Mobile payment service Square filed for an initial public offering (IPO) today. Here’s what it means…
What is Square?
The startup company, founded in 2009 by Twitter co-founder Jack Dorsey, allows vendors to accept credit cards with the Square Register app for iOS and Android. The company also makes a Square Cash app for consumers on iOS and Android that allows for easy transfer of money between people, and is designed for occasions when cash or credit cards aren’t handy or wouldn’t be appropriate, say, splitting a bill at a restaurant.
For businesses, Square additionally makes a tiny physical card reader that plugs into the headphone jack of any smartphone (square-shaped, of course), a tablet-based terminal stand for vendors to use in place of other checkout systems, and a wireless checkout station that works with Apple Pay.
Why did Square IPO?
So what does an IPO do for Square? For one, it will allow the company to raise a lot more money and potentially expand (by selling shares of stock). Square’s official S-1 filing, the paperwork required to go public, lists the company’s net revenue for 2014 at over $850 million, while the company’s net loss was over $154 million. According to the Wall Street Journal, Square is valued at $6 billion after it goes public.
Square seems to be aware of some of the risks it is taking by going public. Now that it’s more accountable for turning around a profit and showing growth to investors, it will need to justify more of its actions and products. And the company’s co-founder and CEO, Jack Dorsey, was also just named CEO of Twitter (for the second time, following his original ouster from Twitter in 2008). Square’s S-1 paperwork explicitly says “Jack Dorsey, our co-founder, President, and Chief Executive Officer, also serves as Chief Executive Officer of Twitter. This may at times adversely affect his ability to devote time, attention, and effort to Square.”
Dorsey clearly believes in the mobile payments company though, and his ability to lead it.
As he wrote in his statement:
If approved, Square intends to trade its shares on the New York Stock Exchange (NYSE) under the symbol SQ.