Updating my valuation and metrics from previous posts below
Last February, Square was running at 9k active merchants, and $2M GDV/day. Today (Mar 2012) Square’s GDV (annual run rate) is $4B which equates to $10M/day ($40-50k/day net revenue).
Consistent with last year’s analysis, we can derive Square’s revenue and their “active” customer base
Rev = TPV * Transaction Margin
Transaction Margin = Merchant rate less processing costs = 295bps – 250bps = 45-20bps
Square FY12 Rev = $4B * 45bps = $18M (top end)
Active Merchants: ~80-100k
Very impressive growth… They obviously have another source of revenue planned (ie advertising/incentives) if they can justify a $4B valuation… I give some comparables in this previous blog. A $4B valuation would be $50k/ merchant.. wow.. quite an acquisition cost. All of this is particularly ironic given IBM’s recent sale of their Retail Store Systems (RSS) division to Toshiba TEC for $870M. RSS has 14 of top 20 global retailers, $2T+ in retail sales, 20-40k developers (in retail IT teams), …