The payment company's stock climbed almost 12.7% to $16.95 on Thursday, adding to its year-to-date gains of 24.4% and surpassing its initial public offering price of $9.
Square CEO Jack Dorsey said that the company is focused on three areas—integration of services, automation, and harnessing technology to improve its platform—to continue growth in the business.
"Fastproductdevelopment benefitsallaspectsofourbusinessas a strongerplatformwillmakeusevenfaster," Dorsey said on the fourth-quarter earnings call. "Byfocusing andinvestingmoreinintegration,automationandplatform,wecanpushSquare,oursellers and the economyforward."
Square touted that it created Virtual Terminal, which allows for browser-based payments, in just two months and that the new product brought in $40 million in January.
The San Francisco-based finance business reported a loss of 4 cents a share for the three months through December, smaller than the 9 cent loss estimated by analysts in a FactSet survey. Adjusted revenue was $192 million, a 43% jump from prior year, surpassing estimates of $188 million.
The company's gross payment volume climbed 34% to $13.7 billion during the fourth quarter, for a total of $50 billion during 2016, up 39% from the prior year. The company provides credit card payment services though its Square app, card reader, and register using a mobile phone or tablet.
"Wedeliveredvaluetoourcustomersin awaythatmeaningfulgrewSquare'sbusinesstoscale,increasingrevenueandimproving margins," Dorsey said on an earnings call.
Josh Beck, Pacific Crest analyst who has an overweight rating on Square, sees growth in new areas outside of payment processing as a positive.
"Adjacent products like invoices contributed approximately 5% of payment volume while loan growth and food delivery also topped our expectations, offering early proof of the platform potential," Beck wrote in a note to clients. "Square has a rich ecosystem of transaction, SKU-level, customer and inventory data that could enable it to extend beyond payments and play a larger role in commerce."
While there were concerns over whether Dorsey could handle his dual roles as CEO of Twitter (TWTR) - Get Report and Square, the company continued to push out new products. Square became a public company in November 2015 and has been in operation for the last eight years.
In February, Square released its new "industry-specific" point-of-sale product called Square for Retail.
"Inadditionto integratingwithourpaymentsandourhardware,SquareforRetailintegrateswithourcustomer directlytogivesellersadvanceclient-tellingcapabilitiestobuildcustomerprofilesandprovide purchasinghistorydirectlyfromthepoint-of-sale," Dorsey highlighted. "Webelieveintegrationiswhysomanysellers chooseSquareandwewilldoubledownhere."
Square Capital provides loans to businesses and competes with online lenders like Lending Club (LC) - Get Report and OnDeck (ONDK) - Get Report . During the fourth quarter Square Capital had 40,000 business loans for a total of $248 million, an increase of 68% year-over-year.
"Our in-depth work on lending, delivery and payments leads us to believe that Square is set up for a consistent series of positive fundamental surprises over the next year," Pacific Crest analysts wrote in a note.
Credit Suisse analysts have an outperform rating on the stock with a price target of $17, saying that better cost control and revenue were some of the key factors that lead to the strong quarter.
"Management expects general and administrative [expenses] to be the biggest source of leverage, and continues to invest in product development and sales and marketing," Paul Condra, Credit Suisse analyst, wrote in a note to clients.
Other products include Square's food delivery service Caviar, and Instant Deposit that allows quicker access to money by instantly depositing $2,500 per transaction.
"Manyofourproductsarestillquiteyoungandpeopledon'tknowaboutthem yet," Sarah Friar, Square's CFO, said on an earnings call. "Butweabsolutelyknowthatsellerswantfasteraccesstofunds,andthen whentheyget fasteraccesstofundsthey'reabletousethatforgrowth."