Investors in Square Inc (NYSE:SQ) have enjoyed a remarkable year. Shares in the innovative payment processing company are up a remarkable 152% over the past year, crushing the S&P 500's paltry-by-comparison 17% gains. Square's stock has skyrocketed as the market has witnessed its resounding success, growing its business quarter after quarter. In its most recently reported quarter, for instance, Square's gross payment volume increased 32% year over year to $16.4 billion and its adjusted revenue increased 41% to $240 million.

Square recently announced what should be another catalyst for its business: a strategic partnership with the event-planning platform, Eventbrite. As part of the agreement, Square will power all of Eventbrite's payment processing, including mobile, online, and in-person payments. Square also invested $25 million into Eventbrite.

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In the press release, Alyssa Henry, Lead Seller at Square, made the case that the partnership was a natural fit for both companies:

Eventbrite's global network of event creators have the same entrepreneurial spirit and drive as the millions of sellers who run their businesses on Square. We're thrilled to bring Square's payments technology to Eventbrite. As the lines that separate online and offline business fade, we look forward to helping them further simplify all aspects of commerce, so they can stay focused on their core business of powering great live events.

What Square gets out of the deal

While the line being drawn around live event planning is vague, it should be noted that Square is the second payment processing company to make a move into this space this year. This past summer, Global Payments Inc (NYSE:GPN) acquired ACTIVE Network from the private equity firm Vista Equity Partners. ACTIVE Network manages the software behind a number of sports leagues, athletic events (marathon races, mud runs, etc.) and youth camps. At the time, Global Payments' management noted the vast size of the total addressable market and how fragmented it was. What we know of Eventbrite's numbers reinforces the idea that the market for live event planning is massive.

Eventbrite advertises itself as the "world's largest event technology platform." While it's not a public company -- making it impossible to get detailed numbers -- the company's website states the company coordinates two million events each year and processes two million ticket sales per week. Eventbrite also has a global presence, having sold tickets in over 180 countries.

Man holding Square card reader in one hand and a smartphone in other hand with bins of produce in background.

Square recently made deal with Eventbrite to process all payments across the event technology platform. Image source: Square Inc.

Assuming Eventbrite's payment processing fees stay the same, Square gains access to about 104 million tickets sold per year for a 3% payment processing fee. While event organizers are allowed to use other payment processors, another safe assumption to make is that the majority will use Eventbrite's in-house payment processor. Eventbrite is careful to spell out to potential customers that staying in-house for payment processing leads to higher sale conversion rates and makes it easier to manage events. While it is impossible to estimate how all of this will translate to Square's top and bottom lines, as there are far too many variables to account for, it will almost assuredly have a material impact.

Another positive for Square out of this deal is that Eventbrite's 3% payment processing fee is slightly higher than Square's current take rate of 2.94%.

Square's culture of innovation allows it to keep winning

Square's payment platform will allow event organizers to view all sales -- no matter how the payment was made -- from a comprehensive dashboard that will permit organizers to more easily manage events. In a post on Medium, Carl Perry, Developer Lead at Square, said this impressive technology was built on top of the same technology that was used to transform Caviar from a simple food delivery service into a comprehensive food ordering platform. He said, "The functionality we built for Caviar and other marketplaces is part of the foundational platform we will leverage for Eventbrite -- our e-commerce and Point of Sale APIs will drive a single omnichannel payments platform that better services Eventbrite's event creators, and ultimately event attendees with a seamless purchasing experience."

Square's business success is built upon its culture of innovation, which has led to lucrative opportunities outside of what one would normally expect from a payment processing company, such as its Square Capital and Caviar services. As evidenced by this new partnership, the technology behind these services is now opening up entirely new opportunities for Square. If they haven't yet, investors need to sit up and recognize that it's hip to be Square.

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.