Shares of Square (NYSE:SQ) were trading more than 7% higher in after-hours trading on Wednesday, following the company's fourth-quarter and full-year results. Investors are probably impressed by the company's strong top-line performance, sharp growth in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and fast-growing Cash App business.

Here's a closer look at the quarter's results. 

A man using the Square Cash App

Cash App. Image source: Square.

Square's Q4 2019 financial results

Square's revenue jumped 41% year over year in Q4. However, when excluding revenue from food-delivery platform Caviar from the year-ago quarter to make the comparison fair (Square recently sold its Caviar business), revenue was up 46%. This is impressively a slight acceleration from revenue growth rates seen in the prior three quarters.

Net income for the period was $391 million, up from a loss of $28 million in the fourth quarter of 2018. But $373 million of this profit came from the company's gain on the sale of its Caviar business. Excluding this benefit, net income was $18 million, still up substantially from the company's loss in the year-ago period.

Adjusted EBITDA soared 46% year over year to $119 million.

Strong growth in subscriptions and services

Square's fast-growing subscription and services business, which includes revenue from products like the Cash App, Square Capital, and various seller subscriptions and services, continues to be an important driver for the financial technology company.

Total subscription and services-based revenue during the quarter jumped 78% year over year to $266 million when excluding Caviar from the year-ago period. Gross profit for the segment when excluding caviar was $227 million.

Cash App, in particular, was a key catalyst for this segment and for Square's business as a whole. Cash App revenue rose 96% year over year to $183 million. The app's gross profit climbed even faster, jumping 104% year over year to $144 million.

"In the fourth quarter, Cash App gross profit represented 27% of our overall gross profit," management said. In addition, Square finished the year with 24 million monthly active users -- up 60% year over year.

Looking ahead

Management expects more strong growth in both revenue and gross profit in 2020. For the full year, management guided for revenue to rise 30% year over year, or 33% when excluding Caviar from 2019. Square forecast gross profit to jump from $1.89 billion in 2019 to between $2.440 billion and $2.475 billion in 2020.

However, adjusted EBITDA isn't expected to grow as sharply as revenue and gross profit because of management's plans to reinvest incremental earnings into growth opportunities. Adjusted EBITDA for the full year of 2020 is expected to be between $500 million and $520 million, up from $417 million in 2019.

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