Today is a milestone for Square: Its first earnings report as a publicly traded company. The mobile payments firm, which filed for its IPO late last year, isn’t expected to blow away investors with its 4Q and fiscal year results. Is it just early for Square or is this a sign that major changes are needed?
After markets close today, Square is expected to report a loss of 10 cents per share on $344.4 million in revenue, according to USA Today.
It’s not that Square isn’t making money. During the first half of 2015, the company’s revenue grew 51% over the same period in 2014. At the same time, its costs remained high and losses have mounted. All told, the company reported a total loss of $154.1 million in 2014. Today, we’ll learn whether Square has managed to close that gap over the last year. Recent reports suggest that the company’s revenue growth has been slowing down.
If Square is indeed struggling to inch toward profitability, many investors will point to one obvious culprit: Jack Dorsey. It’s not that the founder and CEO of Square isn’t a good businessman. He just may be distracted: Last year, he officially signed on as the permanent CEO of Twitter, another company he helped found. From day one, many have expressed concern about Dorsey’s ability to effectively lead two publicly traded companies at once. Dorsey’s double duty is cited as a “red flag” by Seeking Alpha, which points to Elon Musk and Steve Jobs as famous examples of CEOs who were forced to back off the challenging task of co-leading two companies at once.
Square foresaw this type of criticism from the outset, going so far as to mention Dorsey’s double duty in its S-1 filing last year. The company will likely address the issue once again in today’s earnings call. But if revenue growth doesn’t pick up the pace soon, we may well be seeing some big changes at Square’s headquarters in 2016.