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Square earnings: Brick-and-mortar struggles

Square logo
  • Q1 revenue: $1.38 billion (+44% YoY vs. $1.3 billion expected)
  • Q1 loss: $106 million (-178% YoY, below expectations)
  • Q2 guidance: None provided at this time.

The big number: Square's $106 million loss came as a shock to Wall Street, as the company's exposure to COVID-19 hit its balance sheet faster than expected. It did, however, note it was seeing strong growth in January and February before a slowdown in March.

People are talking: "I do believe that the speed at which we were able to move, and the volume we were able to move with the PPP program for our sellers vs. the rest of the financial institutions, will be a net positive for us in terms of a goodwill halo," Square CEO Jack Dorsey said on a call with analysts.

Opportunities: Looking at the total dollar amount processed by Square's system from the last two weeks of March through the end of April, seller gross payment volume (GPV) was down 39% vs. the same period last year. However, Square said it had fallen to as low as -45% by the middle of last month, before regaining some ground in the last two weeks of April. Additionally, Cash App gross profits grew 115% over the same period last year.

Threats: Despite data indicating the "early signs of stabilization" in its seller ecosystem, Square's exposure in the sectors hit hardest by the pandemic, like food and beverage services, casts a shadow over the company's near-term future. Even as GPV dips hit businesses of every size, Square touted its multi-channel payments offerings as a way for customers to combat pandemic-imposed restrictions, using digital channels to find new customers until they can set back up in stores.

The power struggle: With a large part of its business coming from brick-and-mortar retail, Square will now need to lean more heavily on those e-commerce products until the U.S. — and its traditional revenue streams — opens back up. The question remains whether its other sources of revenue will be able to pick up the slack in the meantime.

Microsoft wants to replace artists with AI

Better Zoom calls, simpler email attachments, smart iPhone cases and other patents from Big Tech.

Turning your stories into images.

Image: USPTO/Microsoft

Hello and welcome to 2021! The Big Tech patent roundup is back, after a short vacation and … all the things … that happened between the start of the year and now. It seems the tradition of tech companies filing weird and wonderful patents has carried into the new year; there are some real gems from the last few weeks. Microsoft is trying to outsource all creative endeavors to AI; Apple wants to make seat belts less annoying; and Amazon wants to cut down on some of the recyclable waste that its own success has inevitably created.

And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

The Small Business Recovery

How businesses can use tech to punch above their weight — even in the middle of a pandemic

With no choice but to move online, Square's Alyssa Henry talks about how tech stepped in to support small businesses.

Though Square is often known for its square-shaped card readers and digital cash registers at stores, it had actually been laying the groundwork for shifts to online and omnichannel retail for years.

Photo: Square

When the pandemic hit, how consumers shopped and how businesses operated changed overnight. With in-person selling no longer an option, stores and small businesses had to figure out how they were going to make things work.

At Square, a lot of that problem-solving fell to Alyssa Henry, the head of the company's seller ecosystem. Henry oversees everything from marketing to engineering for Square's seller products, including its point-of-sale software and online stores. "Everything was shut down initially and so all of a sudden, these sellers had had no revenue coming in, so they had no cash flow," Henry said.

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Biz Carson

Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.

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