Updating my valuation and metrics from previous posts below
Last February, Square was running at 9k active merchants, and $2M GDV/day. Today (Mar 2012) Square’s GDV (annual run rate) is $4B which equates to $10M/day ($40-50k/day net revenue).
Consistent with last year’s analysis, we can derive Square’s revenue and their “active” customer base
Rev = TPV * Transaction Margin
Transaction Margin = Merchant rate less processing costs = 295bps – 250bps = 45-20bps
Square FY12 Rev = $4B * 45bps = $18M (top end)
Active Merchants: ~80-100k
Very impressive growth… They obviously have another source of revenue planned (ie advertising/incentives) if they can justify a $4B valuation… I give some comparables in this previous blog. A $4B valuation would be $50k/ merchant.. wow.. quite an acquisition cost. All of this is particularly ironic given IBM’s recent sale of their Retail Store Systems (RSS) division to Toshiba TEC for $870M. RSS has 14 of top 20 global retailers, $2T+ in retail sales, 20-40k developers (in retail IT teams), …
Could it be the case of the second mice getting (most of) the cheese?..
Tom, about this time last year the average transaction amount for Square was $84.66 (according to a screen shot of their internal dashboard: http://dl.dropbox.com/u/3781238/square_avgtx.PNG) I don’t know if this holds today or even if they publish these stats. Regardless, any insight as to why this would be so much higher than a typical network transaction? (Especially considering their SMB focus.)
Jay… a big miss on my side.. I was focused on the 9k active. So 23k payments over 9k users is 2.56 payments (per week per merchant) with average ticket of $85. Perhaps taxi’s and hot dog stands are not the sweet spot.. Or we have a very small active group in high end luxury goods and services. Jack does have some connected friends. My guess is that if you take out the top decile of high ticket transactions, that $15 is a good avg.. Excellent question