An overview of payment company Square's financial and operating metrics up to and including Q2 2016. This is a free sample from the Jackdaw Research Quarterly Decks Service, which offers similar slide decks on the biggest consumer technology companies on a quarterly basis. Learn more about the Jackdaw Research Quarterly Decks Service at https://jackdawresearch.com/quarterly-company-decks/.

1. Jan Dawson
Chief Analyst
(408) 744-6244
jan@jackdawresearch.com
@jandawson
SQUARE Q2 2016
A FREE DECK FROM THE JACKDAW RESEARCH
QUARTERLY DECKS SERVICE

2. 2
• This deck is a free sample of the Jackdaw Research Quarterly
Company Decks subscription service
• The paid service includes about a dozen similar decks produced
each quarter on major consumer tech companies
• The intention is to highlight trends and patterns which are not
always obvious when merely looking at a spreadsheet
• Accompanying analysis can often be found on our blog at
www.beyonddevic.es
• For more information, please visit:
https://jackdawresearch.com/quarterly-company-decks/
INTRODUCTION
JACKDAW RESEARCH QUARTERLY DECKS SERVICE

3. 3
• I’ve previously written several pieces about Square, which
should serve as useful context for the charts in this deck:
• Square’s Potential and Its Challenges – Techpinions,
October 2015, based on Square’s S-1 IPO filing
• Quick Thoughts on Square’s Q3 2015 Numbers – Beyond
Devices, October 2015, based on Square’s amended S-1
filing and its Q3 2015 numbers
• Solid Progress at Square – Beyond Devices, March 2016,
based on Q4 2015 results
INTRODUCTION
SQUARE, INC

4. 4 Source: Square financial filings, Jackdaw Research analysis
REVENUE
BY SEGMENT, $000
0
100,000
200,000
300,000
400,000
500,000
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Transaction revenue
Starbucks transaction revenue
Software and data product revenue
Hardware revenue

5. 5 Source: Square financial filings, Jackdaw Research analysis
REVENUE
AS % OF TOTAL REVENUE
0%
15%
30%
45%
60%
75%
90%
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Transaction revenue Starbucks transaction revenue
Software and data product revenue Hardware revenue

6. 6 Source: Square financial filings, Jackdaw Research analysis
SOFTWARE AND DATA REVENUE
AS % OF TOTAL REVENUE
0%
1%
2%
4%
5%
6%
7%
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

7. 7 Source: Square financial filings, Jackdaw Research analysis
COST OF REVENUE
BY SEGMENT, $000
0
50,000
100,000
150,000
200,000
250,000
300,000
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Transaction costs Starbucks transaction costs
Software and data product costs Hardware costs
Amortization of acquired technology

8. 8 Source: Square financial filings, Jackdaw Research analysis
MARGINS
-30%
-20%
-10%
0%
10%
20%
30%
40%
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Gross margin Adjusted EBITDA margin
Operating margin Net margin

9. 9 Source: Square financial filings, Jackdaw Research analysis
PROFIT MEASURES
$000
-120,000
-80,000
-40,000
0
40,000
80,000
120,000
160,000
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Gross profit
Operating loss
Net loss
Adjusted EBITDA

10. 10 Source: Square financial filings, Jackdaw Research analysis
GROSS MARGINS
BY PRODUCT
-300%
-200%
-100%
0%
100%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Transactions Starbucks transactions Software and data products Hardware

11. 11 Source: Square financial filings, Jackdaw Research analysis
GROSS MARGINS
FOR STARBUCKS AND NON-STARBUCKS TRANSACTIONS
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Starbucks transactions Non-Starbucks transactions

12. 12 Source: Square financial filings, Jackdaw Research analysis
TRANSACTION ECONOMICS
SQUARE TRANSACTION REVENUE AND PROFIT AS % OF GROSS PAYMENT VOLUME
0%
1%
2%
3%
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Transaction revenue / GPV Transaction profit / GPV

13. 13 Source: Square financial filings, Jackdaw Research analysis
GROSS PROFIT
$000, FOR THREE SMALLER SEGMENTS
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
30,000
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Starbucks transactions
Software and data products
Hardware

14. 14 Source: Square financial filings, Jackdaw Research analysis
GROSS PAYMENT VOLUME
$ MILLIONS
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

15. 15 Source: Square financial filings, Jackdaw Research analysis
GROSS PAYMENT VOLUME
BY SELLER SIZE (PARTIAL DATA SET), EXCLUDING STARBUCKS
0%
25%
50%
75%
100%
Q2 2011 Q4 2011 Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016
<125k annualized GPV 125k-500k >500k

16. 16 Source: Square financial filings, Jackdaw Research analysis
STARBUCKS TRANSACTIONS
AS % OF TOTAL TRANSACTION REVENUE
0%
5%
10%
15%
20%
25%
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

17. 17 Source: Square financial filings, Jackdaw Research analysis
ADJUSTED REVENUE
$000
“Adjusted revenue” is net revenue minus transaction
costs and elimination of Starbucks financials
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016

18. 18 Source: Square financial filings, Jackdaw Research analysis
OPERATING EXPENSES
COMPONENTS AS % OF TOTAL OPERATING EXPENSES
0%
25%
50%
75%
100%
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Product development
Sales & marketing
General & administrative
Transaction and advance losses
Amortization of acquired customer assets
Impairment of intangible assets

19. Jan Dawson
Chief Analyst
(408) 744-6244
jan@jackdawresearch.com
@jandawson
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