☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
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.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Class A common stock, $0.0000001 par value per share
|
SQ
|
New York Stock Exchange
|
Page No.
|
|
PART I—Financial Information
|
|
|
|
PART II—Other Information
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
617,282
|
|
|
$
|
583,173
|
|
Short-term investments
|
572,206
|
|
|
540,991
|
|
||
Restricted cash
|
31,148
|
|
|
33,838
|
|
||
Settlements receivable
|
1,506,194
|
|
|
364,946
|
|
||
Customer funds
|
484,945
|
|
|
334,017
|
|
||
Loans held for sale
|
136,511
|
|
|
89,974
|
|
||
Other current assets
|
180,360
|
|
|
164,966
|
|
||
Total current assets
|
3,528,646
|
|
|
2,111,905
|
|
||
Property and equipment, net
|
130,747
|
|
|
142,402
|
|
||
Goodwill
|
270,161
|
|
|
261,705
|
|
||
Acquired intangible assets, net
|
84,216
|
|
|
77,102
|
|
||
Long-term investments
|
460,827
|
|
|
464,680
|
|
||
Restricted cash
|
14,433
|
|
|
15,836
|
|
||
Built-to-suit lease asset
|
—
|
|
|
149,000
|
|
||
Operating lease right-of-use assets
|
107,809
|
|
|
—
|
|
||
Other non-current assets
|
57,167
|
|
|
58,393
|
|
||
Total assets
|
$
|
4,654,006
|
|
|
$
|
3,281,023
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Customers payable
|
$
|
1,802,128
|
|
|
$
|
749,215
|
|
Settlements payable
|
290,652
|
|
|
54,137
|
|
||
Accrued transaction losses
|
39,630
|
|
|
33,682
|
|
||
Accrued expenses
|
106,351
|
|
|
82,354
|
|
||
Operating lease liabilities, current
|
24,955
|
|
|
—
|
|
||
Other current liabilities
|
111,878
|
|
|
99,153
|
|
||
Total current liabilities
|
2,375,594
|
|
|
1,018,541
|
|
||
Long-term debt, net of current portion (Note 12)
|
919,026
|
|
|
899,695
|
|
||
Built-to-suit lease liability
|
—
|
|
|
149,000
|
|
||
Operating lease liabilities, non-current
|
107,265
|
|
|
—
|
|
||
Other non-current liabilities
|
67,649
|
|
|
93,286
|
|
||
Total liabilities
|
3,469,534
|
|
|
2,160,522
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.0000001 par value: 100,000,000 shares authorized at June 30, 2019 and December 31, 2018. None issued and outstanding at June 30, 2019 and December 31, 2018.
|
—
|
|
|
—
|
|
||
Class A common stock, $0.0000001 par value: 1,000,000,000 shares authorized at June 30, 2019 and December 31, 2018; 341,709,651 and 323,546,864 issued and outstanding at June 30, 2019 and December 31, 2018, respectively.
|
—
|
|
|
—
|
|
||
Class B common stock, $0.0000001 par value: 500,000,000 shares authorized at June 30, 2019 and December 31, 2018; 84,508,342 and 93,501,142 issued and outstanding at June 30, 2019 and December 31, 2018, respectively.
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
2,116,063
|
|
|
2,012,328
|
|
||
Accumulated other comprehensive loss
|
(926
|
)
|
|
(6,053
|
)
|
||
Accumulated deficit
|
(930,665
|
)
|
|
(885,774
|
)
|
||
Total stockholders’ equity
|
1,184,472
|
|
|
1,120,501
|
|
||
Total liabilities and stockholders’ equity
|
$
|
4,654,006
|
|
|
$
|
3,281,023
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Transaction-based revenue
|
$
|
775,510
|
|
|
$
|
625,228
|
|
|
$
|
1,432,272
|
|
|
$
|
1,148,265
|
|
Subscription and services-based revenue
|
251,383
|
|
|
134,332
|
|
|
470,240
|
|
|
231,386
|
|
||||
Hardware revenue
|
22,260
|
|
|
18,362
|
|
|
40,472
|
|
|
32,779
|
|
||||
Bitcoin revenue
|
125,085
|
|
|
37,016
|
|
|
190,613
|
|
|
71,111
|
|
||||
Total net revenue
|
1,174,238
|
|
|
814,938
|
|
|
2,133,597
|
|
|
1,483,541
|
|
||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Transaction-based costs
|
490,349
|
|
|
395,349
|
|
|
899,418
|
|
|
723,260
|
|
||||
Subscription and services-based costs
|
60,119
|
|
|
39,784
|
|
|
120,642
|
|
|
70,152
|
|
||||
Hardware costs
|
33,268
|
|
|
25,536
|
|
|
60,209
|
|
|
45,238
|
|
||||
Bitcoin costs
|
122,938
|
|
|
36,596
|
|
|
187,634
|
|
|
70,468
|
|
||||
Amortization of acquired technology
|
1,719
|
|
|
1,857
|
|
|
3,095
|
|
|
3,437
|
|
||||
Total cost of revenue
|
708,393
|
|
|
499,122
|
|
|
1,270,998
|
|
|
912,555
|
|
||||
Gross profit
|
465,845
|
|
|
315,816
|
|
|
862,599
|
|
|
570,986
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Product development
|
174,201
|
|
|
114,800
|
|
|
328,551
|
|
|
219,895
|
|
||||
Sales and marketing
|
156,421
|
|
|
98,243
|
|
|
290,134
|
|
|
175,509
|
|
||||
General and administrative
|
100,508
|
|
|
82,772
|
|
|
202,106
|
|
|
158,273
|
|
||||
Transaction, loan and advance losses
|
34,264
|
|
|
21,976
|
|
|
62,105
|
|
|
40,007
|
|
||||
Amortization of acquired customer assets
|
1,294
|
|
|
672
|
|
|
2,588
|
|
|
941
|
|
||||
Total operating expenses
|
466,688
|
|
|
318,463
|
|
|
885,484
|
|
|
594,625
|
|
||||
Operating loss
|
(843
|
)
|
|
(2,647
|
)
|
|
(22,885
|
)
|
|
(23,639
|
)
|
||||
Interest expense, net
|
5,143
|
|
|
3,470
|
|
|
9,824
|
|
|
5,582
|
|
||||
Other expense (income), net
|
1,230
|
|
|
(815
|
)
|
|
12,529
|
|
|
(108
|
)
|
||||
Loss before income tax
|
(7,216
|
)
|
|
(5,302
|
)
|
|
(45,238
|
)
|
|
(29,113
|
)
|
||||
Provision (benefit) for income taxes
|
(476
|
)
|
|
604
|
|
|
(347
|
)
|
|
779
|
|
||||
Net loss
|
$
|
(6,740
|
)
|
|
$
|
(5,906
|
)
|
|
$
|
(44,891
|
)
|
|
$
|
(29,892
|
)
|
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.07
|
)
|
Diluted
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.07
|
)
|
Weighted-average shares used to compute net loss per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
423,305
|
|
|
403,301
|
|
|
421,297
|
|
|
399,624
|
|
||||
Diluted
|
423,305
|
|
|
403,301
|
|
|
421,297
|
|
|
399,624
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss
|
$
|
(6,740
|
)
|
|
$
|
(5,906
|
)
|
|
$
|
(44,891
|
)
|
|
$
|
(29,892
|
)
|
Net foreign currency translation adjustments
|
261
|
|
|
(2,944
|
)
|
|
527
|
|
|
(2,395
|
)
|
||||
Net unrealized gain (loss) on revaluation of intercompany loans
|
—
|
|
|
(458
|
)
|
|
$
|
75
|
|
|
$
|
207
|
|
||
Net unrealized gain (loss) on marketable debt securities, net of tax
|
2,237
|
|
|
240
|
|
|
4,525
|
|
|
(950
|
)
|
||||
Total comprehensive loss
|
$
|
(4,242
|
)
|
|
$
|
(9,068
|
)
|
|
$
|
(39,764
|
)
|
|
$
|
(33,030
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(44,891
|
)
|
|
$
|
(29,892
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
37,754
|
|
|
22,488
|
|
||
Non-cash interest and other expense
|
16,802
|
|
|
11,855
|
|
||
Share-based compensation
|
140,554
|
|
|
98,943
|
|
||
Replacement stock awards issued in connection with acquisition
|
—
|
|
|
757
|
|
||
Loss on revaluation of equity investment
|
18,929
|
|
|
—
|
|
||
Amortization of operating lease right-of-use assets and accretion of operating lease liabilities
|
14,354
|
|
|
—
|
|
||
Recovery of common stock in connection with indemnification settlement agreement
|
(789
|
)
|
|
(2,745
|
)
|
||
Transaction, loan and advance losses
|
62,105
|
|
|
40,007
|
|
||
Change in deferred income taxes
|
(2,229
|
)
|
|
(688
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Settlements receivable
|
(1,148,376
|
)
|
|
(191,987
|
)
|
||
Customer funds
|
(125,042
|
)
|
|
(105,813
|
)
|
||
Purchase of loans held for sale
|
(1,035,500
|
)
|
|
(734,251
|
)
|
||
Sales and principal payments of loans held for sale
|
975,823
|
|
|
716,950
|
|
||
Customers payable
|
1,052,867
|
|
|
267,746
|
|
||
Settlements payable
|
236,515
|
|
|
25,828
|
|
||
Charge-offs to accrued transaction losses
|
(36,050
|
)
|
|
(26,030
|
)
|
||
Other assets and liabilities
|
3,010
|
|
|
(22,136
|
)
|
||
Net cash provided by operating activities
|
165,836
|
|
|
71,032
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of marketable debt securities
|
(354,908
|
)
|
|
(165,024
|
)
|
||
Proceeds from maturities of marketable debt securities
|
220,229
|
|
|
79,273
|
|
||
Proceeds from sale of marketable debt securities
|
116,522
|
|
|
56,259
|
|
||
Purchase of marketable debt securities from customer funds
|
(88,064
|
)
|
|
—
|
|
||
Proceeds from maturities of marketable debt securities from customer funds
|
63,000
|
|
|
—
|
|
||
Purchase of property and equipment
|
(30,162
|
)
|
|
(23,143
|
)
|
||
Payments for other investments
|
(2,000
|
)
|
|
—
|
|
||
Purchase of intangible assets
|
—
|
|
|
(1,584
|
)
|
||
Business combinations, net of cash acquired
|
(20,372
|
)
|
|
(111,828
|
)
|
||
Net cash used in investing activities
|
(95,755
|
)
|
|
(166,047
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of convertible senior notes, net
|
—
|
|
|
855,663
|
|
||
Purchase of convertible senior note hedges
|
—
|
|
|
(172,586
|
)
|
||
Proceeds from issuance of warrants
|
—
|
|
|
112,125
|
|
||
Payment of deferred purchase consideration
|
(95
|
)
|
|
(640
|
)
|
||
Principal payments on finance lease obligation
|
(2,568
|
)
|
|
(1,375
|
)
|
||
Proceeds from the exercise of stock options, net
|
66,921
|
|
|
67,199
|
|
||
Payments for tax withholding related to vesting of restricted stock units
|
(106,663
|
)
|
|
(68,575
|
)
|
||
Net cash provided by (used in) financing activities
|
(42,405
|
)
|
|
791,811
|
|
||
Effect of foreign exchange rate on cash and cash equivalents
|
2,340
|
|
|
(3,505
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
30,016
|
|
|
693,291
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
632,847
|
|
|
735,081
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
662,863
|
|
|
$
|
1,428,372
|
|
|
|
Class A and B common stock
|
|
Additional paid-in
|
|
Accumulated other comprehensive
|
|
Accumulated
|
|
Total stockholders’
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
capital
|
|
loss
|
|
deficit
|
|
equity
|
|||||||||||
Balance at December 31, 2018
|
417,048,006
|
|
|
$
|
—
|
|
|
$
|
2,012,328
|
|
|
$
|
(6,053
|
)
|
|
$
|
(885,774
|
)
|
|
$
|
1,120,501
|
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,151
|
)
|
|
(38,151
|
)
|
|||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Exercise of stock options
|
3,588,052
|
|
|
—
|
|
|
25,328
|
|
|
—
|
|
|
—
|
|
|
25,328
|
|
|||||
|
Vesting of early exercised stock options and other
|
425
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|||||
|
Vesting of restricted stock units
|
1,994,156
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
2,629
|
|
|
—
|
|
|
2,629
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
62,835
|
|
|
—
|
|
|
—
|
|
|
62,835
|
|
||||||
Tax withholding related to vesting of restricted stock units
|
(741,324
|
)
|
|
—
|
|
|
(50,801
|
)
|
|
—
|
|
|
—
|
|
|
(50,801
|
)
|
||||||
Issuance of common stock in conjunction with the conversion of senior notes, due 2022
|
43
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Exercise of bond hedges in conjunction with the conversion of senior notes, due 2022
|
(250,614
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recovery of common stock in
connection with indemnification settlement agreement |
(14,798
|
)
|
|
|
|
(789
|
)
|
|
—
|
|
|
—
|
|
|
(789
|
)
|
|||||||
Balance at March 31, 2019
|
421,623,946
|
|
|
—
|
|
|
2,048,938
|
|
|
(3,424
|
)
|
|
(923,925
|
)
|
|
1,121,589
|
|
||||||
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,740
|
)
|
|
(6,740
|
)
|
|||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Exercise of stock options
|
2,671,530
|
|
|
—
|
|
|
22,651
|
|
|
—
|
|
|
—
|
|
|
22,651
|
|
|||||
|
Purchases under employee stock purchase plan
|
360,328
|
|
|
—
|
|
|
18,942
|
|
|
—
|
|
|
—
|
|
|
18,942
|
|
|||||
|
Vesting of restricted stock units
|
2,339,193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
2,498
|
|
|
—
|
|
|
2,498
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
81,392
|
|
|
—
|
|
|
—
|
|
|
81,392
|
|
||||||
Tax withholding related to vesting of restricted stock units
|
(777,006
|
)
|
|
—
|
|
|
(55,862
|
)
|
|
—
|
|
|
—
|
|
|
(55,862
|
)
|
||||||
Issuance of common stock in conjunction with the conversion of senior notes, due 2022
|
86
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Exercise of bond hedges in conjunction with the conversion of senior notes, due 2022
|
(84
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance at June 30, 2019
|
426,217,993
|
|
|
—
|
|
|
2,116,063
|
|
|
(926
|
)
|
|
(930,665
|
)
|
|
1,184,472
|
|
|
|
Class A and B common stock
|
|
Additional paid-in
|
|
Accumulated other comprehensive
|
|
Accumulated
|
|
Total stockholders’
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
capital
|
|
loss
|
|
deficit
|
|
equity
|
|||||||||||
Balance at December 31, 2017
|
395,194,075
|
|
|
$
|
—
|
|
|
$
|
1,630,386
|
|
|
$
|
(1,318
|
)
|
|
$
|
(842,735
|
)
|
|
$
|
786,333
|
|
|
Cumulative Adjustment ASC 606, Revenue from contracts with customers
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,586
|
)
|
|
(4,586
|
)
|
||||||
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,986
|
)
|
|
(23,986
|
)
|
|||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Exercise of stock options
|
4,213,775
|
|
|
—
|
|
|
31,354
|
|
|
—
|
|
|
—
|
|
|
31,354
|
|
|||||
|
Vesting of early exercised stock options and other
|
—
|
|
|
—
|
|
|
136
|
|
|
—
|
|
|
—
|
|
|
136
|
|
|||||
|
Vesting of restricted stock units
|
1,625,534
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
48,356
|
|
|
—
|
|
|
—
|
|
|
48,356
|
|
||||||
Tax withholding related to vesting of restricted stock units
|
(649,305
|
)
|
|
—
|
|
|
(27,651
|
)
|
|
—
|
|
|
—
|
|
|
(27,651
|
)
|
||||||
Balance at March 31, 2018
|
400,384,079
|
|
|
—
|
|
|
1,682,581
|
|
|
(1,294
|
)
|
|
(871,307
|
)
|
|
809,980
|
|
||||||
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,906
|
)
|
|
(5,906
|
)
|
|||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Exercise of stock options
|
3,246,683
|
|
|
—
|
|
|
23,267
|
|
|
—
|
|
|
—
|
|
|
23,267
|
|
|||||
|
Vesting of early exercised stock options and other
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|||||
|
Purchases under employee stock purchase plan
|
450,236
|
|
|
—
|
|
|
12,578
|
|
|
—
|
|
|
—
|
|
|
12,578
|
|
|||||
|
Vesting of restricted stock units
|
2,385,704
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of common stock in connection with business combination
|
2,658,139
|
|
|
—
|
|
|
140,154
|
|
|
—
|
|
|
—
|
|
|
140,154
|
|
||||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,162
|
)
|
|
—
|
|
|
(3,162
|
)
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
54,810
|
|
|
—
|
|
|
—
|
|
|
54,810
|
|
||||||
Tax withholding related to vesting of restricted stock units
|
(773,120
|
)
|
|
—
|
|
|
(40,924
|
)
|
|
—
|
|
|
—
|
|
|
(40,924
|
)
|
||||||
Conversion feature of convertible senior notes, due 2023, net of allocated costs
|
—
|
|
|
—
|
|
|
154,019
|
|
|
—
|
|
|
—
|
|
|
154,019
|
|
||||||
Purchase of bond hedges in conjunction with issuance of convertible senior notes, due 2023
|
—
|
|
|
—
|
|
|
(172,586
|
)
|
|
—
|
|
|
—
|
|
|
(172,586
|
)
|
||||||
Sale of warrants in conjunction with
issuance of convertible senior notes, due 2023 |
—
|
|
|
—
|
|
|
112,125
|
|
|
—
|
|
|
—
|
|
|
112,125
|
|
||||||
Recovery of common stock in
connection with indemnification settlement agreement |
(469,898
|
)
|
|
—
|
|
|
(2,745
|
)
|
|
—
|
|
|
—
|
|
|
(2,745
|
)
|
||||||
Balance at June 30, 2018
|
407,881,823
|
|
|
—
|
|
|
1,963,298
|
|
|
(4,456
|
)
|
|
(877,213
|
)
|
|
1,081,629
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue from Contracts with Customers:
|
|
|
|
|
|
|
|
||||||||
Transaction-based revenue
|
$
|
775,510
|
|
|
$
|
625,228
|
|
|
$
|
1,432,272
|
|
|
$
|
1,148,265
|
|
Subscription and services-based revenue
|
216,491
|
|
|
111,670
|
|
|
405,693
|
|
|
188,885
|
|
||||
Hardware revenue
|
22,260
|
|
|
18,362
|
|
|
40,472
|
|
|
32,779
|
|
||||
Bitcoin revenue
|
$
|
125,085
|
|
|
$
|
37,016
|
|
|
$
|
190,613
|
|
|
$
|
71,111
|
|
Revenue from other sources:
|
|
|
|
|
|
|
|
||||||||
Subscription and services-based revenue
|
$
|
34,892
|
|
|
$
|
22,662
|
|
|
$
|
64,547
|
|
|
$
|
42,501
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Deferred revenue, beginning of the period
|
$
|
42,160
|
|
|
$
|
3,353
|
|
|
$
|
36,451
|
|
|
$
|
5,893
|
|
Less: cumulative impact of the adoption of ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,303
|
)
|
||||
Deferred revenue, beginning of the period, as adjusted
|
42,160
|
|
|
3,353
|
|
|
36,451
|
|
|
1,590
|
|
||||
Deferred revenue, end of the period
|
44,812
|
|
|
27,155
|
|
|
44,812
|
|
|
27,155
|
|
||||
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
|
$
|
14,889
|
|
|
$
|
1,975
|
|
|
$
|
21,786
|
|
|
$
|
1,095
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Short-term debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
125,614
|
|
|
$
|
230
|
|
|
$
|
(5
|
)
|
|
$
|
125,839
|
|
Corporate bonds
|
95,901
|
|
|
220
|
|
|
(72
|
)
|
|
96,049
|
|
||||
Commercial paper
|
3,973
|
|
|
—
|
|
|
—
|
|
|
3,973
|
|
||||
Municipal securities
|
15,947
|
|
|
78
|
|
|
(4
|
)
|
|
16,021
|
|
||||
U.S. government securities
|
314,603
|
|
|
617
|
|
|
(47
|
)
|
|
315,173
|
|
||||
Non-U.S. government securities
|
15,175
|
|
|
21
|
|
|
(45
|
)
|
|
15,151
|
|
||||
Total
|
$
|
571,213
|
|
|
$
|
1,166
|
|
|
$
|
(173
|
)
|
|
$
|
572,206
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
81,861
|
|
|
$
|
400
|
|
|
$
|
(84
|
)
|
|
$
|
82,177
|
|
Corporate bonds
|
196,687
|
|
|
805
|
|
|
(97
|
)
|
|
197,395
|
|
||||
Municipal securities
|
14,591
|
|
|
137
|
|
|
(16
|
)
|
|
14,712
|
|
||||
U.S. government securities
|
156,706
|
|
|
861
|
|
|
(149
|
)
|
|
157,418
|
|
||||
Non-U.S. government securities
|
9,081
|
|
|
54
|
|
|
(10
|
)
|
|
9,125
|
|
||||
Total
|
$
|
458,926
|
|
|
$
|
2,257
|
|
|
$
|
(356
|
)
|
|
$
|
460,827
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Short-term debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
80,160
|
|
|
$
|
32
|
|
|
$
|
(70
|
)
|
|
$
|
80,122
|
|
Corporate bonds
|
109,807
|
|
|
80
|
|
|
(368
|
)
|
|
109,519
|
|
||||
Municipal securities
|
27,839
|
|
|
52
|
|
|
(59
|
)
|
|
27,832
|
|
||||
U.S. government securities
|
292,615
|
|
|
161
|
|
|
(509
|
)
|
|
292,267
|
|
||||
Non-U.S. government securities
|
31,263
|
|
|
4
|
|
|
(16
|
)
|
|
31,251
|
|
||||
Total
|
$
|
541,684
|
|
|
$
|
329
|
|
|
$
|
(1,022
|
)
|
|
$
|
540,991
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
114,444
|
|
|
$
|
194
|
|
|
$
|
(78
|
)
|
|
$
|
114,560
|
|
Corporate bonds
|
159,783
|
|
|
419
|
|
|
(950
|
)
|
|
159,252
|
|
||||
Municipal securities
|
28,453
|
|
|
167
|
|
|
(26
|
)
|
|
28,594
|
|
||||
U.S. government securities
|
153,743
|
|
|
553
|
|
|
(172
|
)
|
|
154,124
|
|
||||
Non-U.S. government securities
|
8,122
|
|
|
28
|
|
|
—
|
|
|
8,150
|
|
||||
Total
|
$
|
464,545
|
|
|
$
|
1,361
|
|
|
$
|
(1,226
|
)
|
|
$
|
464,680
|
|
|
Amortized Cost
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
571,213
|
|
|
$
|
572,206
|
|
Due in one to five years
|
458,926
|
|
|
460,827
|
|
||
Total
|
$
|
1,030,139
|
|
|
$
|
1,033,033
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Cash
|
$
|
307,848
|
|
|
$
|
158,697
|
|
Cash Equivalents:
|
|
|
|
||||
Money market funds
|
163
|
|
|
18
|
|
||
U.S. agency securities
|
23,112
|
|
|
39,991
|
|
||
U.S. government securities
|
27,974
|
|
|
35,349
|
|
||
Short-term debt securities:
|
|
|
|
||||
U.S. agency securities
|
10,867
|
|
|
27,291
|
|
||
U.S. government securities
|
114,981
|
|
|
72,671
|
|
||
Total
|
$
|
484,945
|
|
|
$
|
334,017
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Short-term debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
10,868
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
10,867
|
|
U.S. government securities
|
114,910
|
|
|
81
|
|
|
(10
|
)
|
|
114,981
|
|
||||
Total
|
$
|
125,778
|
|
|
$
|
82
|
|
|
$
|
(12
|
)
|
|
$
|
125,848
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Short-term debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
27,293
|
|
|
$
|
2
|
|
|
$
|
(4
|
)
|
|
$
|
27,291
|
|
U.S. government securities
|
72,662
|
|
|
12
|
|
|
(3
|
)
|
|
72,671
|
|
||||
Total
|
$
|
99,955
|
|
|
$
|
14
|
|
|
$
|
(7
|
)
|
|
$
|
99,962
|
|
|
Amortized Cost
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
125,778
|
|
|
$
|
125,848
|
|
Total
|
$
|
125,778
|
|
|
$
|
125,848
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Cash Equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
272,313
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
218,109
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. agency securities
|
—
|
|
|
102,904
|
|
|
—
|
|
|
—
|
|
|
46,423
|
|
|
—
|
|
||||||
Commercial paper
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Time deposits
|
10,081
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
U.S. government securities
|
39,663
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
—
|
|
|
—
|
|
|
86,239
|
|
|
—
|
|
|
—
|
|
||||||
Non-U.S. government securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,981
|
|
|
—
|
|
||||||
Customer funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
163
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
||||||
U.S. agency securities
|
—
|
|
|
33,978
|
|
|
—
|
|
|
—
|
|
|
67,282
|
|
|
—
|
|
||||||
U.S. government securities
|
142,956
|
|
|
—
|
|
|
—
|
|
|
108,020
|
|
|
—
|
|
|
—
|
|
||||||
Short-term debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency securities
|
—
|
|
|
125,839
|
|
|
—
|
|
|
—
|
|
|
80,122
|
|
|
—
|
|
||||||
Corporate bonds
|
—
|
|
|
96,049
|
|
|
—
|
|
|
—
|
|
|
109,519
|
|
|
—
|
|
||||||
Commercial paper
|
—
|
|
|
3,973
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
16,021
|
|
|
—
|
|
|
—
|
|
|
27,832
|
|
|
—
|
|
||||||
U.S. government securities
|
315,173
|
|
|
—
|
|
|
—
|
|
|
292,267
|
|
|
—
|
|
|
—
|
|
||||||
Non-U.S. government securities
|
—
|
|
|
15,151
|
|
|
—
|
|
|
—
|
|
|
31,251
|
|
|
—
|
|
||||||
Long-term debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency securities
|
—
|
|
|
82,177
|
|
|
—
|
|
|
—
|
|
|
114,560
|
|
|
—
|
|
||||||
Corporate bonds
|
—
|
|
|
197,395
|
|
|
—
|
|
|
—
|
|
|
159,252
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
14,712
|
|
|
—
|
|
|
—
|
|
|
28,594
|
|
|
—
|
|
||||||
U.S. government securities
|
157,418
|
|
|
—
|
|
|
—
|
|
|
154,124
|
|
|
—
|
|
|
—
|
|
||||||
Non-U.S. government securities
|
—
|
|
|
9,125
|
|
|
—
|
|
|
—
|
|
|
8,150
|
|
|
—
|
|
||||||
Other:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Marketable equity investment
|
26,413
|
|
|
—
|
|
|
—
|
|
|
45,342
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
964,180
|
|
|
$
|
697,324
|
|
|
$
|
—
|
|
|
$
|
904,119
|
|
|
$
|
696,966
|
|
|
$
|
—
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
Carrying Value
|
|
Fair Value (Level 2)
|
|
Carrying Value
|
|
Fair Value (Level 2)
|
||||||||
2023 Notes
|
$
|
733,366
|
|
|
$
|
1,032,318
|
|
|
$
|
718,522
|
|
|
$
|
901,468
|
|
2022 Notes
|
185,660
|
|
|
672,074
|
|
|
181,173
|
|
|
515,693
|
|
||||
Total
|
$
|
919,026
|
|
|
$
|
1,704,392
|
|
|
$
|
899,695
|
|
|
$
|
1,417,161
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
Carrying Value
|
|
Fair Value (Level 3)
|
|
Carrying Value
|
|
Fair Value (Level 3)
|
||||||||
Loans held for sale
|
$
|
136,511
|
|
|
$
|
143,023
|
|
|
$
|
89,974
|
|
|
$
|
93,064
|
|
Total
|
$
|
136,511
|
|
|
$
|
143,023
|
|
|
$
|
89,974
|
|
|
$
|
93,064
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Leasehold improvements
|
$
|
105,411
|
|
|
$
|
107,611
|
|
Computer equipment
|
85,930
|
|
|
80,093
|
|
||
Capitalized software
|
70,667
|
|
|
58,908
|
|
||
Office furniture and equipment
|
21,531
|
|
|
20,699
|
|
||
|
283,539
|
|
|
267,311
|
|
||
Less: Accumulated depreciation and amortization
|
(152,792
|
)
|
|
(124,909
|
)
|
||
Property and equipment, net
|
$
|
130,747
|
|
|
$
|
142,402
|
|
Consideration:
|
|
||
Cash
|
$
|
132,432
|
|
Stock (2,418,271 shares of Class A common stock)
|
140,107
|
|
|
|
$
|
272,539
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed:
|
|
||
Current assets (inclusive of cash acquired of $25,758)
|
$
|
46,978
|
|
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)
|
(37,509
|
)
|
|
Total identifiable net assets acquired
|
79,330
|
|
|
Goodwill
|
193,209
|
|
|
Total
|
$
|
272,539
|
|
Balance at December 31, 2018
|
$
|
261,705
|
|
Acquisitions
|
10,832
|
|
|
Other adjustments
|
(2,376
|
)
|
|
Balance at June 30, 2019
|
$
|
270,161
|
|
|
Balance at June 30, 2019
|
||||||||||
Cost
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Technology assets
|
57,484
|
|
|
(31,515
|
)
|
|
25,969
|
|
|||
Customer assets
|
57,109
|
|
|
(10,656
|
)
|
|
46,453
|
|
|||
Trade name
|
11,300
|
|
|
(3,060
|
)
|
|
8,240
|
|
|||
Other
|
5,299
|
|
|
(1,745
|
)
|
|
3,554
|
|
|||
Total
|
$
|
131,192
|
|
|
$
|
(46,976
|
)
|
|
$
|
84,216
|
|
|
Balance at December 31, 2018
|
||||||||||
Cost
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Technology assets
|
$
|
45,978
|
|
|
$
|
(28,420
|
)
|
|
$
|
17,558
|
|
Customer assets
|
57,109
|
|
|
(8,068
|
)
|
|
49,041
|
|
|||
Trade name
|
11,300
|
|
|
(1,648
|
)
|
|
9,652
|
|
|||
Other
|
2,246
|
|
|
(1,395
|
)
|
|
851
|
|
|||
Total
|
$
|
116,633
|
|
|
$
|
(39,531
|
)
|
|
$
|
77,102
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Acquired intangible assets, net, beginning of the period
|
$
|
79,697
|
|
|
$
|
14,138
|
|
|
$
|
77,102
|
|
|
$
|
14,334
|
|
Acquisitions
|
8,477
|
|
|
74,192
|
|
|
14,559
|
|
|
75,871
|
|
||||
Amortization expense
|
3,958
|
|
|
2,816
|
|
|
7,445
|
|
|
4,691
|
|
||||
Acquired intangible assets, net, end of the period
|
$
|
84,216
|
|
|
$
|
85,514
|
|
|
$
|
84,216
|
|
|
$
|
85,514
|
|
2019 (remaining 6 months)
|
$
|
8,216
|
|
2020
|
14,306
|
|
|
2021
|
13,109
|
|
|
2022
|
11,179
|
|
|
2023
|
9,649
|
|
|
Thereafter
|
27,757
|
|
|
Total
|
$
|
84,216
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Inventory, net
|
$
|
29,354
|
|
|
$
|
28,627
|
|
Processing costs receivable
|
61,116
|
|
|
46,102
|
|
||
Prepaid expenses
|
18,697
|
|
|
21,782
|
|
||
Accounts receivable, net
|
32,157
|
|
|
22,393
|
|
||
Other
|
39,036
|
|
|
46,062
|
|
||
Total
|
$
|
180,360
|
|
|
$
|
164,966
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Accrued facilities expenses
|
$
|
16,868
|
|
|
$
|
13,040
|
|
Accrued payroll
|
12,125
|
|
|
9,612
|
|
||
Accrued advertising and other marketing
|
21,892
|
|
|
12,201
|
|
||
Processing costs payable
|
16,730
|
|
|
12,683
|
|
||
Accrued non income tax liabilities
|
9,131
|
|
|
9,503
|
|
||
Other accrued liabilities
|
29,605
|
|
|
25,315
|
|
||
Total
|
$
|
106,351
|
|
|
$
|
82,354
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Accounts payable
|
$
|
29,021
|
|
|
$
|
36,416
|
|
Deferred revenue, current
|
38,639
|
|
|
31,474
|
|
||
Square Capital payable (i)
|
16,668
|
|
|
6,092
|
|
||
Square Payroll payable (ii)
|
12,394
|
|
|
7,534
|
|
||
Other
|
15,156
|
|
|
17,637
|
|
||
Total
|
$
|
111,878
|
|
|
$
|
99,153
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Marketable equity investment (i)
|
$
|
26,413
|
|
|
$
|
45,342
|
|
Other
|
30,754
|
|
|
13,051
|
|
||
Total
|
$
|
57,167
|
|
|
$
|
58,393
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Statutory liabilities (i)
|
$
|
48,516
|
|
|
$
|
54,748
|
|
Deferred rent, non-current (ii)
|
—
|
|
|
23,003
|
|
||
Deferred revenue, non-current
|
6,173
|
|
|
4,977
|
|
||
Other
|
12,960
|
|
|
10,558
|
|
||
Total
|
$
|
67,649
|
|
|
$
|
93,286
|
|
|
Principal outstanding
|
|
Unamortized debt discount
|
|
Unamortized debt issuance costs
|
|
Net carrying value
|
||||||||
June 30, 2019
|
|
|
|
|
|
|
|
||||||||
2023 Notes
|
$
|
862,500
|
|
|
$
|
(124,525
|
)
|
|
$
|
(4,609
|
)
|
|
$
|
733,366
|
|
2022 Notes
|
211,728
|
|
|
(23,531
|
)
|
|
(2,537
|
)
|
|
185,660
|
|
||||
Total
|
$
|
1,074,228
|
|
|
$
|
(148,056
|
)
|
|
$
|
(7,146
|
)
|
|
$
|
919,026
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
2023 Notes
|
$
|
862,500
|
|
|
$
|
(138,924
|
)
|
|
$
|
(5,054
|
)
|
|
$
|
718,522
|
|
2022 Notes
|
211,728
|
|
|
(27,569
|
)
|
|
(2,986
|
)
|
|
181,173
|
|
||||
|
$
|
1,074,228
|
|
|
$
|
(166,493
|
)
|
|
$
|
(8,040
|
)
|
|
$
|
899,695
|
|
|
Amount allocated to conversion option
|
|
Less: allocated issuance costs
|
|
Equity component, net
|
||||||
June 30, 2019 and December 31, 2018
|
|
|
|
|
|
||||||
2023 Notes
|
$
|
155,250
|
|
|
$
|
(1,231
|
)
|
|
$
|
154,019
|
|
2022 Notes
|
41,481
|
|
|
(1,108
|
)
|
|
40,373
|
|
|||
Total
|
$
|
196,731
|
|
|
$
|
(2,339
|
)
|
|
$
|
194,392
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Contractual interest expense
|
$
|
1,277
|
|
|
$
|
850
|
|
|
$
|
2,554
|
|
|
$
|
1,263
|
|
Amortization of debt discount and issuance costs
|
9,725
|
|
|
6,830
|
|
|
19,333
|
|
|
11,223
|
|
||||
Total
|
$
|
11,002
|
|
|
$
|
7,680
|
|
|
$
|
21,887
|
|
|
$
|
12,486
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Accrued transaction losses, beginning of the period
|
$
|
36,047
|
|
|
$
|
28,309
|
|
|
$
|
33,682
|
|
|
$
|
26,893
|
|
Provision for transaction losses
|
22,190
|
|
|
14,087
|
|
|
41,998
|
|
|
28,345
|
|
||||
Charge-offs to accrued transaction losses
|
(18,607
|
)
|
|
(13,189
|
)
|
|
(36,050
|
)
|
|
(26,031
|
)
|
||||
Accrued transaction losses, end of the period
|
$
|
39,630
|
|
|
$
|
29,207
|
|
|
$
|
39,630
|
|
|
$
|
29,207
|
|
|
Number of Stock Options Outstanding
|
|
Weighted
Average Exercise Price |
|
Weighted
Average Remaining Contractual Term (in years) |
|
Aggregate
Intrinsic Value |
|||||
Balance at December 31, 2018
|
33,152,881
|
|
|
$
|
9.52
|
|
|
5.45
|
|
$
|
1,543,793
|
|
Granted
|
1,184,657
|
|
|
72.15
|
|
|
|
|
|
|||
Exercised
|
(6,259,582
|
)
|
|
7.66
|
|
|
|
|
|
|||
Forfeited
|
(130,671
|
)
|
|
11.54
|
|
|
|
|
|
|||
Balance at June 30, 2019
|
27,947,285
|
|
|
$
|
12.59
|
|
|
5.42
|
|
$
|
1,675,414
|
|
|
|
|
|
|
|
|
|
|||||
Options exercisable as of June 30, 2019
|
25,358,359
|
|
|
$
|
9.12
|
|
|
5.12
|
|
$
|
1,607,944
|
|
|
Number of
shares |
|
Weighted
Average Grant Date Fair Value |
|||
Unvested as of December 31, 2018
|
17,934,728
|
|
|
$
|
31.34
|
|
Granted
|
4,625,215
|
|
|
71.99
|
|
|
Vested
|
(3,943,408
|
)
|
|
27.21
|
|
|
Forfeited
|
(977,657
|
)
|
|
30.30
|
|
|
Unvested as of June 30, 2019
|
17,638,878
|
|
|
$
|
42.98
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Risk-free interest rate
|
2.37
|
%
|
|
2.92
|
%
|
|
2.48
|
%
|
|
2.92
|
%
|
Expected volatility
|
40.48
|
%
|
|
30.87
|
%
|
|
39.52
|
%
|
|
30.87
|
%
|
Expected term (years)
|
6.02
|
|
|
6.19
|
|
|
6.05
|
|
|
6.19
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of revenue
|
$
|
29
|
|
|
$
|
30
|
|
|
$
|
50
|
|
|
$
|
61
|
|
Product development
|
56,144
|
|
|
33,806
|
|
|
98,793
|
|
|
64,288
|
|
||||
Sales and marketing
|
7,833
|
|
|
5,634
|
|
|
14,035
|
|
|
10,595
|
|
||||
General and administrative
|
15,460
|
|
|
12,649
|
|
|
27,676
|
|
|
23,999
|
|
||||
Total
|
$
|
79,466
|
|
|
$
|
52,119
|
|
|
$
|
140,554
|
|
|
$
|
98,943
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Net loss
|
$
|
(6,740
|
)
|
|
$
|
(5,906
|
)
|
|
$
|
(44,891
|
)
|
|
$
|
(29,892
|
)
|
Basic shares:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
424,105
|
|
|
403,390
|
|
421,983
|
|
|
400,318
|
||||||
Weighted-average unvested shares
|
(800
|
)
|
|
(89
|
)
|
|
(686
|
)
|
|
(694
|
)
|
||||
Weighted-average shares used to compute basic net loss per share
|
423,305
|
|
|
403,301
|
|
|
421,297
|
|
|
399,624
|
|||||
Diluted shares:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used to compute diluted net loss per share
|
423,305
|
|
|
403,301
|
|
|
421,297
|
|
|
399,624
|
|||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.07
|
)
|
Diluted
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.07
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Stock options and restricted stock units
|
46,686
|
|
|
62,908
|
|
|
47,256
|
|
|
64,635
|
|
Common stock warrants
|
30,252
|
|
|
23,605
|
|
|
30,252
|
|
|
21,377
|
|
Convertible senior notes
|
20,305
|
|
|
—
|
|
|
20,305
|
|
|
—
|
|
Unvested shares
|
800
|
|
|
89
|
|
|
686
|
|
|
694
|
|
Employee stock purchase plan
|
169
|
|
|
170
|
|
|
195
|
|
|
189
|
|
Total anti-dilutive securities
|
98,212
|
|
|
86,772
|
|
|
98,694
|
|
|
86,895
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||
|
2019
|
|
2019
|
||||
Operating lease costs
|
$
|
7,487
|
|
|
$
|
14,177
|
|
Sublease income
|
—
|
|
|
—
|
|
||
Finance lease costs
|
|
|
|
||||
Amortization of right-of-use assets
|
1,284
|
|
|
2,577
|
|
||
Interest on lease liabilities
|
—
|
|
|
—
|
|
||
Total lease costs
|
$
|
8,771
|
|
|
$
|
16,754
|
|
|
Six Months Ended June 30,
|
||
|
2019
|
||
Cash flows from operating activities:
|
|
||
Payments for operating lease liabilities
|
$
|
16,067
|
|
Cash flows from financing activities:
|
|
||
Principal payments on finance lease obligation
|
$
|
2,568
|
|
Supplemental Cash Flow Data:
|
|
||
Right-of-use assets obtained in exchange for operating lease obligations
|
$
|
21,905
|
|
|
Finance
|
|
Operating
|
||||
Year:
|
|
|
|
||||
2019 (remaining 6 months)
|
$
|
2,461
|
|
|
$
|
13,305
|
|
2020
|
2,446
|
|
|
40,578
|
|
||
2021
|
—
|
|
|
57,178
|
|
||
2022
|
—
|
|
|
57,054
|
|
||
2023
|
—
|
|
|
50,866
|
|
||
Thereafter
|
—
|
|
|
233,739
|
|
||
Total
|
$
|
4,907
|
|
|
$
|
452,720
|
|
Less amount representing interest
|
—
|
|
|
13,072
|
|
||
Less leases executed but not yet commenced
|
—
|
|
|
307,428
|
|
||
Total
|
$
|
4,907
|
|
|
$
|
132,220
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
1,119,039
|
|
|
$
|
777,335
|
|
|
$
|
2,033,695
|
|
|
$
|
1,417,508
|
|
International
|
55,199
|
|
|
37,603
|
|
|
99,902
|
|
|
66,033
|
|
||||
Total net revenue
|
$
|
1,174,238
|
|
|
$
|
814,938
|
|
|
$
|
2,133,597
|
|
|
$
|
1,483,541
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Long-lived assets
|
|
|
|
||||
United States
|
$
|
580,939
|
|
|
$
|
471,970
|
|
International
|
11,994
|
|
|
9,239
|
|
||
Total long-lived assets
|
$
|
592,933
|
|
|
$
|
481,209
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Supplemental Cash Flow Data:
|
|
|
|
||||
Cash paid for interest
|
$
|
2,836
|
|
|
$
|
1,108
|
|
Cash paid for income taxes
|
1,717
|
|
|
854
|
|
||
Right-of-use assets obtained in exchange for operating lease obligations
|
21,905
|
|
|
—
|
|
||
Supplemental disclosures of non-cash investing and financing activities:
|
|
|
|
||||
Change in purchases of property and equipment in accounts payable and accrued expenses
|
14,047
|
|
|
9,708
|
|
||
Unpaid business combination purchase price
|
8,411
|
|
|
3,995
|
|
||
Fair value of common stock issued related to business combination
|
—
|
|
|
(139,396
|
)
|
||
Recovery of common stock in connection with indemnification settlement agreement
|
789
|
|
|
2,745
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
||||||||||||||
Transaction-based revenue
|
$
|
775,510
|
|
|
$
|
625,228
|
|
|
$
|
150,282
|
|
|
24
|
%
|
|
$
|
1,432,272
|
|
|
$
|
1,148,265
|
|
|
$
|
284,007
|
|
|
25
|
%
|
Subscription and services-based revenue
|
251,383
|
|
|
134,332
|
|
|
117,051
|
|
|
87
|
%
|
|
$
|
470,240
|
|
|
$
|
231,386
|
|
|
$
|
238,854
|
|
|
103
|
%
|
|||
Hardware revenue
|
22,260
|
|
|
18,362
|
|
|
3,898
|
|
|
21
|
%
|
|
40,472
|
|
|
32,779
|
|
|
$
|
7,693
|
|
|
23
|
%
|
|||||
Bitcoin revenue
|
125,085
|
|
|
37,016
|
|
|
88,069
|
|
|
238
|
%
|
|
$
|
190,613
|
|
|
$
|
71,111
|
|
|
$
|
119,502
|
|
|
168
|
%
|
|||
Total net revenue
|
$
|
1,174,238
|
|
|
$
|
814,938
|
|
|
$
|
359,300
|
|
|
44
|
%
|
|
$
|
2,133,597
|
|
|
$
|
1,483,541
|
|
|
$
|
650,056
|
|
|
44
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
||||||||||||||
Transaction-based costs
|
$
|
490,349
|
|
|
$
|
395,349
|
|
|
$
|
95,000
|
|
|
24
|
%
|
|
$
|
899,418
|
|
|
$
|
723,260
|
|
|
$
|
176,158
|
|
|
24
|
%
|
Subscription and services-based costs
|
60,119
|
|
|
39,784
|
|
|
20,335
|
|
|
51
|
%
|
|
120,642
|
|
|
70,152
|
|
|
50,490
|
|
|
72
|
%
|
||||||
Hardware costs
|
33,268
|
|
|
25,536
|
|
|
7,732
|
|
|
30
|
%
|
|
60,209
|
|
|
45,238
|
|
|
14,971
|
|
|
33
|
%
|
||||||
Bitcoin costs
|
122,938
|
|
|
36,596
|
|
|
86,342
|
|
|
236
|
%
|
|
187,634
|
|
|
70,468
|
|
|
117,166
|
|
|
166
|
%
|
||||||
Amortization of acquired technology
|
1,719
|
|
|
1,857
|
|
|
(138
|
)
|
|
(7
|
)%
|
|
3,095
|
|
|
3,437
|
|
|
(342
|
)
|
|
(10
|
)%
|
||||||
Total cost of revenue
|
$
|
708,393
|
|
|
$
|
499,122
|
|
|
$
|
209,271
|
|
|
42
|
%
|
|
$
|
1,270,998
|
|
|
$
|
912,555
|
|
|
$
|
358,443
|
|
|
39
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
||||||||||||||
Product development
|
$
|
174,201
|
|
|
$
|
114,800
|
|
|
$
|
59,401
|
|
|
52
|
%
|
|
$
|
328,551
|
|
|
$
|
219,895
|
|
|
$
|
108,656
|
|
|
49
|
%
|
% of total net revenue
|
15
|
%
|
|
14
|
%
|
|
|
|
|
|
15
|
%
|
|
15
|
%
|
|
|
|
|
||||||||||
Sales and marketing
|
$
|
156,421
|
|
|
$
|
98,243
|
|
|
$
|
58,178
|
|
|
59
|
%
|
|
$
|
290,134
|
|
|
$
|
175,509
|
|
|
$
|
114,625
|
|
|
65
|
%
|
% of total net revenue
|
13
|
%
|
|
12
|
%
|
|
|
|
|
|
14
|
%
|
|
12
|
%
|
|
|
|
|
||||||||||
General and administrative
|
$
|
100,508
|
|
|
$
|
82,772
|
|
|
$
|
17,736
|
|
|
21
|
%
|
|
$
|
202,106
|
|
|
$
|
158,273
|
|
|
$
|
43,833
|
|
|
28
|
%
|
% of total net revenue
|
9
|
%
|
|
10
|
%
|
|
|
|
|
|
9
|
%
|
|
11
|
%
|
|
|
|
|
||||||||||
Transaction, loan and advance losses
|
$
|
34,264
|
|
|
$
|
21,976
|
|
|
$
|
12,288
|
|
|
56
|
%
|
|
$
|
62,105
|
|
|
$
|
40,007
|
|
|
$
|
22,098
|
|
|
55
|
%
|
% of total net revenue
|
3
|
%
|
|
3
|
%
|
|
|
|
|
|
3
|
%
|
|
3
|
%
|
|
|
|
|
||||||||||
Amortization of acquired customer assets
|
$
|
1,294
|
|
|
$
|
672
|
|
|
$
|
622
|
|
|
93
|
%
|
|
$
|
2,588
|
|
|
$
|
941
|
|
|
$
|
1,647
|
|
|
175
|
%
|
% of total net revenue
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
||||||||||
Total operating expenses
|
$
|
466,688
|
|
|
$
|
318,463
|
|
|
$
|
148,225
|
|
|
47
|
%
|
|
$
|
885,484
|
|
|
$
|
594,625
|
|
|
$
|
290,859
|
|
|
49
|
%
|
•
|
an increase of $49.3 million and $82.7 million in personnel costs for the three and six months ended June 30, 2019, respectively, related to our engineering, data science, and design teams, as well as the acquisition of Weebly, as we continued to improve and diversify our product offerings. The increase in personnel related costs includes an increase in share-based compensation expense of $22.3 million and $34.5 million for the three and six months ended June 30, 2019, respectively;
|
•
|
an increase of $5.5 million and $12.0 million in depreciation and amortization expense for the three and six months ended June 30, 2019, respectively, as a result of additions in property and equipment including capitalized software, data center equipment, and leasehold improvements to help our business scale and as result of assets acquired through the acquisition of Weebly; and
|
•
|
an increase of $4.3 million and $8.8 million in software and data center operating costs as a result of increased capacity needs and expansion of our cloud-based services.
|
•
|
an increase of $35.2 million and $69.9 million in costs for three and six months ended June 30, 2019, respectively, associated with increased volume of activity with our Cash App peer-to-peer service, transactions losses and also Cash Card issuance costs in line with an increase in users. We offer the peer-to-peer service to our Cash App customers for free, and we consider it to be a marketing tool to encourage the usage of Cash App, which includes Cash Card among other features;
|
•
|
an increase of $9.0 million and $17.7 million in advertising costs for the three and six months ended June 30, 2019, respectively, primarily from increased online and mobile marketing campaigns during the period; and
|
•
|
an increase of $7.5 million and $14.5 million in sales and marketing personnel costs for the three and six months ended June 30, 2019, respectively, to enable growth initiatives. The increase in personnel related costs includes an increase in share-based compensation expense of $2.2 million and $3.4 million for the three and six months ended June 30, 2019, respectively.
|
•
|
an increase of $11.0 million and $24.4 million in general and administrative personnel costs for the three and six months ended June 30, 2019, respectively, mainly as a result of additions to our support, finance, and legal personnel as we continued 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 $2.8 million and $3.7 million for the three and six months ended June 30, 2019, respectively; and
|
•
|
the remaining increase is primarily due to software and subscription costs, third-party legal and other professional fees and other administrative expenses.
|
•
|
transaction losses increased by $9.1 million and $14.6 million for the three and six months ended June 30, 2019, respectively, primarily due to growth in GPV in our seller business as well as growth of our Cash App platform. Seller transaction losses continued to trend below 0.1% of GPV, underscoring continued discipline in risk management; and
|
•
|
an increase of $3.2 million and $7.5 million in loan losses for the three and six months ended June 30, 2019, respectively, as a result of the growth and aging of our Square Capital loan portfolio as well as certain new loan products for which we continue to train our risk models.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
||||||||||||||
Interest expense, net
|
$
|
5,143
|
|
|
$
|
3,470
|
|
|
$
|
1,673
|
|
|
48
|
%
|
|
$
|
9,824
|
|
|
$
|
5,582
|
|
|
$
|
4,242
|
|
|
76
|
%
|
Other expense (income), net
|
$
|
1,230
|
|
|
$
|
(815
|
)
|
|
$
|
2,045
|
|
|
NM
|
|
|
$
|
12,529
|
|
|
$
|
(108
|
)
|
|
$
|
12,637
|
|
|
NM
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
||||||||||||||
Provision (benefit) for income taxes
|
$
|
(476
|
)
|
|
$
|
604
|
|
|
$
|
(1,080
|
)
|
|
(179
|
)%
|
|
$
|
(347
|
)
|
|
$
|
779
|
|
|
$
|
(1,126
|
)
|
|
(145
|
)%
|
Effective tax rate
|
6.6
|
%
|
|
(11.4
|
)%
|
|
|
|
|
|
0.8
|
%
|
|
(2.7
|
)%
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands, except GPV and per share data)
|
||||||||||||||
Gross Payment Volume (GPV) (in millions)
|
$
|
26,785
|
|
|
$
|
21,372
|
|
|
$
|
49,371
|
|
|
$
|
39,198
|
|
Adjusted Revenue
|
$
|
562,800
|
|
|
$
|
385,433
|
|
|
$
|
1,051,850
|
|
|
$
|
692,253
|
|
Adjusted EBITDA
|
$
|
105,304
|
|
|
$
|
68,322
|
|
|
$
|
167,001
|
|
|
$
|
104,216
|
|
Adjusted Net Income Per Share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.23
|
|
|
$
|
0.15
|
|
|
$
|
0.36
|
|
|
$
|
0.23
|
|
Diluted
|
$
|
0.21
|
|
|
$
|
0.13
|
|
|
$
|
0.32
|
|
|
$
|
0.20
|
|
•
|
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, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total net revenue
|
$
|
1,174,238
|
|
|
$
|
814,938
|
|
|
$
|
2,133,597
|
|
|
$
|
1,483,541
|
|
Less: transaction-based costs
|
490,349
|
|
|
395,349
|
|
|
899,418
|
|
|
723,260
|
|
||||
Less: bitcoin costs
|
122,938
|
|
|
36,596
|
|
|
187,634
|
|
|
70,468
|
|
||||
Add: deferred revenue adjustment related to purchase accounting
|
1,849
|
|
|
2,440
|
|
|
5,305
|
|
|
2,440
|
|
||||
Adjusted Revenue
|
$
|
562,800
|
|
|
$
|
385,433
|
|
|
$
|
1,051,850
|
|
|
$
|
692,253
|
|
•
|
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. Additionally, for purposes of calculating diluted Adjusted EPS we add back cash interest expense on convertible senior notes, as if converted at the beginning of the period, if the impact is dilutive, since we intend to settle future conversions of our convertible senior notes entirely in shares.
|
•
|
We exclude the gain or loss on the disposal of property and equipment, gain or loss on revaluation of equity investment, gain or loss on debt extinguishment related to the conversion of senior notes 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 and other activities 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, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss
|
$
|
(6,740
|
)
|
|
$
|
(5,906
|
)
|
|
$
|
(44,891
|
)
|
|
$
|
(29,892
|
)
|
Share-based compensation expense
|
79,466
|
|
|
52,119
|
|
|
140,554
|
|
|
98,943
|
|
||||
Depreciation and amortization
|
18,783
|
|
|
12,328
|
|
|
37,754
|
|
|
22,488
|
|
||||
Interest expense, net
|
5,143
|
|
|
3,470
|
|
|
9,824
|
|
|
5,582
|
|
||||
Other expense (income), net
|
1,230
|
|
|
(815
|
)
|
|
12,529
|
|
|
(108
|
)
|
||||
Provision (benefit) for income taxes
|
(476
|
)
|
|
604
|
|
|
(347
|
)
|
|
779
|
|
||||
Loss (gain) on disposal of property and equipment
|
281
|
|
|
73
|
|
|
300
|
|
|
(25
|
)
|
||||
Acquisition related and other costs
|
6,133
|
|
|
4,363
|
|
|
6,915
|
|
|
4,363
|
|
||||
Acquired deferred revenue adjustment
|
1,849
|
|
|
2,440
|
|
|
5,305
|
|
|
2,440
|
|
||||
Acquired deferred costs adjustment
|
(365
|
)
|
|
(354
|
)
|
|
(942
|
)
|
|
(354
|
)
|
||||
Adjusted EBITDA
|
$
|
105,304
|
|
|
$
|
68,322
|
|
|
$
|
167,001
|
|
|
$
|
104,216
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss
|
$
|
(6,740
|
)
|
|
$
|
(5,906
|
)
|
|
$
|
(44,891
|
)
|
|
$
|
(29,892
|
)
|
Share-based compensation expense
|
79,466
|
|
|
52,119
|
|
|
140,554
|
|
|
98,943
|
|
||||
Amortization of intangible assets
|
3,958
|
|
|
2,816
|
|
|
7,445
|
|
|
4,691
|
|
||||
Amortization of debt discount and issuance costs
|
9,725
|
|
|
6,830
|
|
|
19,333
|
|
|
11,223
|
|
||||
Loss on revaluation of equity investment
|
4,842
|
|
|
—
|
|
|
18,929
|
|
|
—
|
|
||||
Loss (gain) on disposal of property and equipment
|
281
|
|
|
73
|
|
|
300
|
|
|
(25
|
)
|
||||
Acquisition related and other costs
|
6,133
|
|
|
4,363
|
|
|
6,915
|
|
|
4,363
|
|
||||
Acquired deferred revenue adjustment
|
1,849
|
|
|
2,440
|
|
|
5,305
|
|
|
2,440
|
|
||||
Acquired deferred costs adjustment
|
(365
|
)
|
|
(354
|
)
|
|
(942
|
)
|
|
(354
|
)
|
||||
Adjusted Net Income - basic
|
$
|
99,149
|
|
|
$
|
62,381
|
|
|
$
|
152,948
|
|
|
$
|
91,389
|
|
Cash interest expense on convertible senior notes
|
$
|
1,277
|
|
|
$
|
—
|
|
|
$
|
2,554
|
|
|
$
|
—
|
|
Adjusted Net Income - diluted
|
$
|
100,426
|
|
|
$
|
62,381
|
|
|
$
|
155,502
|
|
|
$
|
91,389
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used to compute Adjusted Net Income Per Share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
423,305
|
|
|
403,301
|
|
|
421,297
|
|
|
399,624
|
|
||||
Diluted
|
486,532
|
|
|
470,022
|
|
|
486,794
|
|
|
465,892
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Adjusted Net Income Per Share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.23
|
|
|
$
|
0.15
|
|
|
$
|
0.36
|
|
|
$
|
0.23
|
|
Diluted
|
$
|
0.21
|
|
|
$
|
0.13
|
|
|
$
|
0.32
|
|
|
$
|
0.20
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Cash and cash equivalents
|
$
|
617,282
|
|
|
$
|
583,173
|
|
Short-term restricted cash
|
31,148
|
|
|
33,838
|
|
||
Long-term restricted cash
|
14,433
|
|
|
15,836
|
|
||
Cash, cash equivalents, and restricted cash
|
$
|
662,863
|
|
|
$
|
632,847
|
|
Short-term investments
|
572,206
|
|
|
540,991
|
|
||
Long-term investments
|
460,827
|
|
|
464,680
|
|
||
Cash, cash equivalents, restricted cash and investments in marketable debt securities
|
$
|
1,695,896
|
|
|
$
|
1,638,518
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
165,836
|
|
|
$
|
71,032
|
|
Net cash used in investing activities
|
(95,755
|
)
|
|
(166,047
|
)
|
||
Net cash provided by (used in) financing activities
|
(42,405
|
)
|
|
791,811
|
|
||
Effect of foreign exchange rate on cash and cash equivalents
|
2,340
|
|
|
(3,505
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
$
|
30,016
|
|
|
$
|
693,291
|
|
•
|
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. Also customer funds obligations, which are included in customers payable, may cause customers payable to trend differently than settlements receivable. Holidays and day-of-week may also cause significant volatility in daily GPV amounts.
|
•
|
Net loss of $44.9 million, offset by add back of non-cash items consisting primarily of share-based compensation of $140.6 million, transaction, loan and advance losses of $62.1 million, depreciation and amortization of $37.8 million, loss on revaluation of equity investment of $18.9 million, and amortization of operating lease right-of-use assets and accretion of operating lease liabilities of $14.4 million. The loss on revaluation of the equity investment is the mark to market valuation of the investment in Eventbrite. The other 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 (which includes customer funds obligation) of $1,052.9 million and settlements payable of $236.5 million. Both customers payable and settlements payable balances increased significantly due to the period ending on a weekend, compared to a weekday in the prior period, as we settle processing payment activity on business days. These balances are largely offset by settlements receivable, described below, which moves in tandem.
|
•
|
The cash increases described above were offset in part by cash used from changes in operating assets and liabilities, including increases in settlements receivable of $1,148.4 million, for reasons described above, increases in customer funds of $125.0 million as result of an increasing customer base with stored funds on the Cash App, the net loan activity related to loans held for sale of $59.7 million arising from increased loan purchases, and charge-offs to accrued transaction losses of $36.1 million arising as a result of growth in GPV.
|
•
|
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 and settlements payable of $25.8 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.
|
•
|
Offset in part by cash used from changes in operating assets and liabilities, including increases in settlements receivable of $192.0 million for reasons described above, increases in customer funds of $105.8 million as result of an increasing customer base with stored funds on the Cash App, 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 changes in other assets and liabilities of $22.1 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 payments, 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;
|
•
|
the transaction may subject us to additional regulatory burdens that affect our business in potentially unanticipated and significantly negative ways;
|
•
|
we may not realize a satisfactory return or increase our revenue;
|
•
|
we may experience difficulty, and may not be successful in, integrating technologies, IT systems, data processing methods and policies, accounting systems, culture, or management or other personnel of 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, including in connection with the assumption of ongoing expenses of the acquired business;
|
•
|
the transaction may divert management’s attention and resources, which may cause disruptions in our ongoing operations;
|
•
|
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;
|
•
|
acquired businesses or businesses in which we invest may not have adequate controls, processes and procedures to ensure compliance with laws and regulations, including with respect to data privacy and security, and our due diligence process may not identify compliance issues or other liabilities;
|
•
|
we may incur substantial liabilities associated with the activities or conduct of the acquired business, including legal and regulatory claims or disputes, violations of laws and regulations, and other liabilities, whether known or unknown;
|
•
|
we may fail to identify or assess the magnitude of certain liabilities, shortcomings, or other circumstances prior to acquiring or investing in a business, which could result in additional financial, legal, or regulatory exposure, which may subject us to additional controls, policies, procedures, liabilities, litigation, costs of compliance or remediation, or other adverse effects on our business, operating results, or financial condition;
|
•
|
we may have difficulty entering into new market segments;
|
•
|
we may be unable to retain the customers, vendors, and partners of acquired businesses;
|
•
|
there may be lawsuits or regulatory actions resulting from the transaction;
|
•
|
there may be risks associated with undetected cyberattacks or security breaches at companies that we acquire or with which we may combine or partner;
|
•
|
there may be regulatory constraints, including competition regulations that may affect the extent to which we can maximize the value of our acquisitions or investments;
|
•
|
there may be local and foreign regulations applicable to the international activities of our business and the businesses we acquire;
|
•
|
there may be risks associated with the complexity of entering into and effectively managing joint ventures, strategic investments, and other strategic partnerships;
|
•
|
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 or the regulations applicable to our current or futures lines of business;
|
•
|
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.
|
Period
|
Total number of
Shares purchased
|
Average price paid
per share
|
Total number of shares purchased as part of publicly announced plans or programs
|
Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
|
|||||
April 1 to April 30
|
4,043 (i)
|
|
$
|
76.32
|
|
—
|
|
—
|
|
May 1 to May 31
|
—
|
|
—
|
|
—
|
|
—
|
|
|
June 1 to June 30
|
84 (ii)
|
|
|
—
|
|
—
|
|
||
Total
|
4,127
|
|
$ 76.32 (iii)
|
|
—
|
|
—
|
|
|
|
|
Incorporated by Reference
|
|||
Exhibit Number
|
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
32.1†
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Labels Linkbase Document.
|
|
|
|
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
Date:
|
August 1, 2019
|
|
By:
|
/s/ Jack Dorsey
|
|
|
|
|
Jack Dorsey
|
|
|
|
|
President, Chief Executive Officer, and Chairman
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
By:
|
/s/ Amrita Ahuja
|
|
|
|
|
Amrita Ahuja
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
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.
|