Square (NYSE:SQ) issued its first earnings report as a publicly traded company last week and though it grew revenue by 50%, many watchers are skeptical about its future.

In this segment from the Motley Fool Money podcast, Jeff Fischer, who joins Chris Hill and Jason Moser, explains what major issues Square has yet to address. He also examines unexpected avenues the company is focusing on to differentiate itself from competition.

A transcript follows the video.

This podcast was recorded on March 11, 2016.

Chris Hill: Square issued its first report as a public company. Fourth quarter sales for the mobile payment business up nearly 50%. Still no profits though, Jeff.

Jeff Fischer: No profits, and maybe not any until 2017, when they may make a few pennies per share. But Square is an interesting case study. It's a recent IPO as well. This was its first quarter as a public company. And yeah, growth is pretty strong, Chris, but I don't see yet what the competitive advantage is over the long term.

Square basically offers a point-of-sale device to mostly small merchants or retailers who want to do credit card sales through their iPad or phone. They offer that free, and the software is free, and then they make money on each transaction. It's typically a 2.7% transaction charge, and part of that money goes directly to the credit card companies, of course, for using the credit card network and whatnot. So, I don't see what the long-term advantage is. Their competitors, obviously, are the other point-of-sale providers, the credit card networks themselves, on and on.

Jason Moser: I've heard Square management talk before about, they feel like their advantage is in the analytics they can provide for their customers, which are typically small business customers. Now, whether that's the reality, I think time will tell. But I think that's where they see the business really heading. That's going to be one of the strengths that they ...

Fischer: I think so, too, Jason. Visa (NYSE:V) and MasterCard (NYSE:MA) are really focused on providing analytics as well. And that's why, if Square gets big enough and does well enough, I would think one of them may acquire it at some point.

Hill: Jack Dorsey is the CEO at Square, also at Twitter (NYSE:TWTR). Which shareholder base should be happier right now, considering that neither stock is performing particularly well?

Moser: I would think that probably the Twitter shareholder base is feeling pretty good right now, because I think the number of new features and innovations and relationships that they're forging over at Twitter has really, really accelerated since he's taken the position back there again. Square, I think, is in a bit of a tougher competitive position. There's not as much of a differentiator there as something like Twitter. I think Twitter is a very unique property, whereas Square, like Jeff was mentioning, the competitive advantage there is going to be a little bit more difficult to pinpoint.

Fischer: Yeah, it's a good question, if you had to buy just one, which one would you buy?

Moser: Personally, I ...

Ron Gross: Neither.

Fischer: (laughs)

Moser: (laughs) I own shares of Twitter, I haven't really entertained buying shares of Square.

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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.