Payment processing company Square (NYSE:SQ) announced its second-quarter earnings on Aug. 2, and it beat analysts' expectations on both the top and bottom lines. In addition, Square reported impressive growth, not just in the core payment processing business, but in several other promising areas as well. Here's a rundown of the numbers, and where Square could go from here.

A solid earnings beat

Square generated $552 million in revenue versus expectations of $536.3 million, and on the bottom line, the company posted a loss of $0.04 per share, compared to analysts' estimates for a $0.05-per-share loss. During the quarter, Square saw $16.4 billion in gross payment volume, significantly higher than the estimates that called for $16.02 billion.

Along with the strong results, Square increased its full-year revenue and EPS guidance, now expecting revenue that's about 3.3% better than the previous guidance range, and earnings per share that are 22% higher, both based on the midpoints of the previous ranges.

Square card reader attached to a smartphone, in a toolbelt.

Square's payment processing solutions have allowed a variety of businesses to accept card payments. Image Source: Square.

Beyond the headlines

While the headline numbers were certainly better than expected, the real story when it comes to Square is its growth. For starters, the $552 million in revenue represented 26% year-over-year growth, and payment volume grew at an even more impressive 32%. Equally important, operating expenses grew at a slightly slower rate than revenue, at 25%.

Charts of Square's payment volume and revenue growth, and mix of sellers.

Image source: Square investor presentation.

Also, as you can see from the graphic (bottom left), Square has done an excellent job of attracting larger businesses to its products. While its core market remains smaller merchants, this could prove to be a lucrative growth area in the years ahead.

One particularly impressive area is Square's business lending business, Square Capital, which offers loans to business owners based on their revenue history with Square, and automatically repays the loan with deductions from the merchant's card payments.

During the second quarter, Square Capital made more than 49,000 business loans totaling $318 million, which is a staggering 68% more than it made in the same quarter a year ago. And there may be significant expansion potential ahead. In addition to just making business loans, Square recently rolled out a pilot program called Square Installments, which a seller can use to allow its customers to finance purchases over several months.

The Square Cash Card, the physical version of Square's Cash peer-to-peer payment platform, was also rolled out in June, allowing users to spend their balance wherever Visa cards are accepted. Square's goal with this is to build an "ecosystem of services" for individuals, similar to the one their payment-processing platform has provided for businesses.

These are just a couple of examples of Square's promising businesses that could drive growth even higher. In addition, Square has lots of international expansion potential. The company just recently expanded into the U.K., and is still in just a handful of markets.

The Foolish bottom line

Over the past year, Square's stock price has skyrocketed by 163%, so at about $26, it's obviously not as attractive as it was at $10. However, the stock has performed so well for a reason -- specifically, it has shown an ability to maintain a rapid pace of growth. And if Square continues to surprise analysts and grow at an impressive rate, the stock could still be a long-term bargain, even at the higher price.

Of course, no stock capable of rising so rapidly is without risk, and Square is certainly no exception. Growth could slow, margins could face pressure, or a number of other things could potentially happen. Even so, any risk could be more than justified by Square's potential, and I'm excited to see where Square goes from here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.