Square Inc. reported first-quarter revenue that topped analysts’ estimates, suggesting the digital-payments business can keep growing amid increasing competition from PayPal Holdings Inc. and Apple Inc.
Sales rose 51 percent percent to $379.3 million in the quarter, Square said Thursday in a statement. That compared with analysts’ average estimate of $345.6 million, according to data compiled by Bloomberg. The company reported a net loss of $96.8 million, or 29 cents per share.
Chief Executive Officer Jack Dorsey must convince investors that Square can grow even as PayPal, Apple and others join the crowded transactions industry. Square in March introduced a tool to let merchants collect payments on their websites, putting the company in more direct competition with PayPal.
Square forecast adjusted revenue of $151 million to $156 million in the current quarter, and raised its annual projection by $15 million to $615 million to $635 million.
Square shares were little changed in extended trading after closing at $13.05. The San Francisco-based company has gained 45 percent since its initial public offering at $9 in November.
Investors are also watching Square’s lending program to see if demand is influenced by its change from advances to loans. Loans give businesses the flexibility to pay back balances more quickly than advances, which deducted payments from transactions until the balance was repaid.
Square targets small businesses with devices that plug into smartphones and tablets, allowing merchants to process credit-card payments. The company usually takes a 2.75 percent cut per transaction swipe. It also provides loans to merchants and tools for managing inventory and analyzing sales data.
The low-margin payments business is seen as an entry point to attract customers, who can be sold additional services. Square has customers in the U.S., Canada, Japan and Australia.
Square reported gross payments volume of $10.3 billion in the quarter, up 45 percent from a year earlier. That’s a slower pace than 47 percent reported in the fourth quarter.