IPO Plans Disclosed by Payment Startup Square

IPO Plans Disclosed by Payment Startup Square

Jack Dorsey’s schedule is going to get even busier. On Wednesday, the mobile payment startup Square, one of the companies that Mr. Dorsey runs, disclosed its prospectus of the initial public offering to the public, highlighting that it is close to a road show for selling stock to investors. The last 10 days have been pretty packed with action for the tech executive as last week, he was named the permanent chief of Twitter. On Tuesday, the CEO had also announced that in an attempt to lure more users to the service, he had plans to lay off about 8% of the staff at the social networking firm.

Mr. Dorsey already has a lot on his plate and the disclosure of the prospectus of Square’s IPO is going to add to it. Previously, Square had filed the document confidentially, but was not open to the public. The document provided a quick glance at the financial information of a payment startup that has had almost an equal amount of champions and naysayers. According to the filing, the revenue of the company last year increased to $850 million, which was a rise of about 54% as compared to the year before. However, there was also an increase in losses in 2014 as opposed to 2013 and they amounted to $154 million.

This means that the 38-year-old Mr. Dorsey will be selling off a money-losing company to investors when there has been a lackluster reception given to IPOs such as that of Pure Storage, a recent technology firm. Furthermore, questions are also being asked about Mr. Dorsey’s ability of operating as the chief executive of both Square and Twitter. Navigating the turnaround of one company and taking another public is no easy task and he has a lot of work to do on both ends. Analysts have said that it is very rare for anyone to serve two masters successfully.

The CEO’s multiple jobs were mentioned in the prospectus of Square’s IPO as it said that his dual roles may have an adverse impact on his ability of devoting effort, time and attention. A spokesman for Square, Aaron Zamost did not comment on Wednesday, but last week, he had stated that Mr. Dorsey had the ability of doing justice to both companies at the same time. The initial public offering filed by Square is worth $275 million, which is subject to change. Launched in 2009, the aim of the payment startup was to revolutionize payment processing for small and medium-sized businesses.

The company distributed a square-shaped and small piece of hardware for this purpose. Millions of sellers use this hardware as it is used for processing credit card transactions. Mr. Dorsey is highly committed to the company as the prospectus showed that he is the biggest shareholder with a stake about 24.4%. The next largest shareholder is Khosla Ventures, which has a stake worth 17.3%. Nonetheless, there have been lots of questions about the IPO prospects of Square as it is believed that margins for payment processing are very thin.

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