(Reuters) - Payments company Square Inc (SQ.N) posted better-than-expected third-quarter results and raised its full-year profit and revenue forecasts, as a growing number of larger merchants used its technology to process transactions.
The company, co-founded and led by Twitter Inc (TWTR.N) Chief Executive Jack Dorsey, now expects full-year adjusted profit of 24-25 cents per share and revenues of $2.18 billion to $2.19 billion.
It had earlier expected an adjusted profit of 21-23 cents per share and revenue of $2.14 billion to $2.16 billion.
The company’s shares initially rose in extended trading, before reversing course to trade down 1.4 percent. The stock has soared 169 percent this year up to Wednesday’s close.
Square’s Chief Financial Officer Sarah Friar said the raised guidance for the full year was in part attributable to the company attracting larger merchants.
“We are continuing to move upmarket,” Friar said on a call with analysts.
Square’s flagship technology is a credit card reader that turns smartphones or tablets into a payment terminal. It is popular with small merchants as it allows them to process credit card transactions without a cash register or expensive systems.
The company, which went public in 2015, has been seeking to diversify its revenue stream by attracting larger merchants and offering more diverse services to its clients, ranging from loans to payment cards.
Last month it expanded its hardware offering by launching a new point-of-sale device called Square Register, which aims to be better suited to the needs of larger businesses.
“Square Register fits our sellers’ needs as their businesses grow and become more complex,” Dorsey said on a call with analysts.
Payments from larger merchants, or those processing more than $500,000 in transactions annually, grew 64 percent.
Square’s gross payment volume – the total dollar amount of all card payments processed by sellers – climbed 31 percent to $17.39 billion in the quarter ended Sept. 30.
The San Francisco-based company's loss narrowed to $16.1 million, or 4 cents per share, from $32.3 million, or 9 cents per share, a year earlier. (squ.re/2AlRpyb)
Square posted an adjusted profit of 7 cents per share, while its adjusted revenue rose 45 percent to $257 million in the quarter.
Analysts on average had expected a profit of 5 cents per share on revenue of $245 million, according to Thomson Reuters I/B/E/S.
Reporting by Anna Irrera in New York and Nikhil Subba in Bengaluru; Editing by Savio D'Souza and Diane Craft