On The Fly: What to watch in Square earnings report

Square (SQ) is scheduled to report results of its fourth fiscal quarter after the market close on February 22, with a conference call scheduled for 5 pm EDT. What to watch for: 1. EXPECTATIONS: During the company's last earnings call, Square raised is fourth quarter revenue view to $438M-$443M and its 2016 revenue outlook to $1.695B-$1.7B, with consensus at $440.56M and $1.68B, respectively, at that time. Additionally, the company said it sees 2016 adjusted revenue to be in the range of $677M-$680M, representing 50% year over year growth at the midpoint. Revenue consensus for the quarter and year now stand at $449.6M and $1.7B, respectively. 2. CATALYSTS: On November 14, Pacific Crest analyst Josh Beck upgraded Square to Overweight from Sector Weight, with a $15 price target, saying he expects the company's payments business and operating expense efficiency to enable its fundamentals to beat expectations over the next year. The analyst also noted that he thinks these catalysts could spur investors to focus on the company's profitability and cash flow, causing the shares to undergo a "positive rerating." 3. POSITIVE TRENDS: The following month, Deutsche Bank analyst Bryan Keane also upgraded Square to Buy from Hold, as he views the company as well positioned to capitalize on many positive trends, including the growth in micro and small business, electronic payments and the move toward integrated solutions. Square's ownership of its own platform allows it to gain and retain clients more efficiently than industry peers and its model is underappreciated by the Street, added Keane, who raised his price target on the stock to $17 from $13. 4. APPLE PAY PARTNERSHIP: Late in January, Square announced that "small businesses across the U.S. will be able to process more than $12,000 worth of Apple (AAPL) Pay payments for free - $350 worth of savings in Square processing costs - by encouraging their customers to pay with Apple Pay. Sellers can request a free Apple Pay marketing kit with collateral encouraging customers to pay with their iPhone or Apple Watch and staff training materials to educate employees about accepting Apple Pay." The company also noted that customers can order Square's $49 card reader for $29 under a limited time offer. 5. STOCK SALE PLAN: In November, Square disclosed that its CEO Jack Dorsey has entered into a stock trading plan to sell shares over the course of the next twelve months, in accordance with a rule 10b5-1 plan. The prearranged plan was finalized in August, and total shares available for sale are capped at approximately 7% of Dorsey's overall holdings. "The proceeds from these sales are for Dorsey's financial and tax planning purposes and to enable him to help further fund the Start Small Foundation," the company noted.