$
|
158,820
|
|
|
$
|
162,118
|
|
International
|
5,337
|
|
|
2,675
|
|
||
Total long-lived assets
|
$
|
164,157
|
|
|
$
|
164,793
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Supplemental Cash Flow Data:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
1,374
|
|
|
$
|
570
|
|
|
$
|
981
|
|
Cash paid for income taxes
|
1,254
|
|
|
395
|
|
|
1,916
|
|
|||
Supplemental disclosures of non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Change in purchases of property and equipment in accounts payable and accrued expenses
|
143
|
|
|
2,554
|
|
|
5,593
|
|
|||
Unpaid business acquisition purchase price
|
2,115
|
|
|
240
|
|
|
—
|
|
|||
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
|
|
|
|
|
Incorporated by Reference
|
|||
Exhibit Number
|
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
|
8-K
|
001-37622
|
3.1
|
November 24, 2015
|
||
|
8-K
|
001-37622
|
3.1
|
November 3, 2017
|
||
|
S-1/A
|
333-207411
|
4.1
|
November 6, 2015
|
||
|
S-1
|
333-207411
|
4.2
|
October 14, 2015
|
||
|
8-K
|
001-37622
|
4.1
|
March 6, 2017
|
||
|
8-K
|
001-37622
|
4.2
|
March 6, 2017
|
||
|
S-1/A
|
333-207411
|
10.1
|
November 6, 2015
|
||
|
10-Q
|
001-37622
|
10.1
|
August 2, 2017
|
||
|
10-K
|
001-37622
|
10.3
|
March 10, 2016
|
||
|
S-1
|
333-207411
|
10.4
|
October 14, 2015
|
||
|
S-1
|
333-207411
|
10.5
|
October 14, 2015
|
||
|
10-K
|
001-37622
|
10.6
|
February 24, 2017
|
||
|
S-1
|
333-207411
|
10.7
|
October 14, 2015
|
||
|
10-K
|
001-37622
|
10.8
|
March 10, 2016
|
||
|
S-1/A
|
333-207411
|
10.9
|
November 6, 2015
|
||
|
S-1/A
|
333-207411
|
10.11
|
November 6, 2015
|
||
|
S-1/A
|
333-207411
|
10.12
|
November 6, 2015
|
||
|
10-K
|
001-37622
|
10.13
|
February 24, 2017
|
|
10-Q
|
001-37622
|
10.6
|
May 4, 2017
|
||
|
10-Q
|
001-37622
|
10.7
|
May 4, 2017
|
||
|
|
|
|
|
||
|
S-1/A
|
333-207411
|
10.14
|
November 6, 2015
|
||
|
S-1/A
|
333-207411
|
10.14A
|
November 16, 2015
|
||
|
8-K
|
001-37622
|
10.1
|
February 27, 2017
|
||
|
S-1
|
333-207411
|
10.15
|
October 14, 2015
|
||
|
S-1
|
333-207411
|
10.16
|
October 14, 2015
|
||
|
S-1
|
333-207411
|
10.17
|
October 14, 2015
|
||
|
8-K
|
001-37622
|
10.1
|
February 24, 2017
|
||
|
8-K
|
001-37622
|
10.1
|
March 6, 2017
|
||
|
8-K
|
001-37622
|
10.2
|
March 6, 2017
|
||
|
8-K
|
001-37622
|
10.3
|
March 6, 2017
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
+
|
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.
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†
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The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are deemed furnished and not 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.
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Signature
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Title
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Date
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/s/ Jack Dorsey
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President, Chief Executive Officer, and Chairman (Principal Executive Officer)
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February 27, 2018
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Jack Dorsey
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/s/ Sarah Friar
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Chief Financial Officer (Principal Financial Officer)
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February 27, 2018
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Sarah Friar
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/s/ Ajmere Dale
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Chief Accounting Officer (Principal Accounting Officer)
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February 27, 2018
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Ajmere Dale
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/s/ Roelof Botha
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Director
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February 27, 2018
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Roelof Botha
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/s/ Paul Deighton
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Director
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February 27, 2018
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Paul Deighton
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/s/ Randy Garutti
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Director
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February 27, 2018
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Randy Garutti
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/s/ Jim McKelvey
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Director
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February 27, 2018
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Jim McKelvey
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/s/ Mary Meeker
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Director
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February 27, 2018
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Mary Meeker
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/s/ Anna Patterson
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Director
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February 27, 2018
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Anna Patterson
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/s/ Naveen Rao
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Director
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February 27, 2018
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Naveen Rao
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/s/ Ruth Simmons
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Director
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February 27, 2018
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Ruth Simmons
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/s/ Lawrence Summers
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Director
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February 27, 2018
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Lawrence Summers
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/s/ David Viniar
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Director
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February 27, 2018
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David Viniar
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Period During Ninth Amendment Space Term
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Annual Base Rental Rate per Rentable Square Foot
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Annual Base Rent
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Monthly Installment of Base Rent
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Subsidiary name
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Jurisdiction of incorporation
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Caviar, Inc.
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Delaware, U.S.
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Square Capital, LLC
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Delaware, U.S.
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Squareup International Limited
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Ireland
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Squareup Pte. Ltd.
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Singapore
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