Dorsey's Square reports smaller-than-expected quarterly loss

By Anna Irrera and Diptendu Lahiri

(Reuters) - Payments processor Square Inc (SQ.N) reported better-than-expected quarterly results on Wednesday, helped by its efforts to offer new services and attract larger customers.

The San Francisco-based company, which is run by Twitter Inc (TWTR.N) Chief Executive Jack Dorsey, posted a quarterly loss of 4 cents per share on revenue of $452 million.

Analysts on average had expected a loss of 9 cents per share on revenue of $450 million, according to Thomson Reuters I/B/E/S.

The company's shares rose 8 percent in after-market trading.

Square's technology allows mom-and-pop businesses to accept credit card payments on mobile devices. It has been trying to attract bigger merchants and enter new businesses such as financial software and lending.

The company processed $13.7 billion in payments in the fourth quarter, up 34 percent from the year-ago period.

Chief Financial Officer Sarah Friar said growth was boosted by business from bigger customers such as small chain stores. Earlier this month it launched a payments system developed to better meet the needs of retailers of any size.

Fourth-quarter payments volume from larger customers grew 47 percent over the year and accounted for 42 percent of total payments volume, up from 39 percent a year earlier.

Its Square Capital business, which offers loans to customers in exchange for a fixed percentage of their daily card sales, also contributed to revenue growth. It originated $248 million in loans last quarter, up 68 percent from the fourth quarter of 2015.

Spending on product development and marketing has cut into the bottom line. Operating expenses rose 15 percent to $180.5 million in the latest quarter.

Square estimated first-quarter revenue of $440 million to $452 million. Analysts had expected $450 million.

For the full year, Square estimated $2.09 billion to $2.15 billion in revenue, also in line with the average analyst expectation of $2.12 billion.

(Reporting by Anna Irrera in New York and Diptendu Lahiri in Bengaluru; Editing by Lauren Tara LaCapra and Richard Chang)