Square's (SQ) Triple Digit Subscription Growth Continues To Impress Stifel

Stifel analyst, Scott Devitt, reiterated his Buy rating on shares of Square (NYSE: SQ) after the company reported . revenue and adj. EBITDA forecasts which were both above the high end of guidance as revenue growth accelerated for the sixth consecutive quarter reaching 68% or 56% organic. Subscription and services revenue growth was the highlight growing 155% y/y (+117% organic). Management guided 4Q revenue growth to 59% at the midpoint, above consensus expectations, though adj. EBITDA margin was guided approximately 100bps below consensus as the company continues to invest in key strategic areas.

The analyst stated "The strong growth from larger sellers remains a healthy sign as more than 50% of these merchants use multiple Square products, which should drive further cross-selling opportunities and higher retention. We believe the new Square Terminal launched in October should also boost further seller adoption of Square’s devices, and ecosystem more broadly, as it fills a gap in the company’s POS product line – between the larger, more sophisticated Square Register and the smaller Square Contactless Chip Reader. On the call, management provided an initial outlook for FY:19, calling for 40%+ adj. revenue growth and similar adj. EBITDA margin expansion to FY:18 (~200bps)".

No change to the price target of $100.

For an analyst ratings summary and ratings history on Square click here. For more ratings news on Square click here.

Shares of Square closed at $78.75 yesterday.

You May Also Be Interested In

• Boston Scientific (BSX) PT Raised to $83 at Stifel
• HSBC Downgrades Anglo American Platinum Limited (AMS:SJ) (ANGPY) to Reduce
• 'Catalysts on the horizon:' Airbnb (ABNB) upgraded to Buy at Mizuho, shares climb