Square shares are crashing after reporting lower than expected earnings
Square shares dropped as much as 15% in after hours trading on Thursday, after the payments company reported widening losses as spending accelerated.
Operating expenses increased nearly 72% year-on-year to $207 million for the quarter, causing Square's net loss to reach $96.7 million, nearly double the level at this time last year.
Excluding certain items, Square said it lost $0.14 per share, which was larger than Wall Street expectation of a loss of $0.09 a share.
Square beat Wall Street targets on the top line, generating quarterly revenue of $379.2 million, up 51% year over year, and higher than $343.6 million analysts were expecting.
There was also a one-time charge of roughly $50 million as a result of a lawsuit against Robert E. Morley Jr., a professor at Washington University in St. Louis, who claimed to be the original creator of Square's credit card reader.
Square said it signed a binding term sheet last quarter to potentially reach a settlement with the plaintiff, but the lawsuit contributed to a huge increase in general and administrative costs, which skyrocketed to $96 million this quarter from $28 million in the first quarter of last year.
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