Jack Dorsey’s other company had a surprisingly good quarter

Smile, Jack. Square’s doing well!
Smile, Jack. Square’s doing well!
Image: Reuters/Lucas Jackson
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After Twitter reported second-quarter earnings last week that missed expectations, CEO Jack Dorsey could use some good news from the other company he leads, Square. And the payments company came through, delivering results that beat investor estimates for most key metrics. Square’s stock popped almost 10% after hours.

Net revenue reached $439 million for the quarter, a more than 40% increase from a year earlier. However, Starbucks accounted for $33 million of transaction revenue, and its payment-processing agreement with the coffee chain is set to expire in the third quarter of 2016. For the third quarter, Square expects net revenue to be in the range of $410 million to $420 million.

Part of that revenue growth is due to Square processing more transactions. Payment volume reached $12.5 billion, a 42% increase from a year earlier. The company’s been rolling out a new card reader, one that works with mobile wallets like Apple Pay and chip cards.

Square Capital, its merchant-lending unit, also continues to grow. Run by ex-Yahoo executive Jackie Reses, Square Capital lent $189 million to 34,000 merchants last quarter, up 123% from a year earlier.

Square’s had a tough time since going public in November 2015, as investors have worried about its ability to become profitable. In the second quarter, it lost $27 million, an improvement from a $30 million loss a year earlier and a $97 million loss in the first quarter of the year.