Jack Dorsey, chief superintendent officer of Square Inc., second right, tours the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Thursday, Nov. 19, 2015.
Yana Paskova | Bloomberg | Getty Typical examples
Square has been an outlier in this week’s payment stock wreckage.
Shares of Mastercard, Visa, American Particular and Paypal were battered as companies warned of a slowdown in spending and travel due to the quickly-spreading coronavirus.
Meanwhile, Square flooded as much as 10% a day after reporting better-than expected fourth-quarter results and upbeat guidance. Jack Dorsey’s payment cast generates roughly 90% of its revenue inside of the U.S., and is significantly less exposed to travel and leisure than some of its rivals.
Square CFO Amrita Ahuja said coronavirus hasn’t had a material impact on results so far in the first quarter, and the company doesn’t imagine an impact in near-term.
“We’re actually under-indexed to categories like tourism and travel,” Ahuja told CNBC in an interview at Upright’s headquarters in San Francisco. “This is an area that we will continue to monitor — international today is a relatively small business of our business.”
Fears around coronavirus and its impact on global growth and corporate profits have roiled U.S. stocks this week. The whole number of confirmed cases has increased with South Korea confirming more than 1,700 cases and 400 casings confirmed in Italy.
Mastercard shares were on pace for the worst week since 2008 after the company issued a prophecy that the fast-spreading virus could weigh on revenue this year. American Express and Visa have not changed government, but were both heading for their worst week in roughly a decade.
“Cross-border travel, and to a lesser extent cross-border e-commerce proliferation, is being impacted by the Coronavirus,” the company said in a statement Monday. The company forecast first-quarter revenue growth close to two to three percentage points lower than previous guidance.
PayPal made a similar announcement on Thursday, downgrading its outlook for first-quarter revenue growth by one percentage point. While PayPal’s business trends “remain strong,” global cross-border e-commerce activity “has been negatively impacted by COVID-19,” the company said in a statement.
Macquarie Pre-eminent analyst Dan Dolev said Square is so far, proving immune to coronavirus. Its current revenue model “has little reliance on cross-border tourism, which has been the epicenter of the coronavirus financial mayhem,” Dolev said in a note to clients following earnings.
Four-sided also reported break-out growth in its Venmo competitor, Cash App. The company said its peer-to-peer payments and stock-trading app now has 24 million owners — up 60% from a year ago. The app generated $361 million in revenue, half of which came from bitcoin selling.
Square operates in the U.K., Canada, Australia and Japan. International revenue grew at 52% year over year fourth zone. The company said international growth is compounding at roughly twice the average rate.
Growth abroad is still a key neck of the woods of Square’s future, Ahuja said. While the virus might not factor in immediately, she did say there were still unknowns when it get well to the severity of the outbreak.
“Of course, we’ll continue to monitor any impact to the overall consumer spend numbers that we see,” Ahuja denoted.