Business Context and Reporting Period
This Form 8-K filing by Square, Inc. (now Block, Inc.) reports on the completion of a material asset disposition on October 31, 2019. The Company sold its Caviar food delivery business to a subsidiary of DoorDash, Inc.
Key Financial Metrics and Transaction Details
- Transaction Consideration: The sale was executed for $410 million in cash and DoorDash preferred stock.
- Financial Statements: The filing references unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2019, and the year ended December 31, 2018, as well as a pro forma balance sheet as of June 30, 2019 (Exhibit 99.3).
- Historical Data: Selected unaudited quarterly condensed statements of operations for the Caviar business are provided for the six fiscal quarters from March 31, 2018, through June 30, 2019 (Exhibit 99.2).
- Revenue, Profit, and Cash Flow: Specific consolidated revenue, profit, cash flow, margin, debt, or liquidity figures for Square, Inc. are not explicitly stated in the text of this filing; they are contained within the referenced exhibits.
Material Changes and Related Party Considerations
The primary material change is the divestiture of the Caviar business. The transaction involved a related party consideration due to the ownership structure of DoorDash:
- Sequoia Capital holds a greater than 15% ownership interest in DoorDash.
- Roelof Botha, a member of Square's Board of Directors, is a director and stockholder of an entity affiliated with Sequoia Capital.
- Mr. Botha recused himself from negotiations and Board discussions regarding the sale.
- The Company's audit and risk committee reviewed and approved the transaction pursuant to its related person transactions policy.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, management commentary on future outlook, or specific risk factors beyond the disclosure of the related party transaction. The Company issued a press release on November 1, 2019, announcing the completion of the sale (Exhibit 99.1).
Investor Verification Checklist
- Review Exhibit 99.3 for the unaudited pro forma financial impact of the Caviar sale on Square's consolidated results.
- Examine Exhibit 99.2 to understand the historical financial performance of the divested Caviar business.
- Verify the valuation and terms of the DoorDash preferred stock received as part of the $410 million consideration.
- Confirm the details of the related party transaction approval process involving the audit and risk committee.