Re:Square files for IPO
by nkurz on Thursday October 15, 2015 @03:06AM
(#10391767)
Doing some back of the envelope calculations I can't see any scale where they are profitable given their current fee structure.
Could you explain? I'm sure you have much more experience reading such numbers[1] than I do, but at a glance they look viable if they can grow to something around double their size.
Ignoring Starbucks and doubling the amounts for 1H 2015 to make it annual, they'll have about $1000M of revenue from transactions, and will pay about $600M of transaction costs. They'll have about $500M of operating costs for 2015 and $100M of various other costs.
If in 201X they were to be double this size, they'd have $2000M of revenue, and $1200M of transaction costs. If they can keep their operating and other costs below $800M, they'll be profitable. Of their expenses, "Transaction and advance losses" will probably scale linearly, but all the rest plausible to be significantly sublinear.
Is this simplistic scenario clearly impossible for some reason?
Could you explain? I'm sure you have much more experience reading such numbers[1] than I do, but at a glance they look viable if they can grow to something around double their size.
Ignoring Starbucks and doubling the amounts for 1H 2015 to make it annual, they'll have about $1000M of revenue from transactions, and will pay about $600M of transaction costs. They'll have about $500M of operating costs for 2015 and $100M of various other costs.
If in 201X they were to be double this size, they'd have $2000M of revenue, and $1200M of transaction costs. If they can keep their operating and other costs below $800M, they'll be profitable. Of their expenses, "Transaction and advance losses" will probably scale linearly, but all the rest plausible to be significantly sublinear.
Is this simplistic scenario clearly impossible for some reason?
[1] https://www.sec.gov/Archives/edgar/data/1512673/000119312515...