updated 06:31 pm EST, Wed November 6, 2013
Mobile-based payment service said almost ready to go public
Mobile payment processor Square is said to be in discussions to make an initial public offering, according to twin reports from The Wall Street Journal and CNBC. The payment processing firm is reportedly in talks with Goldman Sachs and Morgan Stanley, among other banks. The public offering is still very much in the planning stages, according to reports, but it could happen as soon as 2014.
Square provides the familiar card reader attachments that plug in to iPhones, iPads, and Android devices, allowing small businesses to accept credit card transactions on the go. It also provides mobile-based point-of-sale systems to retailers, allowing them to process, track, and analyze payments. The company charges a small fee for its processing services, and its revenue from those and other charges is growing as its business expands.
Square will make $550 million in sales this year on total payment volume of about $20 billion. By next year, the company expects to process about $30 billion in total transactions, with 70 to 80 percent of its sales revenue going to partnered credit card companies. That puts the company's net revenue between $110 and $165 million, by some estimates.
Square does not currently turn a profit on its operations, but the Journal says that its CEO, Jack Dorsey, has been discussing plan within the company to achieve profitability by 2015.
The public offering could see Square partnering with finance giants Morgan Stanley and Goldman Sachs. Goldman took the lead role in another big tech IPO, that of microblogging service Twitter. The firm also had a hand in the difficult initial public offering of Facebook, a fiasco that led to investigations and multiple shareholder lawsuits following difficulties in many traders being able to purchase and sell shares.
Square has yet to hire any banks, and neither the processor nor its suspected bank partners will comment on the matter, but some signs indicate that Square is making a move toward going public. In the past few months, the company has brought on executives from other public companies, including Salesforce.com and Facebook.