Square Inc. executives are bullish on the potential of the company's small-business lending product, Square Capital, where they see an untapped pool of merchant borrowers.
CFO Sarah Friar said Square was "super pleased" with the results of Square Capital in the most recent period, as the product saw loans facilitated grow 68% year over year. The growth potential of the product is a function of the company's user base, she said, which continues to grow. Square Capital also has a strong renewal rate, according to Friar, which underscores its value and user-friendly nature.
Chairman, President and CEO Jack Dorsey said the market for Square Capital is "massive" because the company has tapped into something new. Dorsey said the loan product is reaching a new market of merchants who usually rely on friends and family for loans. The payments company is not competing with financial institutions and the average loan size is $6,000, according to the executive.
"We think that's a massive opportunity and no one else is really going after it, especially with all the data that we have, so we can make really calculated judgments and decisions around it," Dorsey said. "We're really happy with the performance of Square Capital and its outlook."
Internationally, Square has approached each new market "thoughtfully," given the amount of work and friction involved in opening a new market in offline payments, he said.
In the U.K., Dorsey said it is still early for Square, but the company is glad to be seeing patterns similar to ones it saw in the U.S.
"We are not the first mover in the market and we don't believe that is critical," Dorsey said. "We just need to make sure that we are the best."
That requires a focus on the "cohesive ecosystem, speed, simplicity and elegance" of Square, the executive added. Also in the U.K., Dorsey said the company is pleased to be replicating the success it saw in retail in the U.S.
"We have a super energized team to continue to build in the market, and we're excited to continue to serve more and more sellers," he added. "But we're focusing on our strengths, the No. 1 of which is our cohesion, which we just don't see any competition in that sense."