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Square Inc., once known for the little white payment dongles used by small businesses, is deepening its online push with the acquisition of website-creation platform Weebly.
The company said Thursday that it plans to acquire Weebly for $365 million in cash and stock, a deal aimed at making it easier for small businesses to have both online and offline stores.
“Omnichannel is our top priority this year,” Alyssa Henry, Square’s seller lead, said on a call with reporters Thursday. “The goal is to enable sellers to start an online business with one cohesive solution.”
Henry declined to specify how much of Square’s revenue comes from online sales, only saying that it represents “a nice share of the business that should continue to grow.” The company currently enables businesses to use its payment technology online via APIs and partnerships.
Square sees “very little overlap” between Weebly’s 625,000 paying subscribers and Square’s current merchant base, according to Chief Financial Officer Sarah Friar, who views the acquisition as “a very nice way to be able to cross-sell.”
Friar also noted that about 40% of Weebly customers are based outside the U.S., and many of those are in the “core markets” that Square is trying to expand into. Square is currently available in Japan, Canada, Australia, and the U.K., and the company is attempting to deepen its presence in these countries where it must work on building brand recognition.
“We think this acquisition makes a great deal of sense given the ongoing and accelerating shift to omni-channel payments,” wrote Jefferies analyst Ramsey El-Assal, who rates the stock at buy with a $60 target. “We view Weebly as complementary to Square’s more card-present focused solutions. The deal deepens Square’s Subscription & Services biz, which has been a key driver of Square’s impressive share gains since the IPO.”
In response to a question on the call about whether the deal was a response to the threat of Shopify Inc. , which enables businesses to create online stores, Square’s executives said that the Weebly acquisition will put it in a “unique position in the space” as Square will be able to serve businesses with both hardware and software offerings.
The company also competes with Stripe and PayPal Holdings Inc.’s Braintree platform when it comes to enabling e-commerce purchases.
Square shares were up 1.6% in after-hours trading, after closing up 4.5% in Thursday’s session in the wake of strong earnings from Visa Inc. and PayPal. Square’s stock is up 159% over the past 12 months, while the S&P 500 has gained 12%. Square is due to report March-quarter earnings after the market closes on May 2.