Square, Inc. (NYSE: SQ) today announced updates to its first
quarter and full year 2020 guidance to reflect the impact of its
issuance of $1.0 billion in aggregate principal amount of 0.125%
convertible senior notes due 2025 (“Notes”).
The revisions to Square’s first quarter and full year 2020
guidance, which was previously announced on February 26, 2020, are
only a result of the Notes issued by Square on March 5, 2020. As a
result of the issuance of the Notes, Square is revising its
guidance for net income (loss) per share and Adjusted Net Income
Per Share (Adjusted EPS) to reflect the estimated increase in
interest expense. Square is also revising its guidance for net
income (loss) per share to reflect the estimated amortization of
debt discount and issuance costs associated with the issuance.
New First
Quarter 2020
Prior Guidance for
Guidance
First Quarter 2020
as of March 5, 2020
as of February 26, 2020
Net income (loss) per share
$(0.04) to (0.02)
$(0.03) to $(0.01)
New Full Year 2020
Prior Guidance for
Guidance
Full Year 2020
as of March 5, 2020
as of February 26, 2020
Net income (loss) per share
$(0.15) to (0.11)
$(0.09) to $(0.05)
Adjusted EPS (diluted)
$0.88 to 0.92
$0.90 to $0.94
As a reminder, Square will release financial results for the
first quarter of 2020 on May 6, 2020, after market close.
Note: Square also granted the initial
purchasers of the Notes a 30-day option to purchase up to an
additional $150 million aggregate principal amount of the Notes
solely to cover over-allotments, if any. When updating its first
quarter and full-year guidance for the transaction, Square has
assumed this entire amount of additional Notes will be issued.
We have not reconciled Adjusted EPS
guidance to its GAAP equivalent as a result of the uncertainty
regarding, and the potential variability of, reconciling items such
as share-based compensation expense and weighted-average fully
diluted shares outstanding. Accordingly, a reconciliation of this
non-GAAP guidance metric to its corresponding GAAP equivalent is
not available without unreasonable effort. It is important to note
that the actual amount of such reconciling items would have a
significant impact if they were included in our Adjusted EPS.
About Square, Inc.
Square, Inc. (NYSE: SQ) revolutionized payments in 2009 with
Square Reader, making it possible for anyone to accept card
payments using a smartphone or tablet. Today, we build tools to
empower businesses and individuals to participate in the economy.
Sellers use Square to reach buyers online and in-person, manage
their business, and access financing. And individuals use Cash App
to spend, send, store, and invest money. Square has offices in the
United States, Canada, Japan, Australia, Ireland, and the UK.
SAFE HARBOR STATEMENT
This press release contains forward-looking statements within
the meaning of the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. All statements other than statements
of historical fact could be deemed forward-looking, including, but
not limited to, statements regarding the future performance and
expected financial results for future periods of Square, Inc. and
its consolidated subsidiaries (the Company). In some cases,
forward-looking statements can be identified by terms such as
“may,” “will,” “appears,” “should,” “expects,” “plans,”
“anticipates,” “could,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential,”
or “continue,” or the negative of these words or other similar
terms or expressions that concern our expectations, strategy,
plans, or intentions. Such statements are subject to a number of
known and unknown risks, uncertainties, assumptions, and other
factors that may cause the Company’s actual results, performance,
or achievements to differ materially from results expressed or
implied in this press release Investors are cautioned not to place
undue reliance on these statements.
Risks that contribute to the uncertain nature of the
forward-looking statements include, among others, the impact of the
Company’s convertible senior note offering, including the
conditional conversion feature of the notes and the accounting
method for convertible debt securities that may be settled in cash;
the Company’s ability to deal with the substantial and increasingly
intense competition in its industry; the Company’s ability to
ensure the interoperability of its technology with that of third
parties; changes to the rules and practices of payment card
networks and acquiring processors; the impact of acquisitions or
divestitures, strategic investments, joint ventures, or entries
into new businesses; the effect of extensive regulation and
oversight related to the Company’s business in a variety of areas;
the effect of management changes and business initiatives; adoption
of the Company’s products and services in international markets;
and changes in political, business, and economic conditions; as
well as other risks listed or described from time to time in the
Company’s filings with the Securities and Exchange Commission (the
SEC), including the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2019. All forward-looking statements
are based on information and estimates available to the Company at
the time of this letter and are not guarantees of future
performance. Except as required by law, the Company assumes no
obligation to update any of the statements in this letter.
KEY OPERATING METRICS AND NON-GAAP FINANCIAL MEASURES
To supplement our financial information presented in accordance
with generally accepted accounting principles in the United States
(GAAP), we consider certain operating and financial measures that
are not prepared in accordance with GAAP, including Adjusted EPS.
We believe this metric is useful to facilitate period-to-period
comparisons of our business and to facilitate comparisons of our
performance to that of other payments solution providers. In this
press release, we are updating our previously announced guidance as
to Adjusted EPS.
Adjusted EPS is a non-GAAP financial measure that represents our
net loss per share, adjusted to eliminate the effect of share-based
compensation expenses, amortization of intangible assets,
amortization of debt discount and issuance costs in connection with
our offering of convertible senior notes in the first quarter of
2017, in the second quarter of 2018, and the first quarter of 2020,
the gain or loss on the sale of property and equipment, and
impairment of intangible assets, as applicable. We also exclude
certain costs associated with business acquisitions that are not
normal recurring operating expenses, including amounts paid to
redeem acquirees’ unvested stock-based compensation awards, and
legal, accounting and due diligence costs, and we add back the
impact of the acquired deferred revenue adjustment, which was
written down to fair value in purchase accounting. Basic Adjusted
EPS is computed by dividing the Adjusted Net Income (Loss) by the
weighted-average number of shares of common stock outstanding
during the period. Diluted Adjusted EPS is computed by dividing
Adjusted Net Income by the weighted-average number of shares of
common stock outstanding, adjusted for the dilutive effect of all
potential shares of common stock.
We have included Adjusted EPS because it is a key measure used
by our management to evaluate our operating performance, generate
future operating plans, and make strategic decisions, including
those relating to operating expenses and the allocation of internal
resources. Accordingly, we believe that Adjusted EPS provides
useful information to investors and others in understanding and
evaluating our operating results in the same manner as our
management and board of directors. In addition, it provides a
useful measure for period-to-period comparisons of our business, as
it removes the effect of certain non-cash items and certain
variable charges. Adjusted EPS has limitations as a financial
measure, should be considered as supplemental in nature, and is not
meant as a substitute for the related financial information
prepared in accordance with GAAP.
This non-GAAP financial measure should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. This non-GAAP financial measure
is not based on any standardized methodology prescribed by GAAP and
is not necessarily comparable to similarly titled measures
presented by other companies.
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version on businesswire.com: https://www.businesswire.com/news/home/20200305005833/en/
Media Contact: press@squareup.com
Investor Relations Contact: ir@squareup.com
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