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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ooTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period fromtoCommission File Number 001-37622SQUARE, INC. (Exact name of registrant as specified in its charter)Delaware 80-0429876 (State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number) 1455 Market Street, Suite 600 San Francisco, CA 94103 (Address of principal executive offices, including zip code) (415) 375-3176 (Registrants telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act:Title of Each ClassName of each exchange on which registered Class A Common Stock, $0.0000001 par value per shareNew York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES NO o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES o NO Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T ( 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES NO o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ( 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company“ in Rule 12b 2 of the Exchange Act. (Check one): Large accelerated filer Non-accelerated filer o Accelerated filer o Smaller reporting company oEmerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the closing price of a share of the registrants Class A common stock on June 30, 2018 as reported by the New York Stock Exchange on such date was approximately $18.6 billion . Shares of the registrants Class A common stock and Class B common stock held by each executive officer, director and holder of 5% or more of the outstanding Class A common stock and Class B common stock have been excluded in that such persons may be deemed to be affiliates. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose. As of February 22, 2019 , the number of shares of the registrants Class A common stock outstanding was 327,326,001 and the number of shares of the registrants Class B common stock outstanding was 92,368,406 . Portions of the registrants Definitive Proxy Statement relating to the Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. Such Definitive Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of the registrants fiscal year ended December 31, 2018 .TABLE OF CONTENTS Page NoPART I Item 1. Business 4 Item 1A. Risk Factors 16 Item 1B. Unresolved Staff Comments 40 Item 2. Properties 40 Item 3. Legal Proceedings 41 Item 4. Mine Safety Disclosures 42PART II Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 43 Item 6. Selected Financial Data 45 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations 50 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 69 Item 8. Financial Statements and Supplementary Data 71 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 118 Item 9A. Controls and Procedures 118 Item 9B. Other Information 119PART III Item 10. Directors, Executive Officers and Corporate Governance 120 Item 11. Executive Compensation 120 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 120 Item 13. Certain Relationships and Related Transactions, and Director Independence 120 Item 14. Principal Accounting Fees and Services 120PART IV Item 15. Exhibits, Financial Statement Schedules 121 Item 16. Form 10-K Summary 124Signatures 125SPECIAL NOTE REGARDING FORWA RD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “appears,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Annual Report on Form 10-K include, but are not limited to, statements about our future financial performance, our anticipated growth and growth strategies and our ability to effectively manage that growth, our ability to invest in and develop our products and services to operate with changing technology, the expected benefits of our products to our customers and the impact of our products on our business; our anticipated expansion and growth in Gross Payment Volume (GPV) and revenue, including our expectations regarding larger sellers, our plans for international expansion, the expected impact of our recent acquisitions, our plans with respect to patents and other intellectual property, our expectations regarding litigation and positions we have taken with respect to our tax classification, our expectations regarding share-based compensation, our expectations regarding the impacts of accounting guidance, our expectations regarding restricted cash, and the sufficiency of our cash and cash equivalents and cash generated from operations to meet our working capital and capital expenditure requirements. We have based the forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Annual Report on Form 10-K. We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. All forward-looking statements are based on information and estimates available to the Company at the time of this Annual Report on Form 10-K and are not guarantees of future performance. We undertake no obligation to update any forward-looking statements made in this Annual Report on Form 10-K to reflect events or circumstances after the date of this Annual Report on Form 10-K or to reflect new information or the occurrence of unanticipated events, except as required by law.3PART I Item 1. BUSINESS Our Business We started Square in February 2009 to enable businesses (sellers) to accept card payments, an important capability that was previously inaccessible to many businesses. However, sellers need many innovative solutions to thrive, and we have since expanded to provide additional products and services to give them access to a cohesive ecosystem of tools to help them manage their business. In the same way that we have provided businesses with fast, elegant, and cohesive tools, we see an opportunity with our Cash App product to build a similar ecosystem of services for individuals. Our purpose of economic empowerment drives the development of all our products and services, as everything we do should give people accessible, affordable tools to grow their businesses and participate in the economy. Square is a cohesive commerce ecosystem that helps our sellers start, run, and grow their businesses. We combine sophisticated software with affordable hardware to provide sellers powerful payment and point-of-sale solutions. We achieve high seller acceptance rates and fast onboarding, while maintaining low risk and fraud losses as a result of our approach to risk management that emphasizes data science and machine learning. We focus on technology and design to create products and services that are cohesive, fast, self-serve, and elegant. These attributes differentiate Square in a fragmented industry that forces sellers to stitch together hardware, software, and payments services from multiple vendors. The foundation of our ecosystem is a full service, managed payments offering. Once a seller downloads the Square Point of Sale mobile app, they can quickly and easily take their first payment, typically within minutes. With our offering, a seller can accept payments in person via magnetic stripe (a swipe), EMV (Europay, MasterCard, and Visa) (a dip), or NFC (Near Field Communication) (a tap); or online via Square Invoices, Square Virtual Terminal, or the sellers website or app. Once on our system, sellers gain access to features such as next-day settlements, digital receipts, payment dispute management, data security, and Payment Card Industry (PCI) compliance.Our commerce ecosystem also includes point-of-sale software and services that help sellers make informed business decisions through the use of analytics and reporting. In the second quarter of 2018, we acquired Weebly to enable sellers to easily start or grow an omnichannel business with one cohesive solution. Sellers can manage orders, inventory, locations, employees, and payroll; engage customers and grow their sales; build a website or online store with Weebly; and gain access to business loans through Square Capital. We monetize these features through either a per transaction fee, a subscription fee, or a service fee. We have also extended our ecosystem to serve sellers with more specific needs. Our developer platform provides tools for developers to build on top of our existing products and services, and integrate with third-party solutions that work best for a sellers business. In addition, certain verticals, such as services businesses, retail sellers, and restaurants have access to industry specific products such as Invoices, Appointments, Square for Retail, and Square for Restaurants. We also serve sellers through Caviar, a food ordering service for pickup and delivery that helps restaurants reach new customers and increase sales. We have grown rapidly to serve millions of sellers that represent a diverse set of industries and sizes, ranging from a single vendor at a farmers market to multi-location businesses. Square sellers also span geographies including the United States, Canada, Japan, Australia, and the United Kingdom. In the year ended December 31, 2018 , we processed $84.7 billion of Gross Payment Volume (GPV), which was generated by nearly 1.8 billion card payments from approximately 342 million payment cards. We processed $65.3 billion and $49.7 billion of GPV in 2017 and 2016 , respectively. Our ability to add new sellers efficiently, and help them grow their business after they join our platform, has historically led to continued and sustained growth. Our existing sellers also represent a sizable opportunity to up-sell and cross-sell products and services with reduced incremental sales and marketing expense. Cash App is an ecosystem of financial tools for individuals to send, spend, and store money. With Cash App, customers can send and receive P2P (peer- to-peer) payments, receive direct deposit payments, and fund their account with bank account or debit card. Customers can make purchases with their Cash Card, a Visa prepaid card that is linked to the balance stored in Cash App. With Cash Boost, customers receive instant discounts when they make Cash Card purchases at designated merchants. Customers can also use their stored funds to buy and sell bitcoin within Cash App. 4Our Products and ServicesManaged Payments Solutions The foundation of our ecosystem is a full service, managed payments offering. Sellers can onboard to Square in minutes and, once onboarded, accept payments in person via swipe, dip, or tap of a card or online via a stored card on file or payment entry form. Sellers pay a transparent transaction fee which includes next-day settlements (or instant settlement for an additional fee via Instant Deposit), payment dispute management, data security, and PCI compliance. During the first quarter of 2019, we launched Square Card to provide a new way for sellers to spend and manage their funds. Square Card is a free business prepaid debit card that enables sellers to
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