Monday, March 5, 2012 at 7:36 pm.
Square’s Sexy Growth Curve
It is easy to be skeptical of Square, which — while very cool — also feels like it must somehow be overhyped. (Why did my local café stop using it? Why don’t I ever see it in use? Can it really replace most cash registers? Etc.)
But it’s also easy to be impressed with what Square is delivering, update after update, all looking very beautiful. Such as: Today’s Register app launch — a more sophisticated point-of-sale app for retailers than what Square offered before. If I were starting my sandwich shop today, I’d probably use that.
And then, more importantly, there is the fact that people and businesses are actually apparently using Square to move money. This isn’t just another social networking play that will eventually have to make huge returns in ad revenue (not today, at least). This is cash over the wire. Real stuff.
In a series of tweets and/or puff pieces at TechCrunch, Square has revealed semi-regular updates of its daily payment processing volume. It started at $1 million about a year ago. By the end of April, it was $2 million. By mid-May, $3 million. In late July, $4 million.
Then, last October, Square switched to “billions per year” instead of “millions per day,” presumably because that sounds more impressive. (That’s cool, I still have a TI-89 handy.) Its “$2 billion per year” run rate in late October suggests around $5.5 million per day. And today’s update — “$4 billion per year” — is about $11 million per day.
Assuming Square gets a 2.75% cut of all of the $11 million in payments processed per day, that’s around $300,000 in gross revenue per day, or a $110 million annual revenue run rate. Neat.
Plotting the run rate in this chart shows Square’s sexy growth curve — it actually seems to be accelerating a bit. (Not precise, because it’s based on PR opportunities and not necessarily internal milestones, but it should be close-ish.) Reaching $15 million per day — er, $5.5 billion per year — should happen this summer, and Square might even double its current rate this year.
Watching this company continues to be very exciting.
Update: Much more on Square in this lengthy feature for Fast Company, which notes that “almost all of [Square's 2.75% fee] goes back to Visa, MasterCard, and American Express.”