Square Went Public in 2015. What Now?

Few companies have faced as big a distraction on the road to going public as Square did in 2015. Not only is it in the cutthroat and increasingly commoditized business of payment processing, but just mere weeks before it went public, it discovered that its founder and vision-setting CEO Jack Dorsey was suddenly going to be a part-time chief executive.

Dorsey, a Twitter co-founder, vowed to devote the waking hours when he was not at Square to rescuing Twitter from potential irrelevance. Despite these challenges, Square made it out of the IPO gate in November. It didn’t go exactly as planned, but the company made it out alive. Yet if the move is to be viewed as a success, 2016 will be the year Square has to prove it belongs.

Square’s November IPO raised $279 million, but that wasn’t the story — the company’s declining valuation was. Square went public at $9 a share, a discount from the $11 to $13 range it was shooting for, and also from the $15.46 investors in its last private round paid. Wary investors had questions about how the company would become profitable, what its failed Starbucks deal meant for its ability to attract big-company customers and how Dorsey would oversee two public companies as CEO at the same time.

The stock closed the first day of trading at $13.07, meaning some of the big institutional investors that bought into the IPO at $9 made a pretty penny before cashing out. The price has been pretty stable since then, finishing Thursday at $12.78 a share, a 2 percent decline from the closing price on its first day of trading. The main goal of an IPO is to raise capital, and Square did that, just not at the price it had hoped.

Square sold investors on the promise that it is going to be a lot more than a payments company. That vision entails getting the small businesses that use its payments processing service to pay extra to use an array of other software financial services. Among them are payroll software, outsourced food delivery and loan-like merchant cash advances.

This business unit accounted for 12.5 percent of Square’s adjusted revenue in the third quarter of this year, but investors will want to see that percentage grow through the course of 2016 to prove Square can build other real businesses around its payments core, giving small businesses more reasons to stick around. Investors like this business unit for another reason, too: It boasted a gross profit margin in the first half of 2015 that was 80 percent higher than that of the payments business.

At the same time that Square diversifies, the company must guard against spreading its focus too thinly across too many initiatives — something that has plagued it in the past. Square spent several years and tons of resources trying to make Square Wallet a hit consumer product — in large part due to Dorsey’s love for it — to no avail. Now, Dorsey is talking like he wants to bring something similar back from the dead.

Clearly, he remains an unabashed lover of consumer products. But investors have a reason to question whether that’s the right direction for Square.

This article originally appeared on Recode.net.