FORM 10-K
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(Mark One)
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2016
OR
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o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Commission File Number 001-37622
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SQUARE, INC.
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||
(Exact name of registrant as specified in its charter)
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||
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Delaware
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80-0429876
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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1455 Market Street, Suite 600
San Francisco, CA 94103
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(Address of principal executive offices, including zip code)
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(415) 375-3176
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(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Name of each exchange on which registered
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Class A Common Stock, $0.0000001 par value per share
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES
ý
NO
o
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES
o
NO
ý
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES
ý
NO
o
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES
ý
NO
o
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
o
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b‑2 of the Exchange Act. (Check one):
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Large accelerated filer
ý
Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Accelerated filer
o
Smaller reporting company
o
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES
o
NO
ý
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Page No
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Year Ended December 31,
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2015 to 2016
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2014 to 2015
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||||||||||||
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2016
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2015
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2014
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% Change
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% Change
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||||||||
Gross Payment Volume (GPV) (in millions)
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$
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49,683
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$
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35,643
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$
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23,780
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|
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39
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%
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50
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%
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Total net revenue
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$
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1,708,721
|
|
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$
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1,267,118
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|
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$
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850,192
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|
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35
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%
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49
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%
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Adjusted Revenue
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$
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686,618
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$
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452,168
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|
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$
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276,310
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|
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52
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%
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64
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%
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Net loss attributable to common stockholders
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$
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(171,590
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)
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$
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(212,017
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)
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$
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(154,093
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)
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|
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Adjusted EBITDA
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$
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44,887
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|
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$
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(41,115
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)
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$
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(67,741
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)
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|
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Net loss per share attributable to common stockholders:
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||||||||
Basic
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$
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(0.50
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)
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$
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(1.24
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)
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$
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(1.08
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)
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|
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||
Diluted
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$
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(0.50
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)
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$
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(1.24
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)
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$
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(1.08
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)
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|
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Adjusted Net Income (Loss) Per Share:
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||||||||
Basic
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$
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0.04
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$
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(0.39
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)
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$
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(0.62
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)
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Diluted
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$
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0.04
|
|
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$
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(0.39
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)
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$
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(0.62
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)
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•
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Magstripe reader: Our free magstripe reader enables swiped transactions of magnetic stripe cards by connecting with an iOS or Android smartphone or tablet.
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•
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Contactless and chip reader: This reader accepts EMV chip cards and NFC payments, enabling acceptance via Apple Pay, Android Pay, and other mobile wallets. The reader connects wirelessly or via USB.
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•
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Chip card reader: Our chip card reader accepts EMV chip cards and enables swiped transactions of magnetic stripe cards by connecting with an iOS or Android smartphone or tablet.
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•
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Square Stand: This hardware transforms an iPad into a full point-of-sale terminal. It features an integrated magnetic stripe reader, provides power to a connected iPad, and can connect to the contactless and chip reader wirelessly or via USB. Square Stand also connects to various peripheral devices that brick-and-mortar businesses need, such as barcode scanners and receipt printers.
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1.
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Once the buyer is ready to make a purchase, the seller inputs the transaction into the Square Point of Sale and presents the buyer with the amount owed.
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2.
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For in-person transactions, the buyer pays by swiping or dipping their payment card, or by tapping their NFC-enabled payment card or mobile device on a Square Reader or Square Stand, which captures the buyer’s account information. For card not present transactions, card information is keyed in manually by either the buyer or seller into the Square Point of Sale app, Square Invoices, Square Virtual Terminal, or the seller's e-commerce website.
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3.
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The Square Point of Sale sends the transaction information to Square, which acts as the PSP.
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4.
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Square passes the transaction information to the Acquiring Processor via an internet connection. Square pays a small fixed fee per transaction to the Acquiring Processor.
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5.
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The Acquiring Processor routes the transaction to the appropriate Card Network affiliated with the buyer’s card such as Visa, Mastercard, Discover, or American Express. Square pays a variety of fees to the Card Network, the most significant of which are assessment fees that are typically less than 0.15% of the transaction amount.
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6.
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The Acquiring Processor then routes the transaction through the Card Network to the Issuing Bank, which authorizes or declines the transaction for the buyer’s payment card.
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7.
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Upon authorization, the Issuing Bank sends a notification back through the Card Network to the Square Point of Sale to inform the seller that the transaction has been successfully authorized.
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8.
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The Square Point of Sale sends a digital receipt for the transaction to the buyer, enabling a persistent communication channel between the seller and the buyer. For example, this is how the buyer can send feedback to the seller about the service provided.
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9.
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The Issuing Bank then triggers a disbursement of funds to the Acquiring Bank through the Card Network for the transaction amount. Square will ultimately pay the Issuing Bank an interchange fee as a percentage of the amount of the transaction plus a fixed fee per transaction, which together average between 1.5% to 2.0% of the transaction amount. However, this percentage can vary significantly based on the card type, transaction type, and transaction size.
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10.
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Square transfers the funds to the seller’s bank account, net of the fee charged by Square. Square provides sellers with fast access to funds, typically settling with them by the business day after the date of the transaction via Automated Clearing House (ACH) transfers, or the same day via its Instant Deposit service for an additional transaction fee. Square pays a very small fee for each ACH transfer.
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11.
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The funds are settled from the Acquiring Bank to Square, typically in one to two business days after the date of the transaction.
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12.
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At the end of the month, the Issuing Bank sends a statement to the buyer showing their monthly charges. The statement includes a reference to Square as the merchant of record on the billing statement as a prefix to the seller name (denoted as SQ).
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•
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Business software providers such as those that provide inventory management, analytics, customer management and marketing, e-commerce, and appointment solutions;
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•
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Established or new alternative lenders;
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•
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Delivery service providers; and
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•
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Peer-to-peer payment providers.
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improving and implementing existing and developing new internal administrative infrastructure, particularly our operational, financial, communications and other internal systems and procedures;
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installing enhanced management information and control system; and
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preserving our core values, strategies, and goals and effectively communicating these to our employees worldwide.
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difficulty in attracting a sufficient number of sellers;
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failure to anticipate competitive conditions;
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conformity with applicable business customs, including translation into foreign languages and associated expenses;
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increased costs and difficulty in protecting intellectual property and sensitive data;
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changes to the way we do business as compared with our current operations or a lack of acceptance of our products and services;
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the ability to support and integrate with local third-party service providers;
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competition with service providers or other entrenched market-players that have greater experience in the local markets than we do;
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difficulties in staffing and managing foreign operations in an environment of diverse culture, laws and customs, challenges caused by distance, language, and cultural differences, and the increased travel, infrastructure and legal and compliance costs associated with global operations;
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difficulties in recruiting and retaining qualified employees;
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difficulty in gaining acceptance from industry self-regulatory bodies;
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compliance with multiple, potentially conflicting and changing governmental laws and regulations, including with respect to data privacy and security;
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compliance with U.S. and foreign anti-bribery laws;
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potential tariffs, sanctions, or other trade barriers including fines;
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exchange rate risk;
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compliance with potentially conflicting and changing laws of taxing jurisdictions where we conduct business and applicable U.S. tax laws, the complexity and adverse consequences of such tax laws and potentially adverse tax consequences due to changes in such tax laws; and
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regional economic and political instability.
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the transaction may not advance our business strategy;
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we may be unable to identify opportunities on terms acceptable to us;
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we may not realize a satisfactory return or increase our revenue;
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we may experience disruptions on our ongoing operations and divert management’s attention;
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we may be unable to retain key personnel;
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we may experience difficulty in integrating technologies, IT systems, accounting systems, culture, or personnel;
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acquired businesses may not have adequate controls, processes and procedures to ensure compliance with laws and regulations, and our due diligence process may not identify compliance issues or other liabilities;
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we may assume additional financial or legal exposure, including exposure that is known to us;
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we may have difficulty entering new market segments;
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we may be unable to retain the customers and partners of acquired businesses;
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there may be unknown, underestimated, or undisclosed commitments or liabilities, including actual or threatened litigation;
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there may be regulatory constraints, particularly competition regulations that may affect the extent to which we can maximize the value of our acquisitions or investments; and
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acquisitions could result in dilutive issuances of equity securities or the incurrence of debt.
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price and volume fluctuations in the overall stock market from time to time;
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volatility in the market prices and trading volumes of companies in our industry or companies that investors consider comparable;
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changes in operating performance and stock market valuations of other companies generally or of those in our industry in particular;
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sales of shares of our common stock by us or our stockholders;
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failure of securities analysts to maintain coverage and/or to provide accurate consensus results of us, changes in financial estimates by securities analysts who follow us, or our failure to meet these estimates or the expectations of investors;
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the financial or other projections we may provide to the public, any changes in those projections, or our failure to meet those projections;
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announcements by us or our competitors of new products or services;
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public reaction to our press releases, other public announcements, and filings with the SEC;
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rumors and market speculation involving us or other companies in our industry;
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actual or anticipated changes in our results of operations;
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changes in the regulatory environment;
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actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally;
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litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;
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announced or completed acquisitions of businesses or technologies by us or our competitors;
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new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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changes in accounting standards, policies, guidelines, interpretations, or principles;
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any significant change in our management; and
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general economic conditions and slow or negative growth of our markets.
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Year Ended December 31, 2016
|
|
High
|
|
Low
|
||||
First Quarter
|
|
$
|
15.91
|
|
|
$
|
8.06
|
|
Second Quarter
|
|
$
|
15.87
|
|
|
$
|
8.42
|
|
Third Quarter
|
|
$
|
12.54
|
|
|
$
|
8.78
|
|
Fourth Quarter
|
|
$
|
14.82
|
|
|
$
|
10.88
|
|
Year Ended December 31, 2015
|
|
|
|
|
||||
Fourth Quarter (from November 19, 2015)
|
|
$
|
14.78
|
|
|
$
|
9.00
|
|
Company/Index
|
|
11/19/2015
|
|
|
12/31/2015
|
|
|
12/31/2016
|
|
Square, Inc.
|
|
100
|
|
|
100.15
|
|
|
104.28
|
|
S&P 500
|
|
100
|
|
|
98.72
|
|
|
110.52
|
|
S&P North American Technology
|
|
100
|
|
|
99.20
|
|
|
111.15
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Product development
|
$
|
91,404
|
|
|
$
|
54,738
|
|
|
$
|
24,758
|
|
|
$
|
8,820
|
|
|
$
|
3,984
|
|
Sales and marketing
|
14,122
|
|
|
7,360
|
|
|
3,738
|
|
|
1,235
|
|
|
668
|
|
|||||
General and administrative
|
33,260
|
|
|
20,194
|
|
|
7,604
|
|
|
4,603
|
|
|
3,462
|
|
|||||
Total share-based compensation
|
$
|
138,786
|
|
|
$
|
82,292
|
|
|
$
|
36,100
|
|
|
$
|
14,658
|
|
|
$
|
8,114
|
|
|
December 31,
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||
|
(in thousands)
|
||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
452,030
|
|
|
$
|
461,329
|
|
|
$
|
222,315
|
|
|
$
|
166,176
|
|
Settlements receivable
|
321,102
|
|
|
142,727
|
|
|
115,481
|
|
|
64,968
|
|
||||
Working capital
|
423,961
|
|
|
371,361
|
|
|
218,761
|
|
|
124,061
|
|
||||
Total assets
|
1,211,362
|
|
|
894,772
|
|
|
541,888
|
|
|
318,341
|
|
||||
Customers payable
|
388,058
|
|
|
215,365
|
|
|
145,663
|
|
|
95,794
|
|
||||
Total stockholders' equity
|
576,153
|
|
|
508,048
|
|
|
273,672
|
|
|
162,294
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(
in thousands, except for GPV and per share data)
|
||||||||||||||||||
Gross Payment Volume (GPV) (in millions)
|
$
|
49,683
|
|
|
$
|
35,643
|
|
|
$
|
23,780
|
|
|
$
|
14,822
|
|
|
$
|
6,518
|
|
Adjusted Revenue
|
$
|
686,618
|
|
|
$
|
452,168
|
|
|
$
|
276,310
|
|
|
$
|
160,144
|
|
|
$
|
67,627
|
|
Adjusted EBITDA
|
$
|
44,887
|
|
|
$
|
(41,115
|
)
|
|
$
|
(67,741
|
)
|
|
$
|
(51,530
|
)
|
|
$
|
(70,579
|
)
|
Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
(0.62
|
)
|
Diluted
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
(0.62
|
)
|
•
|
Adjusted Revenue is net of transaction-based costs, which is our largest cost of revenue item; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted Revenue differently from how we calculate this measure or not at all, which reduces its usefulness as a comparative measure.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Total net revenue
|
$
|
1,708,721
|
|
|
$
|
1,267,118
|
|
|
$
|
850,192
|
|
|
$
|
552,433
|
|
|
$
|
203,449
|
|
Less: Starbucks transaction-based revenue
|
78,903
|
|
|
142,283
|
|
|
123,024
|
|
|
114,456
|
|
|
9,471
|
|
|||||
Less: transaction-based costs
|
943,200
|
|
|
672,667
|
|
|
450,858
|
|
|
277,833
|
|
|
126,351
|
|
|||||
Adjusted Revenue
|
$
|
686,618
|
|
|
$
|
452,168
|
|
|
$
|
276,310
|
|
|
$
|
160,144
|
|
|
$
|
67,627
|
|
•
|
We exclude Starbucks transaction-based revenue and Starbucks transaction-based costs. As described above, Starbucks completed its previously announced transition to another payments solution provider and has ceased using our payments solutions altogether, and we believe that providing non-GAAP financial measures that exclude the impact of our agreement with Starbucks is useful to investors.
|
•
|
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.
|
•
|
We exclude the litigation settlement with Robert E. Morley described in Note 1 of the accompanying notes to our consolidated financial statements, gain or loss on the sale of property and equipment, and impairment of intangible assets from non-GAAP financial measures because we do not believe that these items are reflective of our ongoing business operations.
|
•
|
share-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy;
|
•
|
the intangible assets being amortized may have to be replaced in the future, and the non-GAAP financial measures do not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or other capital commitments; and
|
•
|
non-GAAP measures do not reflect changes in, or cash requirements for, our working capital needs.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Net loss
|
$
|
(171,590
|
)
|
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
|
$
|
(85,199
|
)
|
Starbucks transaction-based revenue
|
(78,903
|
)
|
|
(142,283
|
)
|
|
(123,024
|
)
|
|
(114,456
|
)
|
|
(9,471
|
)
|
|||||
Starbucks transaction-based costs
|
69,761
|
|
|
165,438
|
|
|
150,955
|
|
|
139,803
|
|
|
12,547
|
|
|||||
Share-based compensation expense
|
138,786
|
|
|
82,292
|
|
|
36,100
|
|
|
14,658
|
|
|
8,114
|
|
|||||
Depreciation and amortization
|
37,745
|
|
|
27,626
|
|
|
18,586
|
|
|
8,272
|
|
|
3,579
|
|
|||||
Litigation settlement expense
|
48,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest and other (income) expense, net
|
(780
|
)
|
|
1,613
|
|
|
2,162
|
|
|
(962
|
)
|
|
(162
|
)
|
|||||
Provision for income taxes
|
1,917
|
|
|
3,746
|
|
|
1,440
|
|
|
513
|
|
|
—
|
|
|||||
(Gain) loss on sale of property and equipment
|
(49
|
)
|
|
270
|
|
|
133
|
|
|
2,705
|
|
|
13
|
|
|||||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
2,430
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
$
|
44,887
|
|
|
$
|
(41,115
|
)
|
|
$
|
(67,741
|
)
|
|
$
|
(51,530
|
)
|
|
$
|
(70,579
|
)
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Net loss
|
$
|
(171,590
|
)
|
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
|
$
|
(104,493
|
)
|
|
$
|
(85,199
|
)
|
Starbucks transaction-based revenue
|
(78,903
|
)
|
|
(142,283
|
)
|
|
(123,024
|
)
|
|
(114,456
|
)
|
|
(9,471
|
)
|
|||||
Starbucks transaction-based costs
|
69,761
|
|
|
165,438
|
|
|
150,955
|
|
|
139,803
|
|
|
12,547
|
|
|||||
Share-based compensation expense
|
138,786
|
|
|
82,292
|
|
|
36,100
|
|
|
14,658
|
|
|
8,114
|
|
|||||
Amortization of intangible assets
|
9,013
|
|
|
7,503
|
|
|
2,133
|
|
|
54
|
|
|
54
|
|
|||||
Litigation settlement expense
|
48,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
(Gain) loss on sale of property and equipment
|
(49
|
)
|
|
270
|
|
|
133
|
|
|
2,705
|
|
|
13
|
|
|||||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
2,430
|
|
|
—
|
|
|||||
Adjusted Net Income (Loss)
|
$
|
15,018
|
|
|
$
|
(66,597
|
)
|
|
$
|
(87,796
|
)
|
|
$
|
(59,299
|
)
|
|
$
|
(73,942
|
)
|
Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
(0.62
|
)
|
Diluted
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
(0.62
|
)
|
Weighted-average shares used to compute Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
341,555
|
|
|
170,498
|
|
|
142,042
|
|
|
127,845
|
|
|
119,220
|
|
|||||
Diluted
|
370,258
|
|
|
170,498
|
|
|
142,042
|
|
|
127,845
|
|
|
119,220
|
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||||
Gross Payment Volume (GPV) (in millions)
|
$
|
49,683
|
|
|
$
|
35,643
|
|
|
$
|
23,780
|
|
|
39
|
%
|
|
50
|
%
|
Total net revenue
|
$
|
1,708,721
|
|
|
$
|
1,267,118
|
|
|
$
|
850,192
|
|
|
35
|
%
|
|
49
|
%
|
Adjusted Revenue
|
$
|
686,618
|
|
|
$
|
452,168
|
|
|
$
|
276,310
|
|
|
52
|
%
|
|
64
|
%
|
Net loss attributable to common stockholders
|
$
|
(171,590
|
)
|
|
$
|
(212,017
|
)
|
|
$
|
(154,093
|
)
|
|
|
|
|
||
Adjusted EBITDA
|
$
|
44,887
|
|
|
$
|
(41,115
|
)
|
|
$
|
(67,741
|
)
|
|
|
|
|
||
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
|
$
|
(1.08
|
)
|
|
|
|
|
||
Diluted
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
|
$
|
(1.08
|
)
|
|
|
|
|
||
Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.62
|
)
|
|
|
|
|
||
Diluted
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
(0.62
|
)
|
|
|
|
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||||
Transaction-based revenue
|
$
|
1,456,160
|
|
|
$
|
1,050,445
|
|
|
$
|
707,799
|
|
|
39
|
%
|
|
48
|
%
|
Starbucks transaction-based revenue
|
78,903
|
|
|
142,283
|
|
|
123,024
|
|
|
(45
|
)%
|
|
16
|
%
|
|||
Subscription and services-based revenue
|
129,351
|
|
|
58,013
|
|
|
12,046
|
|
|
123
|
%
|
|
382
|
%
|
|||
Hardware revenue
|
44,307
|
|
|
16,377
|
|
|
7,323
|
|
|
171
|
%
|
|
124
|
%
|
|||
Total net revenue
|
$
|
1,708,721
|
|
|
$
|
1,267,118
|
|
|
$
|
850,192
|
|
|
35
|
%
|
|
49
|
%
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||||
Transaction-based costs
|
$
|
943,200
|
|
|
$
|
672,667
|
|
|
$
|
450,858
|
|
|
40
|
%
|
|
49
|
%
|
Starbucks transaction-based costs
|
69,761
|
|
|
165,438
|
|
|
150,955
|
|
|
(58
|
)%
|
|
10
|
%
|
|||
Subscription and services-based costs
|
43,132
|
|
|
22,470
|
|
|
2,973
|
|
|
92
|
%
|
|
NM
|
|
|||
Hardware costs
|
68,562
|
|
|
30,874
|
|
|
18,330
|
|
|
122
|
%
|
|
68
|
%
|
|||
Amortization of acquired technology
|
8,028
|
|
|
5,639
|
|
|
1,002
|
|
|
42
|
%
|
|
NM
|
|
|||
Total cost of revenue
|
$
|
1,132,683
|
|
|
$
|
897,088
|
|
|
$
|
624,118
|
|
|
26
|
%
|
|
44
|
%
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||||
Product development
|
$
|
268,537
|
|
|
$
|
199,638
|
|
|
$
|
144,637
|
|
|
35
|
%
|
|
38
|
%
|
Percentage of total net revenue
|
16
|
%
|
|
16
|
%
|
|
17
|
%
|
|
|
|
|
•
|
the addition of personnel in our engineering, product, and design teams; and
|
•
|
product development expenses included
$91.4 million
in share-based compensation expense, a
$36.7 million
increase compared to the prior year.
|
•
|
the addition of personnel in our engineering, product, and design teams, including those who joined as a result of acquisitions; and
|
•
|
product development expenses included $54.7 million in share-based compensation expense, a $30.0 million increase compared to the prior year.
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||||
Sales and marketing
|
$
|
173,876
|
|
|
$
|
145,618
|
|
|
$
|
112,577
|
|
|
19
|
%
|
|
29
|
%
|
Percentage of total net revenue
|
10
|
%
|
|
11
|
%
|
|
13
|
%
|
|
|
|
|
•
|
an increase in sales and marketing personnel to support growth in the business;
|
•
|
sales and marketing expenses included
$14.1 million
in share-based compensation expense, a
$6.8 million
increase compared to the prior year;
|
•
|
an increase of $4.7 million in costs associated with our Square Cash peer-to-peer transfer service; and
|
•
|
paid marketing expenditures were stable compared to the prior year.
|
•
|
an increase in sales and marketing personnel;
|
•
|
an increase of $18.0 million in costs associated with our Square Cash peer-to-peer payments service;
|
•
|
an increase of $13.2 million in advertising costs primarily from increased direct mail, online, and mobile marketing campaigns during the period;
|
•
|
sales and marketing expenses included $7.4 million in share-based compensation expense, a $3.6 million increase compared to the prior year; and
|
•
|
offset in part by lower costs associated with distributing our magstripe readers.
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||||
General and administrative
|
$
|
251,993
|
|
|
$
|
143,466
|
|
|
$
|
94,220
|
|
|
76
|
%
|
|
52
|
%
|
Percentage of total net revenue
|
15
|
%
|
|
11
|
%
|
|
11
|
%
|
|
|
|
|
•
|
the balance included
$48.0 million
of non-recurring expense related to the settlement of legal proceedings with Robert E. Morley, with no similar activity in the prior year;
|
•
|
additions to our customer support, legal, compliance, risk, finance, Square Capital operations, and Caviar operations personnel that together will drive long-term operating efficiencies as our business scales;
|
•
|
increased third-party legal, finance, consulting, and certain software license expenses primarily related to our first year of operations as a public company; and
|
•
|
general and administrative expenses included
$33.3 million
in share-based compensation expense, a
$13.1 million
increase compared to the prior year.
|
•
|
additions to our customer support, risk operations, legal, compliance, and finance teams;
|
•
|
increased third-party legal, finance, consulting, and certain software license expenses; and
|
•
|
general and administrative expenses included $20.2 million in share-based compensation expense, a $12.6 million increase compared to the prior year.
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||||
Transaction, loan and advance losses
|
$
|
51,235
|
|
|
$
|
54,009
|
|
|
$
|
24,081
|
|
|
(5
|
)%
|
|
124
|
%
|
•
|
an $8.5 million charge recorded in the
year ended December 31, 2015
, comprised of a $4.4 million charge related to fraud loss from a single seller and an increase of $4.1 million loss provision made to reflect updates to our risk model; and
|
•
|
an out of period adjustment of $5.5 million recorded in the
year ended December 31, 2016
, as a result of a correction to the calculation of our reserve for transaction losses.
|
•
|
an $8.5 million charge recorded in the year ended December 31, 2015, comprised of a $4.4 million accrual related to fraud loss from a single seller and an increase of $4.1 million loss provision made to reflect updates to our risk model;
|
•
|
$3.8 million incremental provisions for MCAs; and
|
•
|
increased GPV which resulted in the recording of a higher reserve.
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||||
Amortization of acquired customer assets
|
$
|
850
|
|
|
$
|
1,757
|
|
|
$
|
1,050
|
|
|
(52
|
)%
|
|
67
|
%
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||||
Interest and other (income) expense, net
|
$
|
(780
|
)
|
|
$
|
1,613
|
|
|
$
|
2,162
|
|
|
(148
|
)%
|
|
(25
|
)%
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||||
Provision for income taxes
|
$
|
1,917
|
|
|
$
|
3,746
|
|
|
$
|
1,440
|
|
|
(49
|
)%
|
|
160
|
%
|
|
Year Ended December 31,
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
|
% Change
|
|
% Change
|
||||||
Deemed dividend on Series E preferred stock
|
$
|
—
|
|
|
$
|
(32,200
|
)
|
|
$
|
—
|
|
|
NM
|
|
NM
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
|
(unaudited)
|
||||||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Transaction-based revenue
|
$
|
402,496
|
|
|
$
|
388,347
|
|
|
$
|
364,864
|
|
|
$
|
300,453
|
|
|
$
|
298,516
|
|
|
$
|
280,955
|
|
|
$
|
259,864
|
|
|
$
|
211,110
|
|
Starbucks transaction-based revenue
|
34
|
|
|
7,164
|
|
|
32,867
|
|
|
38,838
|
|
|
47,084
|
|
|
32,332
|
|
|
33,630
|
|
|
29,237
|
|
||||||||
Subscription and services-based revenue
|
40,518
|
|
|
35,320
|
|
|
29,717
|
|
|
23,796
|
|
|
22,385
|
|
|
14,694
|
|
|
12,928
|
|
|
8,006
|
|
||||||||
Hardware revenue
|
8,869
|
|
|
8,171
|
|
|
11,085
|
|
|
16,182
|
|
|
6,375
|
|
|
4,207
|
|
|
3,591
|
|
|
2,204
|
|
||||||||
Total net revenue
|
451,917
|
|
|
439,002
|
|
|
438,533
|
|
|
379,269
|
|
|
374,360
|
|
|
332,188
|
|
|
310,013
|
|
|
250,557
|
|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Transaction-based costs
|
260,006
|
|
|
254,061
|
|
|
234,857
|
|
|
194,276
|
|
|
192,730
|
|
|
182,007
|
|
|
165,823
|
|
|
132,107
|
|
||||||||
Starbucks transaction-based costs
|
(49
|
)
|
|
4,528
|
|
|
28,672
|
|
|
36,610
|
|
|
46,896
|
|
|
41,410
|
|
|
40,921
|
|
|
36,211
|
|
||||||||
Subscription and services-based costs
|
11,431
|
|
|
12,524
|
|
|
10,144
|
|
|
9,033
|
|
|
8,650
|
|
|
5,593
|
|
|
5,072
|
|
|
3,155
|
|
||||||||
Hardware costs
|
12,118
|
|
|
15,689
|
|
|
14,015
|
|
|
26,740
|
|
|
14,238
|
|
|
5,726
|
|
|
6,713
|
|
|
4,197
|
|
||||||||
Amortization of acquired technology
|
1,886
|
|
|
1,886
|
|
|
1,886
|
|
|
2,370
|
|
|
2,753
|
|
|
1,142
|
|
|
1,142
|
|
|
602
|
|
||||||||
Total cost of revenue
|
285,392
|
|
|
288,688
|
|
|
289,574
|
|
|
269,029
|
|
|
265,267
|
|
|
235,878
|
|
|
219,671
|
|
|
176,272
|
|
||||||||
Gross profit
|
166,525
|
|
|
150,314
|
|
|
148,959
|
|
|
110,240
|
|
|
109,093
|
|
|
96,310
|
|
|
90,342
|
|
|
74,285
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product development
|
64,889
|
|
|
70,418
|
|
|
68,638
|
|
|
64,592
|
|
|
59,186
|
|
|
55,020
|
|
|
45,887
|
|
|
39,545
|
|
||||||||
Sales and marketing
|
49,406
|
|
|
46,754
|
|
|
39,220
|
|
|
38,496
|
|
|
38,448
|
|
|
39,259
|
|
|
31,730
|
|
|
36,181
|
|
||||||||
General and administrative
|
53,027
|
|
|
52,075
|
|
|
50,784
|
|
|
96,107
|
|
|
45,723
|
|
|
37,820
|
|
|
31,804
|
|
|
28,119
|
|
||||||||
Transaction, loan and advance losses
|
13,034
|
|
|
12,885
|
|
|
17,455
|
|
|
7,861
|
|
|
13,169
|
|
|
16,005
|
|
|
8,513
|
|
|
16,322
|
|
||||||||
Amortization of acquired customer assets
|
147
|
|
|
164
|
|
|
222
|
|
|
317
|
|
|
384
|
|
|
423
|
|
|
482
|
|
|
468
|
|
||||||||
Total operating expenses
|
180,503
|
|
|
182,296
|
|
|
176,319
|
|
|
207,373
|
|
|
156,910
|
|
|
148,527
|
|
|
118,416
|
|
|
120,635
|
|
||||||||
Operating loss
|
(13,978
|
)
|
|
(31,982
|
)
|
|
(27,360
|
)
|
|
(97,133
|
)
|
|
(47,817
|
)
|
|
(52,217
|
)
|
|
(28,074
|
)
|
|
(46,350
|
)
|
||||||||
Interest and other (income) expense, net
|
153
|
|
|
111
|
|
|
(327
|
)
|
|
(717
|
)
|
|
(772
|
)
|
|
781
|
|
|
394
|
|
|
1,210
|
|
||||||||
Loss before income tax
|
(14,131
|
)
|
|
(32,093
|
)
|
|
(27,033
|
)
|
|
(96,416
|
)
|
|
(47,045
|
)
|
|
(52,998
|
)
|
|
(28,468
|
)
|
|
(47,560
|
)
|
||||||||
Provision for income taxes
|
1,036
|
|
|
230
|
|
|
312
|
|
|
339
|
|
|
1,244
|
|
|
932
|
|
|
1,152
|
|
|
418
|
|
||||||||
Net loss
|
(15,167
|
)
|
|
(32,323
|
)
|
|
(27,345
|
)
|
|
(96,755
|
)
|
|
(48,289
|
)
|
|
(53,930
|
)
|
|
(29,620
|
)
|
|
(47,978
|
)
|
||||||||
Deemed dividend on Series E preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,200
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net loss attributable to common stockholders
|
$
|
(15,167
|
)
|
|
$
|
(32,323
|
)
|
|
$
|
(27,345
|
)
|
|
$
|
(96,755
|
)
|
|
$
|
(80,489
|
)
|
|
$
|
(53,930
|
)
|
|
$
|
(29,620
|
)
|
|
$
|
(47,978
|
)
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
(0.04
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.33
|
)
|
Diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.33
|
)
|
Weighted-average shares used to compute net loss per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
356,343
|
|
|
343,893
|
|
|
334,488
|
|
|
331,324
|
|
|
234,548
|
|
|
152,334
|
|
|
149,253
|
|
|
145,069
|
|
||||||||
Diluted
|
356,343
|
|
|
343,893
|
|
|
334,488
|
|
|
331,324
|
|
|
234,548
|
|
|
152,334
|
|
|
149,253
|
|
|
145,069
|
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Share-Based Compensation
|
(unaudited)
|
||||||||||||||||||||||||||||||
Product development
|
$
|
21,340
|
|
|
$
|
23,949
|
|
|
$
|
24,168
|
|
|
$
|
21,947
|
|
|
$
|
21,451
|
|
|
$
|
13,938
|
|
|
$
|
10,391
|
|
|
$
|
8,958
|
|
Sales and marketing
|
4,159
|
|
|
3,697
|
|
|
3,363
|
|
|
2,903
|
|
|
2,836
|
|
|
1,750
|
|
|
1,345
|
|
|
1,429
|
|
||||||||
General and administrative
|
8,388
|
|
|
9,133
|
|
|
9,391
|
|
|
6,348
|
|
|
8,519
|
|
|
5,105
|
|
|
3,496
|
|
|
3,074
|
|
||||||||
Total share-based compensation
|
$
|
33,887
|
|
|
$
|
36,779
|
|
|
$
|
36,922
|
|
|
$
|
31,198
|
|
|
$
|
32,806
|
|
|
$
|
20,793
|
|
|
$
|
15,232
|
|
|
$
|
13,461
|
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
||||||||||||||||
|
(in thousands, except for GPV and per share data)
|
||||||||||||||||||||||||||||||
Key Operating Metrics and non-GAAP Financial Measures
|
(unaudited)
|
||||||||||||||||||||||||||||||
GPV (in millions)
|
$
|
13,694
|
|
|
$
|
13,248
|
|
|
$
|
12,451
|
|
|
$
|
10,290
|
|
|
$
|
10,193
|
|
|
$
|
9,540
|
|
|
$
|
8,793
|
|
|
$
|
7,117
|
|
Adjusted Revenue
|
$
|
191,877
|
|
|
$
|
177,777
|
|
|
$
|
170,809
|
|
|
$
|
146,155
|
|
|
$
|
134,546
|
|
|
$
|
117,849
|
|
|
$
|
110,560
|
|
|
$
|
89,213
|
|
Adjusted EBITDA
|
$
|
29,793
|
|
|
$
|
11,623
|
|
|
$
|
12,554
|
|
|
$
|
(9,083
|
)
|
|
$
|
(6,069
|
)
|
|
$
|
(15,776
|
)
|
|
$
|
859
|
|
|
$
|
(20,129
|
)
|
Adjusted Net Income (Loss)
|
$
|
20,766
|
|
|
$
|
3,677
|
|
|
$
|
5,685
|
|
|
$
|
(15,110
|
)
|
|
$
|
(12,476
|
)
|
|
$
|
(22,467
|
)
|
|
$
|
(5,446
|
)
|
|
$
|
(26,208
|
)
|
Adjusted Net Income (Loss) Per Share Basic
|
$
|
0.06
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.18
|
)
|
Adjusted Net Income (Loss) Per Share Diluted
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.18
|
)
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Adjusted Revenue Reconciliation
|
(unaudited)
|
||||||||||||||||||||||||||||||
Total net revenue
|
$
|
451,917
|
|
|
$
|
439,002
|
|
|
$
|
438,533
|
|
|
$
|
379,269
|
|
|
$
|
374,360
|
|
|
$
|
332,188
|
|
|
$
|
310,013
|
|
|
$
|
250,557
|
|
Less: Starbucks transaction-based revenue
|
34
|
|
|
7,164
|
|
|
32,867
|
|
|
38,838
|
|
|
47,084
|
|
|
32,332
|
|
|
33,630
|
|
|
29,237
|
|
||||||||
Less: Transaction-based costs
|
260,006
|
|
|
254,061
|
|
|
234,857
|
|
|
194,276
|
|
|
192,730
|
|
|
182,007
|
|
|
165,823
|
|
|
132,107
|
|
||||||||
Adjusted Revenue
|
$
|
191,877
|
|
|
$
|
177,777
|
|
|
$
|
170,809
|
|
|
$
|
146,155
|
|
|
$
|
134,546
|
|
|
$
|
117,849
|
|
|
$
|
110,560
|
|
|
$
|
89,213
|
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Adjusted EBITDA Reconciliation
|
(unaudited)
|
||||||||||||||||||||||||||||||
Net loss
|
$
|
(15,167
|
)
|
|
$
|
(32,323
|
)
|
|
$
|
(27,345
|
)
|
|
$
|
(96,755
|
)
|
|
$
|
(48,289
|
)
|
|
$
|
(53,930
|
)
|
|
$
|
(29,620
|
)
|
|
$
|
(47,978
|
)
|
Starbucks transaction-based revenue
|
(34
|
)
|
|
(7,164
|
)
|
|
(32,867
|
)
|
|
(38,838
|
)
|
|
(47,084
|
)
|
|
(32,332
|
)
|
|
(33,630
|
)
|
|
(29,237
|
)
|
||||||||
Starbucks transaction-based costs
|
(49
|
)
|
|
4,528
|
|
|
28,672
|
|
|
36,610
|
|
|
46,896
|
|
|
41,410
|
|
|
40,921
|
|
|
36,211
|
|
||||||||
Share-based compensation expense
|
33,887
|
|
|
36,779
|
|
|
36,922
|
|
|
31,198
|
|
|
32,806
|
|
|
20,793
|
|
|
15,232
|
|
|
13,461
|
|
||||||||
Depreciation and amortization
|
9,928
|
|
|
9,681
|
|
|
9,018
|
|
|
9,118
|
|
|
9,100
|
|
|
6,570
|
|
|
6,410
|
|
|
5,546
|
|
||||||||
Litigation settlement (benefit) expense
|
—
|
|
|
—
|
|
|
(2,000
|
)
|
|
50,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Interest and other (income) expense, net
|
153
|
|
|
111
|
|
|
(327
|
)
|
|
(717
|
)
|
|
(772
|
)
|
|
781
|
|
|
394
|
|
|
1,210
|
|
||||||||
Provision for income taxes
|
1,036
|
|
|
230
|
|
|
312
|
|
|
339
|
|
|
1,244
|
|
|
932
|
|
|
1,152
|
|
|
418
|
|
||||||||
Loss (gain) on sale of property and equipment
|
39
|
|
|
(219
|
)
|
|
169
|
|
|
(38
|
)
|
|
30
|
|
|
—
|
|
|
—
|
|
|
240
|
|
||||||||
Adjusted EBITDA
|
$
|
29,793
|
|
|
$
|
11,623
|
|
|
$
|
12,554
|
|
|
$
|
(9,083
|
)
|
|
$
|
(6,069
|
)
|
|
$
|
(15,776
|
)
|
|
$
|
859
|
|
|
$
|
(20,129
|
)
|
|
Three Months Ended,
|
||||||||||||||||||||||||||||||
|
Dec. 31,
2016 |
|
Sep. 30,
2016 |
|
Jun. 30,
2016 |
|
Mar. 31,
2016 |
|
Dec. 31,
2015 |
|
Sep. 30,
2015 |
|
Jun. 30,
2015 |
|
Mar. 31,
2015 |
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Adjusted Net Income (Loss) Reconciliation
|
(unaudited)
|
||||||||||||||||||||||||||||||
Net loss
|
$
|
(15,167
|
)
|
|
$
|
(32,323
|
)
|
|
$
|
(27,345
|
)
|
|
$
|
(96,755
|
)
|
|
$
|
(48,289
|
)
|
|
$
|
(53,930
|
)
|
|
$
|
(29,620
|
)
|
|
$
|
(47,978
|
)
|
Starbucks transaction-based revenue
|
(34
|
)
|
|
(7,164
|
)
|
|
(32,867
|
)
|
|
(38,838
|
)
|
|
(47,084
|
)
|
|
(32,332
|
)
|
|
(33,630
|
)
|
|
(29,237
|
)
|
||||||||
Starbucks transaction-based costs
|
(49
|
)
|
|
4,528
|
|
|
28,672
|
|
|
36,610
|
|
|
46,896
|
|
|
41,410
|
|
|
40,921
|
|
|
36,211
|
|
||||||||
Share-based compensation expense
|
33,887
|
|
|
36,779
|
|
|
36,922
|
|
|
31,198
|
|
|
32,806
|
|
|
20,793
|
|
|
15,232
|
|
|
13,461
|
|
||||||||
Amortization of intangible assets
|
2,090
|
|
|
2,076
|
|
|
2,134
|
|
|
2,713
|
|
|
3,165
|
|
|
1,592
|
|
|
1,651
|
|
|
1,095
|
|
||||||||
Litigation settlement (benefit) expense
|
—
|
|
|
—
|
|
|
(2,000
|
)
|
|
50,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Loss (gain) on sale of property and equipment
|
$
|
39
|
|
|
$
|
(219
|
)
|
|
$
|
169
|
|
|
$
|
(38
|
)
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
240
|
|
Adjusted Net Income (Loss)
|
$
|
20,766
|
|
|
$
|
3,677
|
|
|
$
|
5,685
|
|
|
$
|
(15,110
|
)
|
|
$
|
(12,476
|
)
|
|
$
|
(22,467
|
)
|
|
$
|
(5,446
|
)
|
|
$
|
(26,208
|
)
|
Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
0.06
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.18
|
)
|
Diluted
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.18
|
)
|
Weighted-average shares used to compute Adjusted Net Income (Loss) Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
356,343
|
|
|
343,893
|
|
|
334,488
|
|
|
331,324
|
|
|
234,548
|
|
|
152,334
|
|
|
149,253
|
|
|
145,069
|
|
||||||||
Diluted
|
382,531
|
|
|
370,746
|
|
|
365,731
|
|
|
331,324
|
|
|
234,548
|
|
|
152,334
|
|
|
149,253
|
|
|
145,069
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash and cash equivalents
|
$
|
452,030
|
|
|
$
|
461,329
|
|
|
$
|
222,315
|
|
Short-term investments
|
59,901
|
|
|
—
|
|
|
—
|
|
|||
Long-term investments
|
27,366
|
|
|
—
|
|
|
—
|
|
|||
Short-term restricted cash
|
22,131
|
|
|
13,537
|
|
|
11,950
|
|
|||
Long-term restricted cash
|
14,584
|
|
|
14,686
|
|
|
14,394
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash (used in) provided by operating activities
|
$
|
23,131
|
|
|
$
|
21,123
|
|
|
$
|
(112,379
|
)
|
Net cash used in investing activities:
|
(122,733
|
)
|
|
(45,096
|
)
|
|
(24,554
|
)
|
|||
Net cash provided by financing activities
|
90,741
|
|
|
264,763
|
|
|
194,152
|
|
|||
Effect of foreign exchange rate on cash and cash equivalents
|
(438
|
)
|
|
(1,776
|
)
|
|
(1,080
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
(9,299
|
)
|
|
$
|
239,014
|
|
|
$
|
56,139
|
|
•
|
Timing of period end.
For periods that end on a weekend or a bank holiday, our cash and cash equivalents, settlements receivable, and customers payable amounts typically will be more than for periods ending on a weekday, as we settle to our sellers for payment processing activity on business days; and
|
•
|
Fluctuations in daily GPV.
When daily GPV increases, our cash and cash equivalents, settlements receivable, and customers payable amounts increase. Typically our cash, cash equivalents, settlements receivable, and customers payable balances at period end represent one to 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.
|
|
Payments due by period
|
||||||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating leases
|
116,703
|
|
|
16,639
|
|
|
32,192
|
|
|
31,929
|
|
|
35,943
|
|
|||||
Capital leases
|
1,882
|
|
|
694
|
|
|
1,187
|
|
|
1
|
|
|
—
|
|
|||||
Purchase commitments
|
18,077
|
|
|
18,077
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
136,662
|
|
|
$
|
35,410
|
|
|
$
|
33,379
|
|
|
$
|
31,930
|
|
|
$
|
35,943
|
|
Page No
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
452,030
|
|
|
$
|
461,329
|
|
Short-term investments
|
59,901
|
|
|
—
|
|
||
Restricted cash
|
22,131
|
|
|
13,537
|
|
||
Settlements receivable
|
321,102
|
|
|
142,727
|
|
||
Customer funds held
|
43,574
|
|
|
9,446
|
|
||
Loans held for sale
|
42,144
|
|
|
604
|
|
||
Merchant cash advance receivable, net
|
4,212
|
|
|
36,473
|
|
||
Other current assets
|
56,331
|
|
|
41,447
|
|
||
Total current assets
|
1,001,425
|
|
|
705,563
|
|
||
Property and equipment, net
|
88,328
|
|
|
87,222
|
|
||
Goodwill
|
57,173
|
|
|
56,699
|
|
||
Acquired intangible assets, net
|
19,292
|
|
|
26,776
|
|
||
Long-term investments
|
27,366
|
|
|
—
|
|
||
Restricted cash
|
14,584
|
|
|
14,686
|
|
||
Other assets
|
3,194
|
|
|
3,826
|
|
||
Total assets
|
$
|
1,211,362
|
|
|
$
|
894,772
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
12,602
|
|
|
$
|
18,869
|
|
Customers payable
|
388,058
|
|
|
215,365
|
|
||
Customer funds obligation
|
43,574
|
|
|
9,446
|
|
||
Accrued transaction losses
|
20,064
|
|
|
17,176
|
|
||
Accrued expenses
|
39,543
|
|
|
44,401
|
|
||
Other current liabilities
|
73,623
|
|
|
28,945
|
|
||
Total current liabilities
|
577,464
|
|
|
334,202
|
|
||
Debt (Note 11)
|
—
|
|
|
—
|
|
||
Other liabilities
|
57,745
|
|
|
52,522
|
|
||
Total liabilities
|
635,209
|
|
|
386,724
|
|
||
Commitments and contingencies (Note 16)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.0000001 par value: 100,000,000 shares authorized at December 31, 2016 and December 31, 2015. None issued and outstanding at December 31, 2016 and December 31, 2015.
|
—
|
|
|
—
|
|
||
Class A common stock, $0.0000001 par value: 1,000,000,000 shares authorized at December 31, 2016 and December 31, 2015; 198,746,620 and 31,717,133 issued and outstanding at December 31, 2016 and December 31, 2015, respectively.
|
—
|
|
|
—
|
|
||
Class B common stock, $0.0000001 par value: 500,000,000 shares authorized at December 31, 2016 and December 31, 2015; 165,800,756 and 303,232,312 issued and outstanding at December 31, 2016 and December 31, 2015, respectively.
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,357,381
|
|
|
1,116,882
|
|
||
Accumulated other comprehensive loss
|
(1,989
|
)
|
|
(1,185
|
)
|
||
Accumulated deficit
|
(779,239
|
)
|
|
(607,649
|
)
|
||
Total stockholders’ equity
|
576,153
|
|
|
508,048
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,211,362
|
|
|
$
|
894,772
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Transaction-based revenue
|
$
|
1,456,160
|
|
|
$
|
1,050,445
|
|
|
$
|
707,799
|
|
Starbucks transaction-based revenue
|
78,903
|
|
|
142,283
|
|
|
123,024
|
|
|||
Subscription and services-based revenue
|
129,351
|
|
|
58,013
|
|
|
12,046
|
|
|||
Hardware revenue
|
44,307
|
|
|
16,377
|
|
|
7,323
|
|
|||
Total net revenue
|
1,708,721
|
|
|
1,267,118
|
|
|
850,192
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Transaction-based costs
|
943,200
|
|
|
672,667
|
|
|
450,858
|
|
|||
Starbucks transaction-based costs
|
69,761
|
|
|
165,438
|
|
|
150,955
|
|
|||
Subscription and services-based costs
|
43,132
|
|
|
22,470
|
|
|
2,973
|
|
|||
Hardware costs
|
68,562
|
|
|
30,874
|
|
|
18,330
|
|
|||
Amortization of acquired technology
|
8,028
|
|
|
5,639
|
|
|
1,002
|
|
|||
Total cost of revenue
|
1,132,683
|
|
|
897,088
|
|
|
624,118
|
|
|||
Gross profit
|
576,038
|
|
|
370,030
|
|
|
226,074
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Product development
|
268,537
|
|
|
199,638
|
|
|
144,637
|
|
|||
Sales and marketing
|
173,876
|
|
|
145,618
|
|
|
112,577
|
|
|||
General and administrative
|
251,993
|
|
|
143,466
|
|
|
94,220
|
|
|||
Transaction, loan and advance losses
|
51,235
|
|
|
54,009
|
|
|
24,081
|
|
|||
Amortization of acquired customer assets
|
850
|
|
|
1,757
|
|
|
1,050
|
|
|||
Total operating expenses
|
746,491
|
|
|
544,488
|
|
|
376,565
|
|
|||
Operating loss
|
(170,453
|
)
|
|
(174,458
|
)
|
|
(150,491
|
)
|
|||
Interest and other (income) expense, net
|
(780
|
)
|
|
1,613
|
|
|
2,162
|
|
|||
Loss before income tax
|
(169,673
|
)
|
|
(176,071
|
)
|
|
(152,653
|
)
|
|||
Provision for income taxes
|
1,917
|
|
|
3,746
|
|
|
1,440
|
|
|||
Net loss
|
(171,590
|
)
|
|
(179,817
|
)
|
|
(154,093
|
)
|
|||
Deemed dividend on Series E preferred stock
|
—
|
|
|
(32,200
|
)
|
|
—
|
|
|||
Net loss attributable to common stockholders
|
$
|
(171,590
|
)
|
|
$
|
(212,017
|
)
|
|
$
|
(154,093
|
)
|
Net loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
|
$
|
(1.08
|
)
|
Diluted
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
|
$
|
(1.08
|
)
|
Weighted-average shares used to compute net loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
341,555
|
|
|
170,498
|
|
|
142,042
|
|
|||
Diluted
|
341,555
|
|
|
170,498
|
|
|
142,042
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss
|
$
|
(171,590
|
)
|
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
Net foreign currency translation adjustments
|
(716
|
)
|
|
(356
|
)
|
|
(114
|
)
|
|||
Net unrealized loss on revaluation of intercompany loans
|
(11
|
)
|
|
(22
|
)
|
|
—
|
|
|||
Net unrealized loss on marketable securities
|
(77
|
)
|
|
—
|
|
|
—
|
|
|||
Total comprehensive loss
|
$
|
(172,394
|
)
|
|
$
|
(180,195
|
)
|
|
$
|
(154,207
|
)
|
|
|
Convertible preferred stock
|
|
Class A and B common stock
|
|
Additional paid-in
|
|
Accumulated other comprehensive
|
|
Accumulated
|
|
Total stockholders’
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
capital
|
|
loss
|
|
deficit
|
|
equity
|
||||||||||||||
Balance at December 31, 2013
|
134,528,520
|
|
|
$
|
366,197
|
|
|
138,017,900
|
|
|
$
|
—
|
|
|
$
|
38,329
|
|
|
$
|
(693
|
)
|
|
$
|
(241,539
|
)
|
|
$
|
162,294
|
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(154,093
|
)
|
|
(154,093
|
)
|
||||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
9,403,147
|
|
|
—
|
|
|
8,685
|
|
|
—
|
|
|
—
|
|
|
8,685
|
|
||||||
|
Issuance of common stock in connection with business combinations
|
—
|
|
|
—
|
|
|
8,384,156
|
|
|
—
|
|
|
59,576
|
|
|
—
|
|
|
—
|
|
|
59,576
|
|
||||||
|
Issuance of common stock
|
—
|
|
|
—
|
|
|
24,220
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Series E preferred stock financing
|
9,700,289
|
|
|
148,748
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
148,748
|
|
||||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,128
|
|
|
—
|
|
|
—
|
|
|
11,128
|
|
|||||||
Contribution of preferred stock
|
(8,976,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(1,225,740
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(114
|
)
|
|
—
|
|
|
(114
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,100
|
|
|
—
|
|
|
—
|
|
|
36,100
|
|
|||||||
Tax benefit from share-based award activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,348
|
|
|
—
|
|
|
—
|
|
|
1,348
|
|
|||||||
Balance at December 31, 2014
|
135,252,809
|
|
|
$
|
514,945
|
|
|
154,603,683
|
|
|
$
|
—
|
|
|
$
|
155,166
|
|
|
$
|
(807
|
)
|
|
$
|
(395,632
|
)
|
|
$
|
273,672
|
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(179,817
|
)
|
|
(179,817
|
)
|
||||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Issuance of common stock upon initial public offering, net of issuance costs
|
—
|
|
|
—
|
|
|
29,700,000
|
|
|
|
|
|
245,726
|
|
|
—
|
|
|
—
|
|
|
245,726
|
|
||||||
|
Series E preferred stock financing
|
1,940,058
|
|
|
29,952
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,952
|
|
||||||
|
Conversion of Series A, B, C, D & E preferred stock upon initial public offering to common stock
|
(137,192,867
|
)
|
|
(544,897
|
)
|
|
137,192,867
|
|
|
|
|
544,897
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
Deemed dividend on Series E preferred stock
|
—
|
|
|
—
|
|
|
10,299,696
|
|
|
—
|
|
|
32,200
|
|
|
—
|
|
|
(32,200
|
)
|
|
—
|
|
||||||
|
Exercise of stock options
|
—
|
|
|
—
|
|
|
5,544,785
|
|
|
—
|
|
|
14,766
|
|
|
—
|
|
|
—
|
|
|
14,766
|
|
||||||
|
Issuance of common stock related to acquisitions
|
—
|
|
|
—
|
|
|
3,591,014
|
|
|
—
|
|
|
35,776
|
|
|
—
|
|
|
—
|
|
|
35,776
|
|
||||||
|
Issuance of common stock
|
—
|
|
|
—
|
|
|
3,777
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,958
|
|
|
—
|
|
|
—
|
|
|
4,958
|
|
|||||||
Contribution of common stock
|
—
|
|
|
—
|
|
|
(5,068,238
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(918,139
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(378
|
)
|
|
—
|
|
|
(378
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
82,292
|
|
|
—
|
|
|
—
|
|
|
82,292
|
|
|||||||
Tax benefit from share-based award activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,101
|
|
|
—
|
|
|
—
|
|
|
1,101
|
|
|||||||
Balance at December 31, 2015
|
—
|
|
|
$
|
—
|
|
|
334,949,445
|
|
|
$
|
—
|
|
|
$
|
1,116,882
|
|
|
$
|
(1,185
|
)
|
|
$
|
(607,649
|
)
|
|
$
|
508,048
|
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(171,590
|
)
|
|
(171,590
|
)
|
||||||
Shares issued in connection with:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock
|
|
Class A and B common stock
|
|
Additional paid-in
|
|
Accumulated other comprehensive
|
|
Accumulated
|
|
Total stockholders’
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
capital
|
|
loss
|
|
deficit
|
|
equity
|
||||||||||||||
|
Exercise of stock options and warrants
|
—
|
|
|
—
|
|
|
24,413,821
|
|
|
—
|
|
|
82,438
|
|
|
—
|
|
|
—
|
|
|
82,438
|
|
||||||
|
Purchases under employee stock purchase plan
|
—
|
|
|
—
|
|
|
1,852,900
|
|
|
—
|
|
|
14,201
|
|
|
—
|
|
|
—
|
|
|
14,201
|
|
||||||
|
Vesting of RSUs
|
—
|
|
|
—
|
|
|
3,392,726
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Vesting of early exercised stock options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,313
|
|
|
—
|
|
|
—
|
|
|
2,313
|
|
|||||||
Cancellation of shares related to business combinations
|
—
|
|
|
—
|
|
|
(228
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(61,288
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Change in other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(804
|
)
|
|
—
|
|
|
(804
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141,547
|
|
|
—
|
|
|
—
|
|
|
141,547
|
|
|||||||
Balance at December 31, 2016
|
—
|
|
|
$
|
—
|
|
|
364,547,376
|
|
|
$
|
—
|
|
|
$
|
1,357,381
|
|
|
$
|
(1,989
|
)
|
|
$
|
(779,239
|
)
|
|
$
|
576,153
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(171,590
|
)
|
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
37,745
|
|
|
27,626
|
|
|
18,586
|
|
|||
Share-based compensation
|
138,786
|
|
|
82,292
|
|
|
36,100
|
|
|||
Excess tax benefit from share-based payment activity
|
—
|
|
|
(1,101
|
)
|
|
(1,348
|
)
|
|||
Provision for transaction losses
|
50,819
|
|
|
43,379
|
|
|
18,478
|
|
|||
Provision for uncollectible receivables related to merchant cash advances
|
1,159
|
|
|
6,240
|
|
|
2,431
|
|
|||
Deferred provision for income taxes
|
58
|
|
|
26
|
|
|
(2,664
|
)
|
|||
(Gain) loss on disposal of property and equipment
|
(49
|
)
|
|
270
|
|
|
133
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Settlements receivable
|
(178,405
|
)
|
|
(27,420
|
)
|
|
(50,361
|
)
|
|||
Customer funds held
|
(34,128
|
)
|
|
(6,462
|
)
|
|
(2,985
|
)
|
|||
Purchase of loans held for sale
|
(668,976
|
)
|
|
(816
|
)
|
|
—
|
|
|||
Proceeds from sales and principal payments of loans held for sale
|
627,627
|
|
|
21
|
|
|
—
|
|
|||
Merchant cash advance receivable
|
31,102
|
|
|
(13,411
|
)
|
|
(31,733
|
)
|
|||
Other current assets
|
(14,986
|
)
|
|
(12,430
|
)
|
|
(14,323
|
)
|
|||
Other assets
|
631
|
|
|
1,220
|
|
|
(636
|
)
|
|||
Accounts payable
|
(2,147
|
)
|
|
7,831
|
|
|
179
|
|
|||
Customers payable
|
172,446
|
|
|
69,547
|
|
|
49,971
|
|
|||
Customer funds obligation
|
34,128
|
|
|
6,462
|
|
|
2,985
|
|
|||
Charge-offs and recoveries to accrued transaction losses
|
(47,931
|
)
|
|
(34,655
|
)
|
|
(17,514
|
)
|
|||
Accrued expenses
|
(409
|
)
|
|
21,450
|
|
|
8,113
|
|
|||
Other current liabilities
|
44,102
|
|
|
19,760
|
|
|
3,007
|
|
|||
Other liabilities
|
3,149
|
|
|
11,111
|
|
|
23,295
|
|
|||
Net cash (used in) provided by operating activities
|
23,131
|
|
|
21,123
|
|
|
(112,379
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchase of marketable securities
|
(164,766
|
)
|
|
—
|
|
|
—
|
|
|||
Maturities of marketable securities
|
43,200
|
|
|
—
|
|
|
—
|
|
|||
Sales of marketable securities
|
34,222
|
|
|
—
|
|
|
—
|
|
|||
Purchase of property and equipment
|
(25,433
|
)
|
|
(37,432
|
)
|
|
(28,794
|
)
|
|||
Proceeds from sale of property and equipment
|
296
|
|
|
—
|
|
|
—
|
|
|||
Payment for acquisition of intangible assets
|
(400
|
)
|
|
(1,286
|
)
|
|
(400
|
)
|
|||
Increases in restricted cash
|
(8,492
|
)
|
|
(1,878
|
)
|
|
(7,075
|
)
|
|||
Business acquisitions (net of cash acquired)
|
(1,360
|
)
|
|
(4,500
|
)
|
|
11,715
|
|
|||
Net cash used in investing activities:
|
(122,733
|
)
|
|
(45,096
|
)
|
|
(24,554
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of preferred stock, net
|
—
|
|
|
29,952
|
|
|
148,748
|
|
|||
Proceeds from issuance of common stock upon initial public offering, net of offering costs
|
—
|
|
|
251,257
|
|
|
—
|
|
|||
Payments of offering costs related to initial public offering
|
(5,530
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from debt
|
—
|
|
|
—
|
|
|
30,000
|
|
|||
Principal payments on debt
|
—
|
|
|
(30,000
|
)
|
|
—
|
|
|||
Payments of debt issuance costs
|
—
|
|
|
(1,387
|
)
|
|
—
|
|
|||
Principal payments on capital lease obligation
|
(168
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuances of common stock from the exercise of options and employee stock purchase plan
|
96,439
|
|
|
13,840
|
|
|
14,056
|
|
|||
Excess tax benefit from share-based payment award
|
—
|
|
|
1,101
|
|
|
1,348
|
|
|||
Net cash provided by financing activities
|
90,741
|
|
|
264,763
|
|
|
194,152
|
|
|||
Effect of foreign exchange rate on cash and cash equivalents
|
(438
|
)
|
|
(1,776
|
)
|
|
(1,080
|
)
|
Net increase (decrease) in cash and cash equivalents
|
(9,299
|
)
|
|
239,014
|
|
|
56,139
|
|
|||
Cash and cash equivalents, beginning of the year
|
461,329
|
|
|
222,315
|
|
|
166,176
|
|
|||
Cash and cash equivalents, end of the year
|
$
|
452,030
|
|
|
$
|
461,329
|
|
|
$
|
222,315
|
|
•
|
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
|
•
|
Level 2 Inputs: Other than quoted prices included in Level 1 Inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
|
•
|
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
|
Property and Equipment
|
|
Useful Life
|
Capitalized software
|
|
18 months
|
Computer and data center equipment
|
|
Three years
|
Furniture and fixtures
|
|
Seven years
|
Leasehold improvements
|
|
Lesser of estimated useful life or remaining lease term
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
207,168
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
337,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
—
|
|
|
7,496
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Short-term securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency securities
|
—
|
|
|
9,055
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate bonds
|
—
|
|
|
6,980
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Commercial paper
|
—
|
|
|
17,298
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
8,028
|
|
|
—
|
|
|
|
|
|
|
|
|||||||||
U.S. government securities
|
18,540
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Long-term securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency securities
|
—
|
|
|
3,502
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate bonds
|
—
|
|
|
12,914
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Municipal securities
|
—
|
|
|
2,492
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
U.S. government securities
|
8,458
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
234,166
|
|
|
$
|
68,765
|
|
|
$
|
—
|
|
|
$
|
337,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31, 2016
|
||||||
|
Carrying Value
|
|
Fair Value (Level 3)
|
||||
Loans held for sale
|
$
|
42,144
|
|
|
$
|
42,633
|
|
Total
|
$
|
42,144
|
|
|
$
|
42,633
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Short-term securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
9,048
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
9,055
|
|
Corporate bonds
|
17,318
|
|
|
—
|
|
|
(20
|
)
|
|
17,298
|
|
||||
Commercial paper
|
6,980
|
|
|
—
|
|
|
—
|
|
|
6,980
|
|
||||
Municipal securities
|
8,037
|
|
|
—
|
|
|
(9
|
)
|
|
8,028
|
|
||||
U.S. government securities
|
18,537
|
|
|
3
|
|
|
—
|
|
|
18,540
|
|
||||
Total
|
$
|
59,920
|
|
|
$
|
10
|
|
|
$
|
(29
|
)
|
|
$
|
59,901
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term securities:
|
|
|
|
|
|
|
|
||||||||
U.S. agency securities
|
$
|
3,502
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,502
|
|
Corporate bonds
|
12,939
|
|
|
—
|
|
|
(25
|
)
|
|
12,914
|
|
||||
Municipal securities
|
2,505
|
|
|
—
|
|
|
(13
|
)
|
|
2,492
|
|
||||
U.S. government securities
|
8,478
|
|
|
—
|
|
|
(20
|
)
|
|
8,458
|
|
||||
Total
|
$
|
27,424
|
|
|
$
|
—
|
|
|
$
|
(58
|
)
|
|
$
|
27,366
|
|
|
Amortized Cost
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
59,920
|
|
|
$
|
59,901
|
|
Due in one to five years
|
27,424
|
|
|
27,366
|
|
||
Total
|
$
|
87,344
|
|
|
$
|
87,267
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||
|
2016
|
|
2015
|
||||
Allowance for uncollectible MCA receivables, beginning of the period
|
$
|
7,443
|
|
|
$
|
2,431
|
|
Provision for uncollectible MCA receivables
|
1,159
|
|
|
6,240
|
|
||
MCA receivables charged off
|
(4,039
|
)
|
|
(1,228
|
)
|
||
Allowance for uncollectible MCA receivables, end of the period
|
$
|
4,563
|
|
|
$
|
7,443
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Computer equipment
|
$
|
52,915
|
|
|
$
|
43,531
|
|
Office furniture and equipment
|
10,737
|
|
|
9,339
|
|
||
Leasehold improvements
|
73,366
|
|
|
65,298
|
|
||
Capitalized software
|
24,642
|
|
|
14,533
|
|
||
Construction in process
|
—
|
|
|
490
|
|
||
Total
|
161,660
|
|
|
133,191
|
|
||
Less: Accumulated depreciation and amortization
|
(73,332
|
)
|
|
(45,969
|
)
|
||
Property and equipment, net
|
$
|
88,328
|
|
|
$
|
87,222
|
|
Balance at December 31, 2014
|
40,267
|
|
|
Acquisitions completed during the year ended December 31, 2015
|
$
|
16,432
|
|
Balance at December 31, 2015
|
$
|
56,699
|
|
Acquisitions completed during the year ended December 31, 2016
|
$
|
474
|
|
Balance at December 31, 2016
|
$
|
57,173
|
|
|
Balance at December 31, 2016
|
||||||||||
Cost
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Patents
|
$
|
1,285
|
|
|
$
|
(454
|
)
|
|
$
|
831
|
|
Technology Assets
|
29,075
|
|
|
(14,702
|
)
|
|
14,373
|
|
|||
Customer Assets
|
7,745
|
|
|
(3,657
|
)
|
|
4,088
|
|
|||
Total
|
$
|
38,105
|
|
|
$
|
(18,813
|
)
|
|
$
|
19,292
|
|
|
Balance at December 31, 2015
|
||||||||||
Cost
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Patents
|
$
|
1,285
|
|
|
$
|
(348
|
)
|
|
$
|
937
|
|
Technology Assets
|
28,645
|
|
|
(6,644
|
)
|
|
22,001
|
|
|||
Customer Assets
|
6,645
|
|
|
(2,807
|
)
|
|
3,838
|
|
|||
Total
|
$
|
36,575
|
|
|
$
|
(9,799
|
)
|
|
$
|
26,776
|
|
2017
|
|
$
|
7,380
|
|
2018
|
|
5,881
|
|
|
2019
|
|
3,097
|
|
|
2020
|
|
1,140
|
|
|
2021
|
|
696
|
|
|
Thereafter
|
1,098
|
|
||
Total
|
$
|
19,292
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Inventory
|
$
|
13,724
|
|
|
$
|
11,864
|
|
Accounts receivable
|
6,191
|
|
|
4,808
|
|
||
Prepaid expenses
|
7,365
|
|
|
7,101
|
|
||
Deferred magstripe reader costs
|
3,911
|
|
|
4,018
|
|
||
Tenant improvement reimbursement receivable
|
1,189
|
|
|
1,788
|
|
||
Deferred hardware costs
|
4,546
|
|
|
1,709
|
|
||
Processing costs receivable
|
8,593
|
|
|
7,847
|
|
||
Other
|
10,812
|
|
|
2,312
|
|
||
Total
|
$
|
56,331
|
|
|
$
|
41,447
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Accrued hardware costs
|
$
|
3,148
|
|
|
$
|
11,622
|
|
Processing costs payable
|
9,655
|
|
|
11,417
|
|
||
Accrued professional fees
|
5,788
|
|
|
7,642
|
|
||
Accrued payroll
|
5,799
|
|
|
2,660
|
|
||
Accrued marketing
|
3,972
|
|
|
2,443
|
|
||
Other accrued liabilities
|
11,181
|
|
|
8,617
|
|
||
Total
|
$
|
39,543
|
|
|
$
|
44,401
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Settlements payable
|
$
|
51,151
|
|
|
$
|
13,105
|
|
Employee early exercised stock options
|
674
|
|
|
2,141
|
|
||
Accrued redemptions
|
1,628
|
|
|
1,066
|
|
||
Current portion of deferred rent
|
2,862
|
|
|
2,393
|
|
||
Deferred revenue
|
5,407
|
|
|
6,623
|
|
||
Other
|
11,901
|
|
|
3,617
|
|
||
Total
|
$
|
73,623
|
|
|
$
|
28,945
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Deposits
|
$
|
1,775
|
|
|
$
|
1,993
|
|
Deferred tax assets
|
306
|
|
|
188
|
|
||
Other
|
1,113
|
|
|
1,645
|
|
||
Total
|
$
|
3,194
|
|
|
$
|
3,826
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Deferred rent
|
$
|
23,119
|
|
|
$
|
25,543
|
|
Employee early exercised stock options
|
66
|
|
|
1,128
|
|
||
Deferred tax liabilities
|
476
|
|
|
299
|
|
||
Statutory liabilities
|
29,497
|
|
|
25,492
|
|
||
Other
|
4,587
|
|
|
60
|
|
||
Total
|
$
|
57,745
|
|
|
$
|
52,522
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Accrued transaction losses, beginning of the year
|
$
|
17,176
|
|
|
$
|
8,452
|
|
|
$
|
7,488
|
|
Provision for transaction losses
|
50,819
|
|
|
43,379
|
|
|
18,478
|
|
|||
Charge-offs and recoveries to accrued transaction losses
|
(47,931
|
)
|
|
(34,655
|
)
|
|
(17,514
|
)
|
|||
Accrued transaction losses, end of the year
|
$
|
20,064
|
|
|
$
|
17,176
|
|
|
$
|
8,452
|
|
|
Year Ended December 31,
|
||||||||||
2016
|
|
2015
|
|
2014
|
|||||||
Domestic
|
$
|
(145,499
|
)
|
|
$
|
(157,229
|
)
|
|
$
|
(139,675
|
)
|
Foreign
|
(24,174
|
)
|
|
(18,842
|
)
|
|
(12,978
|
)
|
|||
Loss before income taxes
|
$
|
(169,673
|
)
|
|
$
|
(176,071
|
)
|
|
$
|
(152,653
|
)
|
|
Year Ended December 31,
|
||||||||||
2016
|
|
2015
|
|
2014
|
|||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
63
|
|
|
$
|
1,662
|
|
|
$
|
2,746
|
|
State
|
527
|
|
|
836
|
|
|
531
|
|
|||
Foreign
|
1,269
|
|
|
1,222
|
|
|
827
|
|
|||
Total current provision for income taxes
|
1,859
|
|
|
3,720
|
|
|
4,104
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
173
|
|
|
67
|
|
|
(2,503
|
)
|
|||
State
|
18
|
|
|
11
|
|
|
(161
|
)
|
|||
Foreign
|
(133
|
)
|
|
(52
|
)
|
|
—
|
|
|||
Total deferred provision for income taxes
|
58
|
|
|
26
|
|
|
(2,664
|
)
|
|||
Total provision for income taxes
|
$
|
1,917
|
|
|
$
|
3,746
|
|
|
$
|
1,440
|
|
|
Balance at December 31,
|
||||||||||
2016
|
|
2015
|
|
2014
|
|||||||
Deferred tax assets:
|
|
|
|
|
|
||||||
Capitalized costs
|
$
|
61,897
|
|
|
$
|
67,051
|
|
|
$
|
28,102
|
|
Accrued expenses
|
29,421
|
|
|
27,964
|
|
|
19,714
|
|
|||
Net operating loss carryforwards
|
65,507
|
|
|
36,633
|
|
|
54,528
|
|
|||
Tax credit carryforwards
|
38,927
|
|
|
25,349
|
|
|
11,662
|
|
|||
Property, equipment and intangible assets
|
5,721
|
|
|
—
|
|
|
—
|
|
|||
Share-based compensation
|
52,091
|
|
|
36,689
|
|
|
13,153
|
|
|||
Other
|
1,640
|
|
|
1,469
|
|
|
542
|
|
|||
Total deferred tax assets
|
255,204
|
|
|
195,155
|
|
|
127,701
|
|
|||
Valuation allowance
|
(254,898
|
)
|
|
(195,103
|
)
|
|
(125,368
|
)
|
|||
Total deferred tax assets, net of valuation allowance
|
306
|
|
|
52
|
|
|
2,333
|
|
|||
Deferred tax liabilities:
|
|
|
|
|
|
||||||
Property, equipment and intangible assets
|
(476
|
)
|
|
(163
|
)
|
|
(2,333
|
)
|
|||
Total deferred tax liabilities
|
(476
|
)
|
|
(163
|
)
|
|
(2,333
|
)
|
|||
Net deferred tax liabilities
|
$
|
(170
|
)
|
|
$
|
(111
|
)
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||||||||
2016
|
|
2015
|
|
2014
|
|||||||
Balance at the beginning of the year
|
$
|
90,372
|
|
|
$
|
78,031
|
|
|
$
|
14,152
|
|
Gross increases and decreases related to prior period tax positions
|
5,190
|
|
|
—
|
|
|
26,690
|
|
|||
Gross increases and decreases related to current period tax positions
|
(3,428
|
)
|
|
12,341
|
|
|
37,189
|
|
|||
Balance at the end of the year
|
$
|
92,134
|
|
|
$
|
90,372
|
|
|
$
|
78,031
|
|
|
Number of stock options outstanding
|
|
Weighted
average exercise price |
|
Weighted
average remaining contractual term (in years) |
|
Aggregate
intrinsic value |
|||||
Balance at December 31, 2015
|
107,515,554
|
|
|
$
|
6.99
|
|
|
7.87
|
|
$
|
656,194
|
|
Granted
|
1,767,320
|
|
|
13.49
|
|
|
|
|
|
|||
Exercised
|
(24,328,414
|
)
|
|
3.39
|
|
|
|
|
|
|||
Forfeited and canceled
|
(11,692,898
|
)
|
|
10.98
|
|
|
|
|
|
|||
Balance at December 31, 2016
|
73,261,562
|
|
|
$
|
7.70
|
|
|
7.28
|
|
$
|
443,711
|
|
Options vested and expected to vest at
|
|
|
|
|
|
|
|
|||||
December 31, 2016
|
69,467,073
|
|
|
$
|
7.51
|
|
|
6.95
|
|
$
|
433,756
|
|
Options exercisable at
|
|
|
|
|
|
|
|
|||||
December 31, 2016
|
69,936,089
|
|
|
$
|
7.54
|
|
|
7.19
|
|
$
|
434,962
|
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Fair value of common stock
|
$8.37 - $15.48
|
|
|
$10.06 - $15.39
|
|
|
$7.25 - $10.06
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Risk-free interest rate
|
1.54
|
%
|
|
1.73
|
%
|
|
1.85
|
%
|
Expected volatility
|
42.74
|
%
|
|
47.68
|
%
|
|
46.95
|
%
|
Expected term (years)
|
6.08
|
|
|
6.02
|
|
|
6.06
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Product development
|
$
|
91,404
|
|
|
$
|
54,738
|
|
|
$
|
24,758
|
|
Sales and marketing
|
14,122
|
|
|
7,360
|
|
|
3,738
|
|
|||
General and administrative
|
33,260
|
|
|
20,194
|
|
|
7,604
|
|
|||
Total
|
$
|
138,786
|
|
|
$
|
82,292
|
|
|
$
|
36,100
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss
|
$
|
(171,590
|
)
|
|
$
|
(179,817
|
)
|
|
$
|
(154,093
|
)
|
Deemed dividend on Series E preferred stock
|
—
|
|
|
(32,200
|
)
|
|
—
|
|
|||
Net loss attributable to common stockholders
|
$
|
(171,590
|
)
|
|
$
|
(212,017
|
)
|
|
$
|
(154,093
|
)
|
Basic shares:
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding
|
344,393
|
|
|
175,139
|
|
|
148,876
|
|
|||
Weighted-average unvested shares
|
(2,838
|
)
|
|
(4,641
|
)
|
|
(6,834
|
)
|
|||
Weighted-average shares used to compute basic net loss per share
|
341,555
|
|
|
170,498
|
|
|
142,042
|
|
|||
Diluted shares:
|
|
|
|
|
|
||||||
Weighted-average shares used to compute diluted net loss per share
|
341,555
|
|
|
170,498
|
|
|
142,042
|
|
|||
|
|
|
|
|
|
||||||
Loss per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
|
$
|
(1.08
|
)
|
Diluted
|
$
|
(0.50
|
)
|
|
$
|
(1.24
|
)
|
|
$
|
(1.08
|
)
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Stock options and restricted stock units
|
88,705
|
|
|
111,148
|
|
|
87,471
|
|
Common stock warrants
|
9,457
|
|
|
9,544
|
|
|
15,762
|
|
Preferred stock warrants
|
—
|
|
|
—
|
|
|
87
|
|
Convertible preferred stock
|
—
|
|
|
—
|
|
|
135,253
|
|
Unvested shares
|
1,892
|
|
|
3,420
|
|
|
6,443
|
|
Employee stock purchase plan
|
216
|
|
|
172
|
|
|
—
|
|
Total anti-dilutive securities
|
100,270
|
|
|
124,284
|
|
|
245,016
|
|
|
Capital
|
|
Operating
|
||||
Year:
|
|
|
|
||||
2017
|
$
|
694
|
|
|
$
|
16,639
|
|
2018
|
651
|
|
|
16,519
|
|
||
2019
|
536
|
|
|
15,673
|
|
||
2020
|
1
|
|
|
15,757
|
|
||
2021
|
—
|
|
|
16,172
|
|
||
Thereafter
|
—
|
|
|
35,943
|
|
||
Total
|
$
|
1,882
|
|
|
$
|
116,703
|
|
Less amount representing interest
|
(4
|
)
|
|
|
|||
Present value of capital lease obligations
|
1,878
|
|
|
|
|||
Less current portion of capital lease obligation
|
(691
|
)
|
|
|
|||
Non-current portion of capital lease obligation
|
$
|
1,187
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue
|
|
|
|
|
|
||||||
United States
|
$
|
1,643,852
|
|
|
$
|
1,224,566
|
|
|
$
|
825,578
|
|
International
|
64,869
|
|
|
42,552
|
|
|
24,614
|
|
|||
Total net revenue
|
$
|
1,708,721
|
|
|
$
|
1,267,118
|
|
|
$
|
850,192
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Long-lived assets
|
|
|
|
||||
United States
|
$
|
162,118
|
|
|
$
|
168,583
|
|
International
|
2,675
|
|
|
2,114
|
|
||
Total long-lived assets
|
$
|
164,793
|
|
|
$
|
170,697
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Supplemental Cash Flow Data:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
570
|
|
|
$
|
981
|
|
|
$
|
940
|
|
Cash paid for income taxes
|
395
|
|
|
1,916
|
|
|
2,442
|
|
|||
Supplemental disclosures of non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment in accounts payable and accrued expenses
|
2,554
|
|
|
5,593
|
|
|
—
|
|
|||
Unpaid business acquisition purchase price
|
240
|
|
|
—
|
|
|
—
|
|
|||
Conversion of Series A, B, C, D & E preferred stock upon initial public offering to common stock
|
—
|
|
|
544,897
|
|
|
—
|
|
|||
Unpaid offering costs related to initial public offering
|
—
|
|
|
5,530
|
|
|
—
|
|
|||
Deemed dividend on Series E preferred stock
|
—
|
|
|
32,200
|
|
|
—
|
|
|||
Fair value of shares issued related to acquisitions
|
—
|
|
|
35,776
|
|
|
59,576
|
|
Signature
|
Title
|
Date
|
/s/ Jack Dorsey
Jack Dorsey
|
President, Chief Executive Officer, and Chairman(Principal Executive Officer)
|
February 24, 2017
|
/s/ Sarah Friar
Sarah Friar
|
Chief Financial Officer (Principal Financial Officer)
|
February 24, 2017
|
/s/ Ajmere Dale
Ajmere Dale
|
Chief Accounting Officer (Principal Accounting Officer)
|
February 24, 2017
|
/s/ Roelof Botha
Roelof Botha
|
Director
|
February 24, 2017
|
/s/ Paul Deighton
Paul Deighton
|
Director
|
February 24, 2017
|
/s/ Jim McKelvey
Jim McKelvey
|
Director
|
February 24, 2017
|
/s/ Mary Meeker
Mary Meeker
|
Director
|
February 24, 2017
|
/s/ Ruth Simmons
Ruth Simmons
|
Director
|
February 24, 2017
|
/s/ Lawrence Summers
Lawrence Summers
|
Director
|
February 24, 2017
|
/s/ David Viniar
David Viniar
|
Director
|
February 24, 2017
|
|
|
|
Incorporated by Reference
|
|||
Exhibit Number
|
|
Description
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
3.1
|
|
Amended and Restated Certificate of Incorporation of the Registrant.
|
8-K
|
001-37622
|
3.1
|
November 24, 2015
|
3.2
|
|
Amended and Restated Bylaws of the Registrant.
|
8-K
|
001-37622
|
3.2
|
November 24, 2015
|
4.1
|
|
Form of Class A common stock certificate of the Registrant.
|
S-1/A
|
333-207411
|
4.1
|
November 6, 2015
|
4.2
|
|
Fifth Amended and Restated Investors’ Rights Agreement among the Registrant and certain holders of its capital stock, dated as of September 9, 2014.
|
S-1
|
333-207411
|
4.2
|
October 14, 2015
|
4.3
|
|
Warrant to purchase shares of common stock issued to Starbucks Corporation, dated as of August 7, 2012, as amended on September 30, 2013.
|
S-1
|
333-207411
|
4.4
|
October 14, 2015
|
10.1
+
|
|
Form of Indemnification Agreement between the Registrant and each of its directors and executive officers.
|
S-1/A
|
333-207411
|
10.1
|
November 6, 2015
|
10.2
+
|
|
Square, Inc. 2015 Equity Incentive Plan, as amended and restated, and related form agreements.
|
10-Q
|
001-37622
|
10.1
|
August 4, 2016
|
10.3
+
|
|
Square, Inc. 2015 Employee Stock Purchase Plan, as amended and restated, and related form agreements.
|
10-K
|
001-37622
|
10.3
|
March 10, 2016
|
10.4
+
|
|
Square, Inc. 2009 Stock Plan and related form agreements.
|
S-1
|
333-207411
|
10.4
|
October 14, 2015
|
10.5
+
|
|
Square, Inc. Executive Incentive Compensation Plan.
|
S-1
|
333-207411
|
10.5
|
October 14, 2015
|
10.6
+
|
|
Square, Inc. Outside Director Compensation Policy, as amended and restated.
|
|
|
|
|
10.7
+
|
|
Form of Change of Control and Severance Agreement between the Registrant and certain of its executive officers.
|
S-1
|
333-207411
|
10.7
|
October 14, 2015
|
10.8
+
|
|
Offer Letter between the Registrant and Jack Dorsey, dated as of March 7, 2016.
|
10-K
|
001-37622
|
10.8
|
March 10, 2016
|
10.9
+
|
|
Offer Letter between the Registrant and Sarah Friar, dated as of October 1, 2015.
|
S-1/A
|
333-207411
|
10.9
|
November 6, 2015
|
10.10
+
|
|
Offer Letter between the Registrant and Dana R. Wagner, dated as of October 1, 2015.
|
S-1/A
|
333-207411
|
10.10
|
November 6, 2015
|
10.11
+
|
|
Offer Letter between the Registrant and Françoise Brougher, dated as of October 1, 2015.
|
S-1/A
|
333-207411
|
10.11
|
November 6, 2015
|
10.12
+
|
|
Offer Letter between the Registrant and Alyssa Henry, dated as of October 1, 2015.
|
S-1/A
|
333-207411
|
10.12
|
November 6, 2015
|
10.13
+
|
|
Offer Letter between the Registrant and Hillary Smith, dated as of October 27, 2016.
|
|
|
|
|
10.14
|
|
Office Lease by and between the Registrant and Hudson 1455 Market, LLC, dated as of October 17, 2012, as amended on March 22, 2013, January 22, 2014, and June 6, 2014.
|
S-1
|
333-207411
|
10.13
|
October 14, 2015
|
10.15
|
|
Revolving Credit Agreement dated as of November 2, 2015 among the Registrant, the Lenders Party Thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
|
S-1/A
|
333-207411
|
10.14
|
November 6, 2015
|
10.16
|
|
Commitment Letter dated October 30, 2015 by Goldman Sachs Lending Partners LLC.
|
S-1/A
|
333-207411
|
10.14A
|
November 16, 2015
|
10.17#
|
|
Master Development and Supply Agreement by and between the Registrant and TDK Corporation, dated as of October 1, 2013.
|
S-1
|
333-207411
|
10.15
|
October 14, 2015
|
10.18#
|
|
Master Manufacturing Agreement by and between the Registrant and Cheng Uei Precision Industry Co., Ltd., dated as of June 27, 2012.
|
S-1
|
333-207411
|
10.16
|
October 14, 2015
|
10.19#
|
|
ASIC Development and Supply Agreement by and between the Registrant, Semiconductor Components Industries, LLC (d/b/a ON Semiconductor) and ON Semiconductor Trading, Ltd., dated as of March 25, 2013.
|
S-1
|
333-207411
|
10.17
|
October 14, 2015
|
21.1
|
|
List of subsidiaries of the Registrant.
|
|
|
|
|
23.1
|
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm.
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.1†
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
+
|
Indicates management contract or compensatory plan.
|
#
|
The Registrant has omitted portions of the relevant exhibit and filed such exhibit separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 406 of the Securities Act of 1933, as amended.
|
†
|
The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
|
Chairperson of Audit and Risk Committee:
|
|
$
|
20,000
|
|
|
|
|
||
Chairperson of Compensation Committee:
|
|
$
|
15,000
|
|
|
|
|
||
Chairperson of Nominating and Corporate Governance Committee:
|
|
$
|
10,000
|
|
|
|
|
||
Member of Audit and Risk Committee:
|
|
$
|
10,000
|
|
|
|
|
||
Member of Compensation Committee:
|
|
$
|
5,000
|
|
|
|
|
||
Member of Nominating and Corporate Governance Committee:
|
|
$
|
2,500
|
|
|
|
|
1.
|
Position
. You will start in a full-time position as General Counsel and you will report to Jack Dorsey. By signing this letter, you confirm with the Company that you are under no contractual or other legal obligations that would prohibit or restrict you from performing your duties with the Company.
|
2.
|
Compensation
. You will be paid an annual salary at the rate of USD 350,000.00, payable on the Company’s regular payroll dates. Your position is classified as exempt. The Company will provide you with a one-time hire-on bonus of USD 100,000.00, which will be included with your first paycheck, and an additional one-time hire-on bonus of USD 100,000.00, which will be included in your first paycheck following the one-year anniversary of your hire date, provided that you continue to be employed by the Company on such date. These payments will be made in accordance with the Company's standard payroll practice and may be subject to applicable withholding and payroll taxes. If you voluntarily terminate your employment with the Company within 12 months of your hire date, you'll be responsible for reimbursing all or part of the hire-on bonus, at the Company's sole discretion.
|
3.
|
RSUs
. We will recommend to the Board of Directors of the Company or an authorized committee thereof (the “Committee”) that you be granted restricted stock units covering 600,000 shares of the Company’s Class A common stock (the “RSUs”). The vesting commencement date for the RSUs will be the 1st or the 16th day of the month immediately following your hire date (the “Vesting Commencement Date”). The RSUs will be subject to the terms and conditions applicable to restricted stock units granted under the Company’s 2015 Equity Incentive Plan (the “Plan”) and the applicable restricted stock unit agreement. 25% of the RSUs will vest on the one year anniversary of the Vesting Commencement Date and 1/16th of the RSUs will vest on quarterly vesting dates thereafter as long you remain in continuous service to the Company, as described in the applicable restricted stock unit agreement. The grant of such RSUs by the Company is subject to the approval of the Committee, and this promise to recommend such approval is not a promise of compensation and is not intended to create any obligation on the part of the Company. You should consult with your own tax advisor concerning the tax risks associated with accepting an RSU award pertaining to the Company’s Class A common stock.
|
4.
|
Confidential Information and Invention Assignment Agreement
. Like all Company employees, you will be required, as a condition of your employment with the Company, to sign the Company’s enclosed standard Confidential Information and Invention Assignment Agreement (the “Confidentiality Agreement”).
|
5.
|
Employment Relationship
. Employment with the Company is for no specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, without prior notice and with or without cause. Any contrary representations, which may have been made to you, are superseded by this offer. This is the full and complete agreement between you and the Company on this term. Further, your participation in any equity or benefit program is not to be regarded as assuring you of continuing employment for any particular period of time. Although your job duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and the Company’s Chief Executive Officer.
|
6.
|
Outside Activities
. While you render services to the Company, you agree that you will not engage in any other employment, consulting or other business activity without the written consent of the Company. In addition, while you render services to the Company, you will not assist any person or entity in competing with the Company, in preparing to compete with the Company or in hiring any employees or consultants of the Company. You will disclose to the Company in writing any other gainful employment, business or activity that you are currently associated with or participate in that competes with the Company.
|
7.
|
Withholding Taxes
. All forms of compensation referred to in this letter are subject to applicable withholding and payroll taxes.
|
8.
|
Authorization to Work
. Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, at the time of joining, you must have authorization to work for the Company in the United States.
|
9.
|
Arbitration
. You and the Company will submit to mandatory and exclusive binding arbitration of any controversy or claim arising out of, or relating to, this Agreement, the formation, breach, interpretation or enforceability of this Agreement, including the employment relationship between you and the Company or the termination of the employment relationship between you and the Company, provided, however, that the parties retain their rights to apply for provisional remedies pursuant to California Code of Civil Procedure §1281.8. Such arbitration will be governed by the Federal Arbitration Act and conducted through the American Arbitration Association in the State of California, San Francisco County, before a single neutral arbitrator, in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association in effect at that time. Except as otherwise required under applicable law, you and the Company expressly intend and agree that (1) class action procedures, and/or actions in any purported representative capacity on behalf others, will not be asserted, nor will they apply, in any arbitration pursuant to this Agreement; and (2) you and the Company each will not assert class action claims or purported representative claims against the other in arbitration or otherwise. The arbitration will provide for reasonable written discovery and depositions. The arbitrator will have the authority to grant you or the Company or both all remedies otherwise available by law. The arbitrator will issue a written decision that contains the essential findings and conclusions on which the decision is based. You will bear only those costs of arbitration you would otherwise bear had you brought a claim covered by this Agreement in court. Judgment upon the determination or award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
|
10.
|
Background Check
. The Company may conduct an employment verification of criminal, education, and employment background. This offer can be rescinded based upon data received in the verification.
|
11.
|
Severance
. You will be eligible to enter into a Change of Control and Severance Agreement (the “Severance Agreement”) applicable to you based on your senior position within the Company. The Severance Agreement will specify the severance payments and benefits you would be entitled to in connection with a change of control transaction and certain terminations of employment.
|
12.
|
Entire Agreement
. This letter, along with the Confidentiality Agreement, the Plan, and any other agreements between you and the Company governing your Company equity award(s), collectively constitute the entire agreement between you and the Company regarding the subject matter contained herein, and they supersede and replace any prior understandings or agreements, whether oral, written or implied, between you and the Company regarding the matters described in this letter.
|
Square, Inc.
|
|
Accepted and agreed:
|
|
|
|
By:
|
|
/s/ Hillary Smith
|
|
|
(Signature)
|
|
|
|
/s/ Jacqueline D. Reses
|
|
Hillary Smith
|
(Signature)
|
|
Name
|
|
|
|
Jacqueline D. Reses
|
|
10/27/2016
|
Name
|
|
Date
|
|
|
|
People and Capital Lead
|
|
12/5/2016
|
Title
|
|
Anticipated Start Date
|
Subsidiary name
|
|
Jurisdiction of incorporation
|
Square Capital, LLC.
|
|
Delaware, U.S.
|
Caviar, Inc.
|
|
Delaware, U.S.
|