ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
80-0429876
|
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer
Identification No.)
|
Page No.
|
|
PART I—Financial Information
|
|
Item 1. Financial Statements
|
|
Condensed Consolidated Balance Sheets (unaudited)
|
|
Condensed Consolidated Statements of Operations (unaudited)
|
|
Condensed Consolidated Statements of Comprehensive Loss (unaudited)
|
|
Condensed Consolidated Statements of Cash Flows (unaudited)
|
|
Notes to the Condensed Consolidated Financial Statements (unaudited)
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk
|
|
Item 4. Controls and Procedures
|
|
PART II—Other Information
|
|
Item 1. Legal Proceedings
|
|
Item 1A. Risk Factors
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
|
Item 3. Defaults Upon Senior Securities
|
|
Item 4. Mine Safety Disclosures
|
|
Item 5. Other Information
|
|
Item 6. Exhibits
|
|
Signatures
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,387,977
|
|
|
$
|
696,474
|
|
Short-term investments
|
233,599
|
|
|
169,576
|
|
||
Restricted cash
|
27,487
|
|
|
28,805
|
|
||
Settlements receivable
|
806,688
|
|
|
620,523
|
|
||
Customer funds
|
208,855
|
|
|
103,042
|
|
||
Loans held for sale
|
85,040
|
|
|
73,420
|
|
||
Other current assets
|
120,250
|
|
|
86,454
|
|
||
Total current assets
|
2,869,896
|
|
|
1,778,294
|
|
||
Property and equipment, net
|
121,708
|
|
|
91,496
|
|
||
Goodwill
|
255,656
|
|
|
58,327
|
|
||
Acquired intangible assets, net
|
85,514
|
|
|
14,334
|
|
||
Long-term investments
|
168,150
|
|
|
203,667
|
|
||
Restricted cash
|
12,908
|
|
|
9,802
|
|
||
Other non-current assets
|
40,995
|
|
|
31,350
|
|
||
Total assets
|
$
|
3,554,827
|
|
|
$
|
2,187,270
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
9,214
|
|
|
$
|
16,763
|
|
Customers payable
|
1,001,422
|
|
|
733,736
|
|
||
Settlements payable
|
140,616
|
|
|
114,788
|
|
||
Accrued transaction losses
|
29,207
|
|
|
26,893
|
|
||
Accrued expenses
|
74,816
|
|
|
52,280
|
|
||
Other current liabilities
|
60,635
|
|
|
28,367
|
|
||
Total current liabilities
|
1,315,910
|
|
|
972,827
|
|
||
Long-term debt (Note 12)
|
1,071,437
|
|
|
358,572
|
|
||
Other non-current liabilities
|
85,851
|
|
|
69,538
|
|
||
Total liabilities
|
2,473,198
|
|
|
1,400,937
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.0000001 par value: 100,000,000 shares authorized at June 30, 2018 and December 31, 2017. None issued and outstanding at June 30, 2018 and December 31, 2017.
|
—
|
|
|
—
|
|
||
Class A common stock, $0.0000001 par value: 1,000,000,000 shares authorized at June 30, 2018 and December 31, 2017; 297,371,047 and 280,400,813 issued and outstanding at June 30, 2018 and December 31, 2017, respectively.
|
—
|
|
|
—
|
|
||
Class B common stock, $0.0000001 par value: 500,000,000 shares authorized at June 30, 2018 and December 31, 2017; 109,580,981 and 114,793,262 issued and outstanding at June 30, 2018 and December 31, 2017, respectively.
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,963,298
|
|
|
1,630,386
|
|
||
Accumulated other comprehensive loss
|
(4,456
|
)
|
|
(1,318
|
)
|
||
Accumulated deficit
|
(877,213
|
)
|
|
(842,735
|
)
|
||
Total stockholders’ equity
|
1,081,629
|
|
|
786,333
|
|
||
Total liabilities and stockholders’ equity
|
$
|
3,554,827
|
|
|
$
|
2,187,270
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Transaction-based revenue
|
$
|
625,228
|
|
|
$
|
482,065
|
|
|
$
|
1,148,265
|
|
|
$
|
885,543
|
|
Subscription and services-based revenue
|
134,332
|
|
|
59,151
|
|
|
231,386
|
|
|
108,211
|
|
||||
Hardware revenue
|
18,362
|
|
|
10,289
|
|
|
32,779
|
|
|
19,305
|
|
||||
Bitcoin revenue
|
37,016
|
|
|
—
|
|
|
71,111
|
|
|
—
|
|
||||
Total net revenue
|
814,938
|
|
|
551,505
|
|
|
1,483,541
|
|
|
1,013,059
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Transaction-based costs
|
395,349
|
|
|
311,092
|
|
|
723,260
|
|
|
568,870
|
|
||||
Subscription and services-based costs
|
39,784
|
|
|
17,116
|
|
|
70,152
|
|
|
32,992
|
|
||||
Hardware costs
|
25,536
|
|
|
14,173
|
|
|
45,238
|
|
|
26,835
|
|
||||
Bitcoin costs
|
36,596
|
|
|
—
|
|
|
70,468
|
|
|
—
|
|
||||
Amortization of acquired technology
|
1,857
|
|
|
1,695
|
|
|
3,437
|
|
|
3,502
|
|
||||
Total cost of revenue
|
499,122
|
|
|
344,076
|
|
|
912,555
|
|
|
632,199
|
|
||||
Gross profit
|
315,816
|
|
|
207,429
|
|
|
570,986
|
|
|
380,860
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Product development
|
114,800
|
|
|
78,126
|
|
|
219,895
|
|
|
146,708
|
|
||||
Sales and marketing
|
98,243
|
|
|
59,916
|
|
|
175,509
|
|
|
109,816
|
|
||||
General and administrative
|
82,772
|
|
|
62,988
|
|
|
158,273
|
|
|
119,923
|
|
||||
Transaction, loan and advance losses
|
21,976
|
|
|
18,401
|
|
|
40,007
|
|
|
30,292
|
|
||||
Amortization of acquired customer assets
|
672
|
|
|
222
|
|
|
941
|
|
|
427
|
|
||||
Total operating expenses
|
318,463
|
|
|
219,653
|
|
|
594,625
|
|
|
407,166
|
|
||||
Operating loss
|
(2,647
|
)
|
|
(12,224
|
)
|
|
(23,639
|
)
|
|
(26,306
|
)
|
||||
Interest and other expense, net
|
2,655
|
|
|
3,266
|
|
|
5,474
|
|
|
3,765
|
|
||||
Loss before income tax
|
(5,302
|
)
|
|
(15,490
|
)
|
|
(29,113
|
)
|
|
(30,071
|
)
|
||||
Provision for income taxes
|
604
|
|
|
472
|
|
|
779
|
|
|
981
|
|
||||
Net loss
|
$
|
(5,906
|
)
|
|
$
|
(15,962
|
)
|
|
$
|
(29,892
|
)
|
|
$
|
(31,052
|
)
|
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.01
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
Diluted
|
$
|
(0.01
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
Weighted-average shares used to compute net loss per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
403,301
|
|
|
376,357
|
|
|
399,624
|
|
|
371,573
|
|
||||
Diluted
|
403,301
|
|
|
376,357
|
|
|
399,624
|
|
|
371,573
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss
|
$
|
(5,906
|
)
|
|
$
|
(15,962
|
)
|
|
$
|
(29,892
|
)
|
|
$
|
(31,052
|
)
|
Net foreign currency translation adjustments
|
(2,944
|
)
|
|
430
|
|
|
(2,395
|
)
|
|
1,187
|
|
||||
Net unrealized gain (loss) on revaluation of intercompany loans
|
(458
|
)
|
|
432
|
|
|
$
|
207
|
|
|
$
|
403
|
|
||
Net unrealized gain (loss) on marketable securities
|
240
|
|
|
(139
|
)
|
|
(950
|
)
|
|
(120
|
)
|
||||
Total comprehensive loss
|
$
|
(9,068
|
)
|
|
$
|
(15,239
|
)
|
|
$
|
(33,030
|
)
|
|
$
|
(29,582
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(29,892
|
)
|
|
$
|
(31,052
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
22,488
|
|
|
18,562
|
|
||
Non-cash interest and other expense
|
11,855
|
|
|
5,680
|
|
||
Share-based compensation
|
98,943
|
|
|
71,263
|
|
||
Replacement stock awards issued in connection with acquisition
|
757
|
|
|
—
|
|
||
Recovery of common stock in connection with indemnification settlement agreement
|
(2,745
|
)
|
|
—
|
|
||
Transaction, loan and advance losses
|
40,007
|
|
|
30,292
|
|
||
Deferred provision (benefit) for income taxes
|
(688
|
)
|
|
99
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Settlements receivable
|
(191,987
|
)
|
|
8,934
|
|
||
Customer funds
|
(105,813
|
)
|
|
(30,022
|
)
|
||
Purchase of loans held for sale
|
(734,251
|
)
|
|
(570,819
|
)
|
||
Sales and principal payments of loans held for sale
|
716,950
|
|
|
560,209
|
|
||
Other current assets
|
(33,495
|
)
|
|
(2,201
|
)
|
||
Other non-current assets
|
(9,696
|
)
|
|
(110
|
)
|
||
Accounts payable
|
(9,716
|
)
|
|
143
|
|
||
Customers payable
|
267,746
|
|
|
34,149
|
|
||
Settlements payable
|
25,828
|
|
|
(9,317
|
)
|
||
Charge-offs to accrued transaction losses
|
(26,030
|
)
|
|
(22,243
|
)
|
||
Accrued expenses
|
6,083
|
|
|
17,000
|
|
||
Other current liabilities
|
18,008
|
|
|
4,327
|
|
||
Other non-current liabilities
|
6,680
|
|
|
5,696
|
|
||
Net cash provided by operating activities
|
71,032
|
|
|
90,590
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of marketable securities
|
(165,024
|
)
|
|
(314,055
|
)
|
||
Proceeds from maturities of marketable securities
|
79,273
|
|
|
52,064
|
|
||
Proceeds from sale of marketable securities
|
56,259
|
|
|
21,730
|
|
||
Purchase of property and equipment
|
(23,143
|
)
|
|
(13,883
|
)
|
||
Purchase of intangible assets
|
(1,584
|
)
|
|
—
|
|
||
Business combinations, net of cash acquired
|
(111,828
|
)
|
|
(1,600
|
)
|
||
Net cash used in investing activities
|
(166,047
|
)
|
|
(255,744
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of convertible senior notes, net
|
855,663
|
|
|
428,250
|
|
||
Purchase of convertible senior note hedges
|
(172,586
|
)
|
|
(92,136
|
)
|
||
Proceeds from issuance of warrants
|
112,125
|
|
|
57,244
|
|
||
Settlement of deferred purchase consideration
|
(640
|
)
|
|
—
|
|
||
Payment for termination of Starbucks warrant
|
—
|
|
|
(54,808
|
)
|
||
Principal payments on capital lease obligation
|
(1,375
|
)
|
|
(634
|
)
|
||
Proceeds from the exercise of stock options and purchases under the employee stock purchase plan, net
|
67,199
|
|
|
89,863
|
|
||
Payments for tax withholding related to vesting of restricted stock units
|
(68,575
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
791,811
|
|
|
427,779
|
|
||
Effect of foreign exchange rate on cash and cash equivalents
|
(3,505
|
)
|
|
2,331
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
693,291
|
|
|
264,956
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
735,081
|
|
|
488,745
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
1,428,372
|
|
|
$
|
753,701
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
As reported
|
|
Balances without adoption
of ASC 606 |
|
Effect of change
|
|
As reported
|
|
Balances without adoption
of ASC 606 |
|
Effect of change
|
||||||||||||
Impact on the Condensed Consolidated Statement of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Subscription and services-based revenue
|
$
|
134,332
|
|
|
$
|
134,240
|
|
|
$
|
92
|
|
|
$
|
231,386
|
|
|
$
|
231,235
|
|
|
$
|
151
|
|
Hardware revenue
|
18,362
|
|
|
16,079
|
|
|
2,283
|
|
|
32,779
|
|
|
29,233
|
|
|
3,546
|
|
||||||
Subscription and services-based costs
|
39,784
|
|
|
39,784
|
|
|
—
|
|
|
70,152
|
|
|
70,152
|
|
|
—
|
|
||||||
Hardware costs
|
$
|
25,536
|
|
|
$
|
22,939
|
|
|
$
|
2,597
|
|
|
$
|
45,238
|
|
|
$
|
41,696
|
|
|
$
|
3,542
|
|
|
June 30, 2018
|
||||||||||
|
As reported
|
|
Balances without adoption
of ASC 606 |
|
Effect of change
|
||||||
Impact on the Condensed Consolidated Balance Sheets:
|
|
|
|
|
|
||||||
Other current assets
|
$
|
120,250
|
|
|
$
|
131,464
|
|
|
$
|
(11,214
|
)
|
Other current liabilities
|
60,635
|
|
|
67,486
|
|
|
(6,851
|
)
|
|||
Other non-current assets
|
40,995
|
|
|
42,570
|
|
|
(1,575
|
)
|
|||
Other non-current liabilities
|
$
|
85,851
|
|
|
$
|
87,282
|
|
|
$
|
(1,431
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue from Contracts with Customers:
|
|
|
|
|
|
|
|
||||||||
Transaction-based revenue
|
$
|
625,228
|
|
|
$
|
482,065
|
|
|
$
|
1,148,265
|
|
|
$
|
885,543
|
|
Subscription and services-based revenue
|
111,670
|
|
|
59,151
|
|
|
188,885
|
|
|
108,211
|
|
||||
Hardware revenue
|
$
|
18,362
|
|
|
$
|
10,289
|
|
|
$
|
32,779
|
|
|
$
|
19,305
|
|
Bitcoin revenue
|
$
|
37,016
|
|
|
$
|
—
|
|
|
$
|
71,111
|
|
|
$
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Deferred revenue, beginning of the period
|
$
|
3,353
|
|
|
$
|
2,965
|
|
|
$
|
5,893
|
|
|
$
|
5,407
|
|
Less: accumulative adjustment for adoption of ASC 606
|
—
|
|
|
—
|
|
|
(4,303
|
)
|
|
—
|
|
||||
Deferred revenue, beginning of the period, as adjusted
|
3,353
|
|
|
2,965
|
|
|
1,590
|
|
|
5,407
|
|
||||
Deferred revenue, end of the period
|
27,155
|
|
|
4,523
|
|
|
27,155
|
|
|
4,523
|
|
||||
Deferred revenue arising from business combination
|
22,800
|
|
|
—
|
|
|
22,800
|
|
|
—
|
|
||||
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period
|
1,975
|
|
|
925
|
|
|
1,095
|
|
|
5,257
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Cash and Cash Equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
1,031,129
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
387,698
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. agency securities
|
—
|
|
|
35,086
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Commercial paper
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,695
|
|
|
—
|
|
||||||
U.S. government securities
|
34,978
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Short-term securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency securities
|
—
|
|
|
14,997
|
|
|
—
|
|
|
—
|
|
|
15,083
|
|
|
—
|
|
||||||
Corporate bonds
|
—
|
|
|
57,371
|
|
|
—
|
|
|
—
|
|
|
57,798
|
|
|
—
|
|
||||||
Commercial paper
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,428
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
23,740
|
|
|
—
|
|
|
—
|
|
|
23,700
|
|
|
—
|
|
||||||
U.S. government securities
|
137,491
|
|
|
—
|
|
|
—
|
|
|
55,567
|
|
|
—
|
|
|
—
|
|
||||||
Long-term securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency securities
|
—
|
|
|
10,076
|
|
|
—
|
|
|
—
|
|
|
20,169
|
|
|
—
|
|
||||||
Corporate bonds
|
—
|
|
|
52,567
|
|
|
—
|
|
|
—
|
|
|
91,413
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
19,444
|
|
|
—
|
|
|
—
|
|
|
26,224
|
|
|
—
|
|
||||||
U.S. government securities
|
86,063
|
|
|
—
|
|
|
—
|
|
|
65,861
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
1,289,661
|
|
|
$
|
213,281
|
|
|
$
|
—
|
|
|
$
|
509,126
|
|
|
$
|
276,510
|
|
|
$
|
—
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying Value
|
|
Fair Value (Level 2)
|
|
Carrying Value
|
|
Fair Value (Level 2)
|
||||||||
2023 Notes
|
$
|
704,021
|
|
|
$
|
924,936
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2022 Notes
|
367,416
|
|
|
1,188,686
|
|
|
358,572
|
|
|
719,356
|
|
||||
Total
|
$
|
1,071,437
|
|
|
$
|
2,113,622
|
|
|
$
|
358,572
|
|
|
$
|
719,356
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying Value
|
|
Fair Value (Level 3)
|
|
Carrying Value
|
|
Fair Value (Level 3)
|
||||||||
Loans held for sale
|
$
|
85,040
|
|
|
$
|
88,645
|
|
|
$
|
73,420
|
|
|
$
|
76,070
|
|
Total
|
$
|
85,040
|
|
|
$
|
88,645
|
|
|
$
|
73,420
|
|
|
$
|
76,070
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Short-term securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
14,978
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
14,997
|
|
Corporate bonds
|
57,293
|
|
|
201
|
|
|
(123
|
)
|
|
57,371
|
|
||||
Commercial paper
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Municipal securities
|
23,720
|
|
|
30
|
|
|
(10
|
)
|
|
23,740
|
|
||||
U.S. government securities
|
137,499
|
|
|
78
|
|
|
(86
|
)
|
|
137,491
|
|
||||
Total
|
$
|
233,490
|
|
|
$
|
328
|
|
|
$
|
(219
|
)
|
|
$
|
233,599
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
10,096
|
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
10,076
|
|
Corporate bonds
|
52,354
|
|
|
245
|
|
|
(32
|
)
|
|
52,567
|
|
||||
Municipal securities
|
19,483
|
|
|
10
|
|
|
(49
|
)
|
|
19,444
|
|
||||
U.S. government securities
|
86,086
|
|
|
88
|
|
|
(111
|
)
|
|
86,063
|
|
||||
Total
|
$
|
168,019
|
|
|
$
|
343
|
|
|
$
|
(212
|
)
|
|
$
|
168,150
|
|
|
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
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
233,490
|
|
|
$
|
233,599
|
|
Due in one to five years
|
168,019
|
|
|
168,150
|
|
||
Total
|
$
|
401,509
|
|
|
$
|
401,749
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Leasehold improvements
|
$
|
94,241
|
|
|
$
|
77,073
|
|
Computer equipment
|
81,763
|
|
|
66,186
|
|
||
Capitalized software
|
45,927
|
|
|
35,063
|
|
||
Office furniture and equipment
|
18,231
|
|
|
14,490
|
|
||
|
240,162
|
|
|
192,812
|
|
||
Less: Accumulated depreciation and amortization
|
(118,454
|
)
|
|
(101,316
|
)
|
||
Property and equipment, net
|
$
|
121,708
|
|
|
$
|
91,496
|
|
Consideration:
|
|
||
Cash
|
$
|
131,860
|
|
Stock (2,406,071 shares of common stock)
|
139,396
|
|
|
|
$
|
271,256
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed:
|
|
||
Current assets (inclusive of cash acquired of $25,758)
|
$
|
44,685
|
|
Intangible customer assets
|
42,700
|
|
|
Intangible technology assets
|
14,900
|
|
|
Intangible trade name
|
11,300
|
|
|
Intangible other assets
|
961
|
|
|
Total liabilities assumed (including deferred revenue of $22,800)
|
(32,824
|
)
|
|
Total identifiable net assets acquired
|
81,722
|
|
|
Goodwill
|
189,534
|
|
|
Total
|
$
|
271,256
|
|
Balance at December 31, 2017
|
$
|
58,327
|
|
Acquisitions completed during the six months ended June 30, 2018
|
197,329
|
|
|
Balance at June 30, 2018
|
$
|
255,656
|
|
|
Balance at June 30, 2018
|
||||||||||
Cost
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Patents
|
$
|
1,285
|
|
|
$
|
(611
|
)
|
|
$
|
674
|
|
Technology assets
|
45,978
|
|
|
(24,766
|
)
|
|
21,212
|
|
|||
Customer assets
|
57,109
|
|
|
(5,481
|
)
|
|
51,628
|
|
|||
Trade name
|
11,300
|
|
|
(235
|
)
|
|
11,065
|
|
|||
Other
|
961
|
|
|
(26
|
)
|
|
935
|
|
|||
Total
|
$
|
116,633
|
|
|
$
|
(31,119
|
)
|
|
$
|
85,514
|
|
|
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
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Acquired intangible assets, net, beginning of the period
|
$
|
14,138
|
|
|
$
|
18,395
|
|
|
$
|
14,334
|
|
|
$
|
19,292
|
|
Acquisitions
|
74,192
|
|
|
—
|
|
|
75,871
|
|
|
1,224
|
|
||||
Amortization expense
|
2,816
|
|
|
1,943
|
|
|
4,691
|
|
|
4,064
|
|
||||
Acquired intangible assets, net, end of the period
|
$
|
85,514
|
|
|
$
|
16,452
|
|
|
$
|
85,514
|
|
|
$
|
16,452
|
|
2018 (remaining 6 months)
|
$
|
7,863
|
|
2019
|
13,843
|
|
|
2020
|
11,638
|
|
|
2021
|
10,440
|
|
|
2022
|
8,511
|
|
|
Thereafter
|
33,219
|
|
|
Total
|
$
|
85,514
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Inventory, net
|
$
|
22,041
|
|
|
$
|
16,777
|
|
Processing costs receivable
|
33,861
|
|
|
21,083
|
|
||
Prepaid expenses
|
16,663
|
|
|
14,473
|
|
||
Accounts receivable, net
|
17,895
|
|
|
8,606
|
|
||
Deferred hardware costs
(i)
|
—
|
|
|
7,931
|
|
||
Deferred magstripe reader costs
(ii)
|
3,034
|
|
|
2,469
|
|
||
Prepaid compensation, current
(iii)
|
5,940
|
|
|
—
|
|
||
Other
|
20,816
|
|
|
15,115
|
|
||
Total
|
$
|
120,250
|
|
|
$
|
86,454
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Accrued payroll
|
$
|
10,229
|
|
|
$
|
9,103
|
|
Accrued professional fees
|
9,168
|
|
|
5,638
|
|
||
Accrued advertising and other marketing
|
11,961
|
|
|
6,723
|
|
||
Processing costs payable
|
11,205
|
|
|
10,145
|
|
||
Accrued non income tax liabilities
|
7,504
|
|
|
6,155
|
|
||
Accrued hardware costs
|
1,806
|
|
|
2,496
|
|
||
Other accrued liabilities
|
22,943
|
|
|
12,020
|
|
||
Total
|
$
|
74,816
|
|
|
$
|
52,280
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Square Capital payable
(iv)
|
$
|
10,301
|
|
|
$
|
7,671
|
|
Square Payroll payable
(v)
|
6,494
|
|
|
2,850
|
|
||
Deferred revenue, current
|
24,062
|
|
|
5,893
|
|
||
Deferred rent, current
|
3,691
|
|
|
3,311
|
|
||
Accrued redemptions
|
1,110
|
|
|
1,036
|
|
||
Other
|
14,977
|
|
|
7,606
|
|
||
Total
|
$
|
60,635
|
|
|
$
|
28,367
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Investment in privately held entity
|
$
|
25,000
|
|
|
$
|
25,000
|
|
Prepaid compensation, non-current
(i)
|
7,927
|
|
|
—
|
|
||
Deposits
|
2,646
|
|
|
2,738
|
|
||
Debt issuance costs
|
650
|
|
|
788
|
|
||
Deferred tax assets
|
680
|
|
|
519
|
|
||
Other
|
4,092
|
|
|
2,305
|
|
||
Total
|
$
|
40,995
|
|
|
$
|
31,350
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Statutory liabilities
(ii)
|
$
|
47,423
|
|
|
$
|
40,768
|
|
Deferred rent, non-current
|
21,479
|
|
|
20,349
|
|
||
Deferred purchase consideration
|
3,900
|
|
|
—
|
|
||
Deferred revenue, non-current
|
3,093
|
|
|
432
|
|
||
Deferred tax liabilities
|
148
|
|
|
644
|
|
||
Other
|
9,808
|
|
|
7,345
|
|
||
Total
|
$
|
85,851
|
|
|
$
|
69,538
|
|
|
Principal outstanding
|
|
Unamortized debt discount
|
|
Unamortized debt issuance costs
|
|
Net carrying value
|
||||
June 30, 2018
|
|
|
|
|
|
|
|
||||
2023 Notes
|
862,500
|
|
|
(152,955
|
)
|
|
(5,524
|
)
|
|
704,021
|
|
2022 Notes
|
440,000
|
|
|
(65,414
|
)
|
|
(7,170
|
)
|
|
367,416
|
|
Total
|
1,302,500
|
|
|
(218,369
|
)
|
|
(12,694
|
)
|
|
1,071,437
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2017
|
|
|
|
|
|
|
|
||||
2022 Notes
|
440,000
|
|
|
(73,384
|
)
|
|
(8,044
|
)
|
|
358,572
|
|
|
Amount allocated to conversion option
|
|
Less: allocated issuance costs
|
|
Equity component, net
|
|||
June 30, 2018
|
|
|
|
|
|
|||
2023 Notes
|
155,250
|
|
|
(1,231
|
)
|
|
154,019
|
|
2022 Notes
|
86,203
|
|
|
(2,302
|
)
|
|
83,901
|
|
Total
|
241,453
|
|
|
(3,533
|
)
|
|
237,920
|
|
|
|
|
|
|
|
|||
December 31, 2017
|
|
|
|
|
|
|||
2022 Notes
|
86,203
|
|
|
(2,302
|
)
|
|
83,901
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Contractual interest expense
|
$
|
850
|
|
|
$
|
413
|
|
|
$
|
1,263
|
|
|
$
|
526
|
|
Amortization of debt discount and issuance costs
|
6,830
|
|
|
4,221
|
|
|
11,223
|
|
|
5,611
|
|
||||
Total
|
$
|
7,680
|
|
|
$
|
4,634
|
|
|
$
|
12,486
|
|
|
$
|
6,137
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Accrued transaction losses, beginning of the period
|
$
|
28,309
|
|
|
$
|
20,444
|
|
|
$
|
26,893
|
|
|
$
|
20,064
|
|
Provision for transaction losses
|
14,087
|
|
|
13,076
|
|
|
28,345
|
|
|
24,634
|
|
||||
Charge-offs to accrued transaction losses
|
(13,189
|
)
|
|
(11,065
|
)
|
|
(26,031
|
)
|
|
(22,243
|
)
|
||||
Accrued transaction losses, end of the period
|
$
|
29,207
|
|
|
$
|
22,455
|
|
|
$
|
29,207
|
|
|
$
|
22,455
|
|
|
Total stockholders’ equity
|
||
Balance at December 31, 2017
|
$
|
786,333
|
|
Net loss
|
(29,892
|
)
|
|
Exercise of stock options
|
54,621
|
|
|
Purchases under the employee stock purchase plan
|
12,578
|
|
|
Vesting of early exercised stock options and other
|
126
|
|
|
Issuance of common stock in connection with business combination
|
139,396
|
|
|
Replacement stock awards issued in connection with acquisition
|
757
|
|
|
Conversion feature of convertible senior notes, due 2023, net of allocated costs
|
154,019
|
|
|
Purchase of bond hedges in conjunction with issuance of convertible senior notes, due 2023
|
(172,586
|
)
|
|
Sale of warrants in conjunction with issuance of convertible senior notes, due 2023
|
112,125
|
|
|
Share-based compensation
|
103,196
|
|
|
Tax withholding related to vesting of restricted stock units
|
(68,575
|
)
|
|
Cumulative adjustment for adoption of ASC 606
|
(4,586
|
)
|
|
Recovery of common stock in connection with indemnification settlement agreement
|
(2,745
|
)
|
|
Change in other comprehensive loss
|
(3,138
|
)
|
|
Balance at June 30, 2018
|
$
|
1,081,629
|
|
|
Number of Stock Options Outstanding
|
|
Weighted
Average Exercise Price |
|
Weighted
Average Remaining Contractual Term (in years) |
|
Aggregate
Intrinsic Value |
|||||
Balance at December 31, 2017
|
47,270,091
|
|
|
$
|
8.67
|
|
|
6.52
|
|
$
|
1,229,103
|
|
Granted
|
783,625
|
|
|
44.75
|
|
|
|
|
|
|||
Exercised
|
(7,460,458
|
)
|
|
7.32
|
|
|
|
|
|
|||
Forfeited
|
(454,154
|
)
|
|
12.21
|
|
|
|
|
|
|||
Balance at June 30, 2018
|
40,139,104
|
|
|
$
|
9.58
|
|
|
6.21
|
|
$
|
2,089,523
|
|
Options exercisable as of
|
|
|
|
|
|
|
|
|||||
June 30, 2018
|
37,006,235
|
|
|
$
|
8.62
|
|
|
6.02
|
|
$
|
1,962,153
|
|
|
Number of
shares |
|
Weighted
Average Grant Date Fair Value |
|||
Unvested as of December 31, 2017
|
21,317,525
|
|
|
$
|
17.84
|
|
Granted
|
4,439,906
|
|
|
45.62
|
|
|
Vested
|
(3,736,968
|
)
|
|
16.52
|
|
|
Forfeited
|
(1,145,249
|
)
|
|
17.00
|
|
|
Unvested as of June 30, 2018
|
20,875,214
|
|
|
$
|
24.03
|
|
|
Three and Six Months Ended June 30,
|
||||
|
2018
|
|
2017
|
||
Dividend yield
|
—
|
%
|
|
—
|
%
|
Risk-free interest rate
|
2.92
|
%
|
|
1.88
|
%
|
Expected volatility
|
30.87
|
%
|
|
32.22
|
%
|
Expected term (years)
|
6.19
|
|
|
6.02
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
2018
|
|
2017
|
||||||||
Cost of revenue
|
$
|
30
|
|
|
$
|
18
|
|
$
|
61
|
|
|
$
|
18
|
|
Product development
|
33,806
|
|
|
25,136
|
|
64,288
|
|
|
44,492
|
|
||||
Sales and marketing
|
5,634
|
|
|
4,355
|
|
10,595
|
|
|
8,290
|
|
||||
General and administrative
|
12,649
|
|
|
10,084
|
|
23,999
|
|
|
18,463
|
|
||||
Total
|
$
|
52,119
|
|
|
$
|
39,593
|
|
$
|
98,943
|
|
|
$
|
71,263
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Net loss
|
$
|
(5,906
|
)
|
|
$
|
(15,962
|
)
|
|
$
|
(29,892
|
)
|
|
$
|
(31,052
|
)
|
Basic shares:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
403,390
|
|
|
377,959
|
|
400,318
|
|
|
373,291
|
||||||
Weighted-average unvested shares
|
(89
|
)
|
|
(1,602
|
)
|
|
(694
|
)
|
|
(1,718
|
)
|
||||
Weighted-average shares used to compute basic net loss per share
|
403,301
|
|
|
376,357
|
|
|
399,624
|
|
|
371,573
|
|||||
Diluted shares:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used to compute diluted loss per share
|
403,301
|
|
|
376,357
|
|
|
399,624
|
|
|
371,573
|
|||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.01
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
Diluted
|
$
|
(0.01
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.08
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Stock options and restricted stock units
|
62,908
|
|
|
81,919
|
|
|
64,635
|
|
|
83,406
|
|
Common stock warrants
|
23,605
|
|
|
19,173
|
|
|
21,377
|
|
|
15,173
|
|
Unvested shares
|
89
|
|
|
1,602
|
|
|
694
|
|
|
1,718
|
|
Employee stock purchase plan
|
170
|
|
|
340
|
|
|
189
|
|
|
359
|
|
Total anti-dilutive securities
|
86,772
|
|
|
103,034
|
|
|
86,895
|
|
|
100,656
|
|
|
Capital
|
|
Operating
|
||||
Year:
|
|
|
|
||||
2018 (remaining 6 months)
|
$
|
2,599
|
|
|
$
|
13,852
|
|
2019
|
5,089
|
|
|
32,823
|
|
||
2020
|
2,501
|
|
|
34,437
|
|
||
2021
|
46
|
|
|
34,473
|
|
||
2022
|
2
|
|
|
35,038
|
|
||
Thereafter
|
—
|
|
|
34,037
|
|
||
Total
|
$
|
10,237
|
|
|
$
|
184,660
|
|
Less amount representing interest
|
(14
|
)
|
|
|
|||
Present value of capital lease obligations
|
10,223
|
|
|
|
|||
Less current portion of capital lease obligation
|
(5,190
|
)
|
|
|
|||
Non-current portion of capital lease obligation
|
$
|
5,033
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
777,335
|
|
|
$
|
530,008
|
|
|
$
|
1,417,508
|
|
|
$
|
974,907
|
|
International
|
37,603
|
|
|
21,497
|
|
|
66,033
|
|
|
38,152
|
|
||||
Total net revenue
|
$
|
814,938
|
|
|
$
|
551,505
|
|
|
$
|
1,483,541
|
|
|
$
|
1,013,059
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Long-lived assets
|
|
|
|
||||
United States
|
$
|
456,159
|
|
|
$
|
158,820
|
|
International
|
6,757
|
|
|
5,337
|
|
||
Total long-lived assets
|
$
|
462,916
|
|
|
$
|
164,157
|
|
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Supplemental Cash Flow Data:
|
|
|
|
||||
Cash paid for interest
|
$
|
1,108
|
|
|
$
|
284
|
|
Cash paid for income taxes
|
854
|
|
|
850
|
|
||
Supplemental disclosures of non-cash investing and financing activities:
|
|
|
|
||||
Change in purchases of property and equipment in accounts payable and accrued expenses
|
9,708
|
|
|
1,454
|
|
||
Unpaid business acquisition purchase price
|
3,995
|
|
|
644
|
|
||
Fair value of common stock issued related to business combination
|
(139,396
|
)
|
|
—
|
|
||
Recovery of common stock in connection with indemnification settlement agreement
|
2,745
|
|
|
—
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Transaction-based revenue
|
$
|
625,228
|
|
|
$
|
482,065
|
|
|
$
|
143,163
|
|
|
30
|
%
|
|
$
|
1,148,265
|
|
|
$
|
885,543
|
|
|
$
|
262,722
|
|
|
30
|
%
|
Subscription and services-based revenue
|
134,332
|
|
|
59,151
|
|
|
75,181
|
|
|
127
|
%
|
|
$
|
231,386
|
|
|
$
|
108,211
|
|
|
$
|
123,175
|
|
|
114
|
%
|
|||
Hardware revenue
|
18,362
|
|
|
10,289
|
|
|
8,073
|
|
|
78
|
%
|
|
32,779
|
|
|
19,305
|
|
|
$
|
13,474
|
|
|
70
|
%
|
|||||
Bitcoin revenue
|
$
|
37,016
|
|
|
$
|
—
|
|
|
$
|
37,016
|
|
|
—
|
%
|
|
$
|
71,111
|
|
|
$
|
—
|
|
|
$
|
71,111
|
|
|
—
|
%
|
Total net revenue
|
$
|
814,938
|
|
|
$
|
551,505
|
|
|
$
|
263,433
|
|
|
48
|
%
|
|
$
|
1,483,541
|
|
|
$
|
1,013,059
|
|
|
$
|
470,482
|
|
|
46
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Transaction-based costs
|
$
|
395,349
|
|
|
$
|
311,092
|
|
|
$
|
84,257
|
|
|
27
|
%
|
|
$
|
723,260
|
|
|
$
|
568,870
|
|
|
$
|
154,390
|
|
|
27
|
%
|
Subscription and services-based costs
|
39,784
|
|
|
17,116
|
|
|
22,668
|
|
|
132
|
%
|
|
70,152
|
|
|
32,992
|
|
|
37,160
|
|
|
113
|
%
|
||||||
Hardware costs
|
25,536
|
|
|
14,173
|
|
|
11,363
|
|
|
80
|
%
|
|
45,238
|
|
|
26,835
|
|
|
18,403
|
|
|
69
|
%
|
||||||
Bitcoin costs
|
36,596
|
|
|
—
|
|
|
33,872
|
|
|
—
|
%
|
|
70,468
|
|
|
—
|
|
|
70,468
|
|
|
—
|
%
|
||||||
Amortization of acquired technology
|
1,857
|
|
|
1,695
|
|
|
162
|
|
|
10
|
%
|
|
3,437
|
|
|
3,502
|
|
|
(65
|
)
|
|
(2
|
)%
|
||||||
Total cost of revenue
|
$
|
499,122
|
|
|
$
|
344,076
|
|
|
$
|
155,046
|
|
|
45
|
%
|
|
$
|
912,555
|
|
|
$
|
632,199
|
|
|
$
|
280,356
|
|
|
44
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Product development
|
$
|
114,800
|
|
|
$
|
78,126
|
|
|
$
|
36,674
|
|
|
47
|
%
|
|
$
|
219,895
|
|
|
$
|
146,708
|
|
|
$
|
73,187
|
|
|
50
|
%
|
% of total net revenue
|
14
|
%
|
|
14
|
%
|
|
|
|
|
|
15
|
%
|
|
14
|
%
|
|
|
|
|
||||||||||
Sales and marketing
|
$
|
98,243
|
|
|
$
|
59,916
|
|
|
$
|
38,327
|
|
|
64
|
%
|
|
$
|
175,509
|
|
|
$
|
109,816
|
|
|
$
|
65,693
|
|
|
60
|
%
|
% of total net revenue
|
12
|
%
|
|
11
|
%
|
|
|
|
|
|
12
|
%
|
|
11
|
%
|
|
|
|
|
||||||||||
General and administrative
|
$
|
82,772
|
|
|
$
|
62,988
|
|
|
$
|
19,784
|
|
|
31
|
%
|
|
$
|
158,273
|
|
|
$
|
119,923
|
|
|
$
|
38,350
|
|
|
32
|
%
|
% of total net revenue
|
10
|
%
|
|
11
|
%
|
|
|
|
|
|
11
|
%
|
|
12
|
%
|
|
|
|
|
||||||||||
Transaction, loan and advance losses
|
$
|
21,976
|
|
|
$
|
18,401
|
|
|
$
|
3,575
|
|
|
19
|
%
|
|
$
|
40,007
|
|
|
$
|
30,292
|
|
|
$
|
9,715
|
|
|
32
|
%
|
% of total net revenue
|
3
|
%
|
|
3
|
%
|
|
|
|
|
|
3
|
%
|
|
3
|
%
|
|
|
|
|
||||||||||
Amortization of acquired customer assets
|
$
|
672
|
|
|
$
|
222
|
|
|
$
|
450
|
|
|
203
|
%
|
|
$
|
941
|
|
|
$
|
427
|
|
|
$
|
514
|
|
|
120
|
%
|
% of total net revenue
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
||||||||||
Total operating expenses
|
$
|
318,463
|
|
|
$
|
219,653
|
|
|
$
|
98,810
|
|
|
45
|
%
|
|
$
|
594,625
|
|
|
$
|
407,166
|
|
|
$
|
187,459
|
|
|
46
|
%
|
•
|
an increase of $20.7 million and $32.9 million in costs associated with our Cash App peer-to-peer transfer service and Cash Card issuance costs, for the three and six months ended June 30, 2018, respectively;
|
•
|
an increase of $5.9 million and $12.3 million in advertising costs for the
three and six months ended
June 30, 2018
, respectively, primarily from increased online, mobile, and televised marketing campaigns during the period; and
|
•
|
an increase of $5.6 million and $11.1 million in sales and marketing personnel costs for the
three and six months ended
June 30, 2018
, respectively, to enable growth initiatives. The increase in personnel-related costs includes an increase in share-based compensation expense of
$1.3 million
and
$2.3 million
for the
three and six months ended
June 30, 2018
, respectively.
|
•
|
an increase of $16.1 million and $29.8 million in general and administrative personnel costs for the
three and six months ended
June 30, 2018
, respectively, mainly as a result of additions to our support, finance and legal personnel as we continue to add resources and skills as our business scales to support long-term growth. The increase in personnel-related costs includes an increase in share-based compensation expense of
$2.6 million
and
$5.5 million
for the
three and six months ended
June 30, 2018
, respectively;
|
•
|
for both the
three and six months ended
June 30, 2018
, we also incurred
$4.4 million
in acquisition related costs that are not normal recurring operating expenses, including amounts paid to redeem acquirees’ unvested share-based compensation awards, and legal, accounting, and due diligence costs. There was no similar activity in the comparative prior year periods; and,
|
•
|
an increase of $2.0 million in various tax and licensing expenses for the six months ended
June 30, 2018
, as we continue to expand our business and product offerings.
|
•
|
a
$3.2 million
and
$5.7 million
charge recorded to loan losses in the
three and six months ended
June 30, 2018
, respectively, compared to
$2.7 million
for both the
three and six
months ended
June 30, 2017
, as a result of the growth 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; and
|
•
|
growth in GPV. Transaction losses increased to a lesser extent than GPV growth due to ongoing investment in data science and improvements in our risk operations to mitigate exposure to transaction losses.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Interest and other expense, net
|
$
|
2,655
|
|
|
$
|
3,266
|
|
|
$
|
(611
|
)
|
|
(19
|
)%
|
|
$
|
5,474
|
|
|
$
|
3,765
|
|
|
$
|
1,709
|
|
|
45
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
||||||||||||||
Provision for income taxes
|
$
|
604
|
|
|
$
|
472
|
|
|
$
|
132
|
|
|
28
|
%
|
|
$
|
779
|
|
|
$
|
981
|
|
|
$
|
(202
|
)
|
|
(21
|
)%
|
Effective tax rate
|
(11.4
|
)%
|
|
(3.0
|
)%
|
|
|
|
|
|
(2.7
|
)%
|
|
(3.3
|
)%
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands, except GPV)
|
|
(in thousands, except GPV)
|
||||||||||||
Gross Payment Volume (GPV) (in millions)
|
$
|
21,372
|
|
|
$
|
16,421
|
|
|
$
|
39,198
|
|
|
$
|
30,068
|
|
Adjusted Revenue
|
$
|
385,433
|
|
|
$
|
240,413
|
|
|
$
|
692,253
|
|
|
$
|
444,189
|
|
Adjusted EBITDA
|
$
|
68,322
|
|
|
$
|
36,496
|
|
|
$
|
104,216
|
|
|
$
|
63,521
|
|
Adjusted Net Income Per Share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.15
|
|
|
$
|
0.08
|
|
|
$
|
0.23
|
|
|
$
|
0.13
|
|
Diluted
|
$
|
0.13
|
|
|
$
|
0.07
|
|
|
$
|
0.20
|
|
|
$
|
0.12
|
|
•
|
Adjusted Revenue is net of transaction-based costs, which is our largest cost of revenue item;
|
•
|
Adjusted Revenue is net of bitcoin costs, which could be a significant cost;
|
•
|
The deferred revenue adjustment that is added back to Adjusted Revenue will never be recognized as revenue by the Company; 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.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Total net revenue
|
$
|
814,938
|
|
|
$
|
551,505
|
|
|
$
|
1,483,541
|
|
|
$
|
1,013,059
|
|
Less: transaction-based costs
|
395,349
|
|
|
311,092
|
|
|
723,260
|
|
|
568,870
|
|
||||
Less: bitcoin costs
|
36,596
|
|
|
—
|
|
|
70,468
|
|
|
—
|
|
||||
Add: deferred revenue adjustment related to purchase accounting
|
2,440
|
|
|
—
|
|
|
2,440
|
|
|
—
|
|
||||
Adjusted Revenue
|
$
|
385,433
|
|
|
$
|
240,413
|
|
|
$
|
692,253
|
|
|
$
|
444,189
|
|
•
|
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
12
), 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 gain or loss on the sale of property and equipment, and impairment of intangible assets, as applicable, from non-GAAP financial measures because we do not believe that these items are reflective of our ongoing business operations.
|
•
|
We also exclude certain costs associated with acquisitions that are not normal recurring operating expenses, including amounts paid to redeem acquirees’ unvested share-based compensation awards, and legal, accounting and due diligence costs, and we add back the impact of the acquired deferred revenue and deferred cost adjustment, which was written down to fair value in purchase accounting. Such amounts were not included in prior periods as they were immaterial or zero.
|
•
|
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.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Net loss
|
$
|
(5,906
|
)
|
|
$
|
(15,962
|
)
|
|
$
|
(29,892
|
)
|
|
$
|
(31,052
|
)
|
Share-based compensation expense
|
52,119
|
|
|
39,593
|
|
|
98,943
|
|
|
71,263
|
|
||||
Depreciation and amortization
|
12,328
|
|
|
9,125
|
|
|
22,488
|
|
|
18,562
|
|
||||
Interest and other expense, net
|
2,655
|
|
|
3,266
|
|
|
5,474
|
|
|
3,765
|
|
||||
Provision for income taxes
|
604
|
|
|
472
|
|
|
779
|
|
|
981
|
|
||||
Loss (gain) on sale of property and equipment
|
73
|
|
|
2
|
|
|
(25
|
)
|
|
2
|
|
||||
Acquisition related costs
|
4,363
|
|
|
—
|
|
|
4,363
|
|
|
—
|
|
||||
Acquired deferred revenue adjustment
|
2,440
|
|
|
—
|
|
|
2,440
|
|
|
—
|
|
||||
Acquired deferred costs adjustment
|
(354
|
)
|
|
—
|
|
|
(354
|
)
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
68,322
|
|
|
$
|
36,496
|
|
|
$
|
104,216
|
|
|
$
|
63,521
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Net loss
|
$
|
(5,906
|
)
|
|
$
|
(15,962
|
)
|
|
$
|
(29,892
|
)
|
|
$
|
(31,052
|
)
|
Share-based compensation expense
|
52,119
|
|
|
39,593
|
|
|
98,943
|
|
|
71,263
|
|
||||
Amortization of intangible assets
|
2,816
|
|
|
1,943
|
|
|
4,691
|
|
|
4,064
|
|
||||
Amortization of debt discount and issuance costs
|
6,830
|
|
|
4,221
|
|
|
11,223
|
|
|
5,611
|
|
||||
Loss (gain) on sale of property and equipment
|
73
|
|
|
2
|
|
|
(25
|
)
|
|
2
|
|
||||
Acquisition related costs
|
4,363
|
|
|
—
|
|
|
4,363
|
|
|
—
|
|
||||
Acquired deferred revenue adjustment
|
2,440
|
|
|
—
|
|
|
2,440
|
|
|
—
|
|
||||
Acquired deferred costs adjustment
|
(354
|
)
|
|
—
|
|
|
(354
|
)
|
|
—
|
|
||||
Adjusted Net Income
|
$
|
62,381
|
|
|
$
|
29,797
|
|
|
$
|
91,389
|
|
|
$
|
49,888
|
|
Adjusted Net Income Per Share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.15
|
|
|
$
|
0.08
|
|
|
$
|
0.23
|
|
|
$
|
0.13
|
|
Diluted
|
$
|
0.13
|
|
|
$
|
0.07
|
|
|
$
|
0.20
|
|
|
$
|
0.12
|
|
Weighted-average shares used to compute Adjusted Net Income Per Share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
403,301
|
|
|
376,357
|
|
|
399,624
|
|
|
371,573
|
|
||||
Diluted
|
470,022
|
|
|
418,468
|
|
|
465,892
|
|
|
411,420
|
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Cash and cash equivalents
|
$
|
1,387,977
|
|
|
$
|
696,474
|
|
Short-term restricted cash
|
27,487
|
|
|
28,805
|
|
||
Long-term restricted cash
|
12,908
|
|
|
9,802
|
|
||
Cash, cash equivalents, and restricted cash
|
$
|
1,428,372
|
|
|
$
|
735,081
|
|
Short-term investments
|
233,599
|
|
|
169,576
|
|
||
Long-term investments
|
168,150
|
|
|
203,667
|
|
||
Cash, cash equivalents, restricted cash and investments in marketable securities
|
$
|
1,830,121
|
|
|
$
|
1,108,324
|
|
|
Six Months Ended
June 30, |
||||||
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
$
|
71,032
|
|
|
$
|
90,590
|
|
Net cash used in investing activities
|
(166,047
|
)
|
|
(255,744
|
)
|
||
Net cash provided by financing activities
|
791,811
|
|
|
427,779
|
|
||
Effect of foreign exchange rate on cash and cash equivalents
|
(3,505
|
)
|
|
2,331
|
|
||
Net increase in cash, cash equivalents and restricted cash
|
$
|
693,291
|
|
|
$
|
264,956
|
|
•
|
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
$29.9 million
, offset by non-cash items consisting primarily of share-based compensation of
$98.9 million
, transaction, loan and advance losses of
$40.0 million
, depreciation and amortization of
$22.5 million
, and non-cash items of
$11.9 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
$267.7 million
, settlements payable of
$25.8 million
and other current liabilities of
$18.0 million
. Both customers payable and settlements payable balances increased significantly compared to as of December 31, 2017 primarily due to the increase in GPV at the end of the period. These balances are largely offset by settlements receivable, described below, which moves in tandem. Other current liabilities increased primarily due to increase in payables associated with Square Capital and Square Payroll.
|
•
|
Offset in part by cash used from changes in operating assets and liabilities, including increases in settlements receivable of
$192.0 million
for reasons aforementioned, increases in customer funds of
$105.8 million
as result of an increasing customer base with stored funds on the Cash App, increases in other current assets of
$33.5 million
, charge-offs to accrued transaction losses of
$26.0 million
arising as a result of growth in GPV, the net activity related to loans held for sale of
$17.3 million
arising from increased loan purchases, and increases in other non-current assets of
$9.7 million
that includes prepaid compensation associated with a business combination.
|
•
|
Net loss of
$31.1 million
, offset by non-cash items consisting primarily of share-based compensation of
$71.3 million
, provision for transaction losses of
$30.3 million
, and depreciation and amortization of
$18.6 million
.
|
•
|
Additional cash provided from changes in operating assets and liabilities, including increases in customer payable of
$34.1 million
, increases in accrued expenses of
$17.0 million
and decreases in settlements receivable of
$8.9 million
.
|
•
|
Offset in part by cash used from changes in operating assets and liabilities, including increases in customer funds of
$30.0 million
, charge-offs to accrued transaction losses of
$22.2 million
, and due to the net activity related to loans held for sale of
$10.6 million
.
|
|
improving and implementing existing and developing new internal administrative infrastructure, particularly our operational, financial, communications and other internal systems and procedures;
|
|
installing enhanced management information and control systems; and
|
|
preserving our core values, strategies, and goals and effectively communicating these to our employees worldwide.
|
|
difficulty in attracting a sufficient number of sellers;
|
|
failure to anticipate competitive conditions;
|
|
conformity with applicable business customs, including translation into foreign languages and associated expenses;
|
|
increased costs and difficulty in protecting intellectual property and sensitive data;
|
|
changes to the way we do business as compared with our current operations or a lack of acceptance of our products and services;
|
|
the ability to support and integrate with local third-party service providers;
|
|
competition with service providers or other entrenched market-players that have greater experience in the local markets than we do;
|
|
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;
|
|
difficulties in recruiting and retaining qualified employees and maintaining our company culture;
|
|
difficulty in gaining acceptance from industry self-regulatory bodies;
|
|
compliance with multiple, potentially conflicting and changing governmental laws and regulations, including with respect to data privacy, data protection and information security;
|
|
compliance with U.S. and foreign anti-corruption, anti-bribery and anti-money laundering laws;
|
|
potential tariffs, sanctions, fines or other trade restrictions;
|
|
exchange rate risk;
|
|
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
|
|
regional economic and political instability.
|
|
the transaction may not advance our business strategy;
|
|
we may spend time and resources on opportunities that we are unable to consummate on terms acceptable to us;
|
|
the transaction may not close or may be delayed;
|
|
we may not be able to secure required regulatory approvals or otherwise satisfy closing conditions for a proposed transaction in a timely manner, or at all;
|
|
we may not realize a satisfactory return or increase our revenue;
|
|
we may experience difficulty, and may not be successful in, integrating the acquired business and we may not realize the expected synergies of the transaction in a timely manner, or at all;
|
|
we may incur significant acquisition costs and transition costs;
|
|
we may experience disruptions on our ongoing operations and divert management’s attention;
|
|
we may not realize the expected benefits from the transaction in the expected time period, or at all;
|
|
we may be unable to retain key personnel;
|
|
we may experience difficulty and may not be successful in integrating technologies, IT systems, data processing methods and policies, accounting systems, culture, or personnel;
|
|
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;
|
|
we may incur substantial liabilities, whether known or unknown, associated with the transaction;
|
|
we may assume additional financial or legal exposure, including exposure that is known to us;
|
|
we may have difficulty entering new market segments;
|
|
we may be unable to retain the customers and partners of acquired businesses;
|
|
there may be unknown, underestimated, or undisclosed commitments or liabilities, including actual or threatened litigation;
|
|
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;
|
|
acquisitions could result in dilutive issuances of equity securities or the incurrence of debt; and
|
|
our business, the acquired business, or the integrated business may be adversely affected by other political, business, and general economic conditions.
|
|
price and volume fluctuations in the overall stock market from time to time;
|
|
volatility in the market prices and trading volumes of companies in our industry or companies that investors consider comparable;
|
|
changes in operating performance and stock market valuations of other companies generally or of those in our industry in particular;
|
|
sales of shares of our common stock by us or our stockholders;
|
|
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;
|
|
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;
|
|
the financial or other projections we may provide to the public, any changes in those projections, or our failure to meet those projections;
|
|
announcements by us or our competitors of new products or services;
|
|
public reaction to our press releases, other public announcements, and filings with the SEC;
|
|
rumors and market speculation involving us or other companies in our industry;
|
|
actual or anticipated changes in our results of operations;
|
|
changes in the regulatory environment;
|
|
actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally;
|
|
litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;
|
|
announced or completed acquisitions of businesses or technologies by us or our competitors;
|
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
|
|
changes in accounting standards, policies, guidelines, interpretations, or principles;
|
|
|
|
actual or perceived data security incidents that we or our service providers may suffer;
|
|
any significant change in our management; and
|
|
general economic conditions and slow or negative growth of our markets.
|
|
|
|
Incorporated by Reference
|
|||
Exhibit Number
|
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
|
8-K
|
001-37622
|
4.1
|
May 25, 2018
|
||
|
8-K
|
001-37622
|
4.2
|
May 25, 2018
|
||
|
8-K
|
001-37622
|
10.1
|
May 21, 2018
|
||
|
8-K
|
001-37622
|
10.1
|
May 25, 2018
|
||
|
8-K
|
001-37622
|
10.2
|
May 25, 2018
|
||
|
8-K
|
001-37622
|
10.3
|
May 25, 2018
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
32.1
†
|
|
|
|
|
|
|
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.
|
|
|
|
|
Date:
|
August 1, 2018
|
|
By:
|
/s/ Jack Dorsey
|
|
|
|
|
Jack Dorsey
|
|
|
|
|
President, Chief Executive Officer, and Chairman
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
By:
|
/s/ Sarah Friar
|
|
|
|
|
Sarah Friar
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
Period During Tenth Amendment Space Term
|
Annual Base Rental Rate per Rentable Square Foot
|
Annual Base Rent
|
Monthly Installment of Base Rent
|
November 1, 2018 - October 31, 2019*
|
$78.00
|
$2,030,184.00
|
$162,182.00**
|
November 1, 2019 - October 31, 2020
|
$80.34
|
$2,091,089.52
|
$174,257.46
|
November 1, 2020 - October 31, 2021
|
$82.75
|
$2,153,822.21
|
$179,485.18
|
November 1, 2021 - October 31, 2022
|
$85.23
|
$2,218,436.87
|
$184,869.74
|
November 1, 2022 - September 27, 2023
|
$87.79
|
$2,284,989.98
|
$190,415.83
|
Period During Tenth Amendment Space Term
|
Annual Base Rental Rate per Rentable Square Foot
|
Annual Base Rent
|
Monthly Installment of Base Rent
|
August 20, 2019 - July 31, 2020
|
$78.00
|
$4,056,234.00
|
$338,019.50*
|
August 1, 2020 - July 31, 2021
|
$80.34
|
$4,177,921.02
|
$348,160.09
|
August 1, 2021 - July 31, 2022
|
$82.75
|
$4,303,258.65
|
$358,604.89
|
August 1, 2022 - July 31, 2023
|
$85.23
|
$4,062,993.38
|
$369,363.03
|
August 1, 2023 - September 27, 2023
|
$87.79
|
$4,565,343.37
|
$380,443.93
|
By:
|
Hudson 1455 Market, LLC, a Delaware limited liability company its Sole Member
|
By:
|
Hudson Pacific Properties, L.P., a Maryland limited partnership its Sole Member
|
By:
|
Hudson Pacific Properties, Inc., a Maryland corporation its General Partner
|
Provide separate sub-meters for the electrical system/install panels and transformers (to the extent they do not already exist) to provide a minimum of five (5) watts per rentable square foot for Tenant's convenience outlets and one and one-half (1.5) watts per rentable square foot for Tenant's lighting.
|
3 months after Lease Commencement Date
|
Ensure the control system ("brain") for the life safety system has sufficient capabilities to control Tenant's strobes, horns, and sprinklers within the Tenth Amendment Suites, elevator, and stairwell doors, and meets all current codes and regulations.
|
3 months after Lease Commencement Date
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Square, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Square, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|