What happened

Shares of digital payment and point-of-sale solutions company Square (SQ -2.28%) took a hit on Friday, falling as much as 17.2%. As of 11:50 a.m. EDT, the stock was down about 15%.

The stock's pullback follows Square's second-quarter earnings release. Though its adjusted top- and bottom-line figures came in ahead of estimates for the quarter, management's third-quarter forecasts for the two metrics were below what analysts were expecting.

A customer uses a chip reader built into Square Register

Image source: Square.

So what

Square's second-quarter adjusted revenue rose 46% year over year to $563 million, beating analysts' average forecast for revenue of $557 million. Adjusted earnings per share was $0.21, up from $0.13 in the year-ago period. On average, analysts expected the bottom-line figure to come in at $0.17.

Helping drive the quarter was Square's 87% year-over-year increase in subscription- and services-based revenue.

Now what

Looking to Q3, management guided for adjusted revenue to be between $590 million and $600 million. The midpoint of this guidance range is below analysts' average forecast for revenue of $599 million. In addition, Square's outlook for non-GAAP (adjusted) earnings per share during Q3 to be between $0.18 and $0.20 is below an analyst consensus estimate for $0.22 during the period.