Last week, Square (NYSE:SQ) posted another quarter of surging revenue growth and improved profitability. Adjusted revenue surged 68% year over year as the company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped from $34 million in the year-ago quarter to $71 million. Propelling this growth was a 29% year-over-year increase in gross payment volume and an impressive 155% jump in subscription and services-based revenue.
While Square's earnings helped show how well the company is doing, management provided further context on the financial-technology company's impressive execution during Square's third-quarter earnings call. Two notable takeaways from the call included a closer look at Square's wild top-line growth and how a recently launched product is already morphing into a meaningful catalyst.
About Square's staggering revenue growth
Square's steep third-quarter revenue growth rate of 51% -- 46% when excluding revenue from recently acquired companies -- by itself does a good job making a case for the company's strong momentum. But a closer look at the strength Square is seeing across its top line, which includes six quarters in a row of accelerating revenue growth rates, highlights an exceptional growth story.
Here's Square CFO Sarah Friar on the company's revenue growth.
To put it in perspective, our total net revenue grew ... 46% organically, but our adjusted revenue, which is really what we focus on, grew 68% year-over-year, taking out the acquisitions of Zesty and Weebly, which we did in Q2, that growth rate [was] 56% year-over-year and that is still accelerating off of Q2, so I think that's remarkable [and] just really speaks to the strength of the ecosystem and the interplay that we see across all of our products.
Importantly, management expects more strong growth in Square's fourth quarter. The company guided for adjusted fourth-quarter revenue between $446 million and $451 million, representing 59% year-over-year growth based on the midpoint of this guidance range.
Square for Restaurants: A key catalyst
Earlier this year, Square launched a platform for restaurants aimed at streamlining both front- and back-end operations. Just as important, the platform gave restaurants easier access to the rest of the products and services in Square's ecosystem, such as Square Capital, payroll, and its food delivery service, Caviar.
During the call, Friar said she expects the product to be a meaningful catalyst for the company.
There [are] over 300,000 full-service restaurants. Here in the U.S. alone, that's $200 billion by annual gross receipts. ... So we do think it has a big potential TAM [total addressable market] and we do think it will continue to contribute meaningfully to revenue as we go into 2019.
Highlighting how big these customers are, Friar said the average gross-payment volume of restaurants using the platform continues to be around $650,000.
Between Square's overall top-line momentum and the impressive performance of Square's newer products, investors can expect the company to continue growing at impressive rates in 2019 and beyond.