Square Secretly Files for IPO (July 27, 2015)
After more than a year of rumors, it appears Square finally could be taking the plunge and going public. The m-POS pioneer—which has been expanding steadily into other verticals—has filed confidentially for an IPO with the SEC, according to Bloomberg, which cited sources with knowledge of the plan. The filing was made under the Jumpstart Our Business Startups Act, a law enacted in 2012 that enables companies with less than $1 billion in revenue to file for an IPO privately, among other provisions. Speculation has swirled since at least late 2013 that Square could be going public—but there were also reports the company was in acquisition talks with possible suitors, including Google, Apple and PayPal.
After filing with the SEC, the company has about three months to decide whether to proceed with the offering. Square is working with Goldman Sachs Group, Morgan Stanley and JPMorgan Chase & Co. on the IPO, according to Bloomberg.
Square’s core m-POS business processed $30 billion in payments for its millions of merchant customers in 2014, but the company has added new services, including P2P and B2B money transfer with Square Cash and small business lending via Square Capital. Last month, the company announced it would begin offering electronic payroll processing for its small and midsize business customers with Square Payroll. The diversification could benefit Square if it goes public and faces more pressure to show profit on a quarterly basis. “If Square can acquire customers through its basic payment product and then … up-sell those customers onto other products, it will have shown that is has a platform from which it can build and grow multifaceted and profitable relationships with small merchants,” Rick Oglesby, research director for Double Diamond Group, tells Paybefore. “That platform should have significant value, even if it’s not currently profitable. The IPO filing most likely indicates that Square believes it has achieved this foundation.”
Should Square proceed with the IPO, it would likely mean company CEO and co-founder Jack Dorsey—who also currently serves as interim CEO of Twitter—would have to focus solely on Square. It’s unlikely IPO underwriters and advisers would allow Dorsey to serve as chief executive of two publicly traded companies, according to industry observers. Twitter’s board last month announced it is seeking to fill the CEO position with someone who can make a full-time commitment to Twitter.