Square Expects to Be Profitable Next Year

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By Seth Fiegerman2014-05-14 18:29:22 UTC

Rumors of Square's demise may have been greatly exaggerated.

Square expects to turn a profit by this time next year, or at latest a couple months after that depending on which investment plan it pursues, according to internal documents obtained by Fortune .

This report comes on the heels of a negative report in The Wall Street Journal , which said that Square was burning through cash and shopping itself around.

See also: Square: No, We Haven't Been in Acquisition Talks

The Fortune story confirms some of the details in the Journal report, including that Square posted a $100 million loss in 2013 (not to mention a $25 million loss last year from a deal with Starbucks). However, Fortune pegs much of the overall loss to increased investments in hiring and claims that Square has a better gross margin (about 34%) on the transactions it processes than had been previously reported.

"The gross profits we earn on transactions already pay for the non-growth expenses of the company," Roelof Botha, a partner at Sequoia Capital and a board member of Square, told Fortune. "We could be profitable tomorrow morning if we said, 'Lets not spend money to keep growing.' "

A rep for Square declined to comment on the financial information in the report.

The mobile payments startup was initially rumored to be considering a public offering this year, but more recent reports have suggested it would be put off.

Topics: Business, Square, starbucks, Startups