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WSJ: Square mulling sale, Google discussed an acquisition

  • The WSJ reports mobile payments upstart Square, reported two months ago to have indefinitely postponed its IPO, has "discussed a possible sale to several deeper-pocketed rivals."
  • The paper adds Google (GOOG) discussed buying Square this year, though it's not clear if talks are continuing. Apple and PayPal are said to have held informal talks that never progressed.
  • Re/code and The Information previously reported Google has shown interest in Square, which processed over $20B worth of transactions last year (largely through its mobile card readers and related apps) and could provide Google with valuable data on offline purchase activity and ad effectiveness (previous). Google's own mobile/offline payments efforts haven't lived up to expectations.
  • The WSJ's sources state Square had 2013 revenue of $550M, but only with a gross margin of 21% (down from 2012's 27%) after backing out processor payments and other fees. That led net loss to total ~$100M.
  • Square has been hatching plans to up-sell merchants on value-added software and services, but it remains very dependent on transactions for now. The company has been valued at $5B in private share sales, but public investors might now assign a lower valuation.
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Comments (3)
  • eh.geee@gmail
    , contributor
    Comments (43) | Send Message
     
    The big bucks in acquisitions go to the IP and the potential of the team. Of course some acquisitions are focused on bringing in the user base. Since the user base is not sticky and would readily move to the next/cheaper solution, Square lacks the differentiated IP and doesn't have a user base. The $5B valuation is nonsense in the context of a private acquisition -- and with the capital markets at all time highs (in USD dollar terms, ignoring currency devaluation) even acquisition for stock would be a sour deal for both parties.
    21 Apr 2014, 10:10 AM Reply Like
  • turb0kat
    , contributor
    Comments (306) | Send Message
     
    $10b easy
    21 Apr 2014, 03:52 PM Reply Like
  • turb0kat
    , contributor
    Comments (306) | Send Message
     
    $10b easy
    21 Apr 2014, 03:52 PM Reply Like
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