After Twitter $TWTR reported second-quarter earnings last week that missed expectations, CEO Jack Dorsey could use some good news from the other company he leads, Square $SQ. 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 $SBUX 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 $AAPL 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.
