Square Inc. posted a better-than-expected 32% jump in revenue for the latest quarter, prompting the payment-processing company to raise its annual revenue guidance.

For the year, the company now expects sales between $1.69 billion to $1.70 billion, up from a previous forecast of $1.63 billion to $1.67 billion. Analysts surveyed by Thomson Reuters expect $1.68 billion.

The company also raised annual guidance for adjusted revenue and adjusted earnings before interest, taxes, depreciation and amortization to a range of $677 million to $680 million and $31 million to $33 million, respectively.

The company narrowed its losses from the prior year, with transaction revenue climbing 38% to $388.3 million, offsetting a 78% fall in Starbucks transaction sales to $7.2 million. The coffee chain is switching to a new payment processor.

During the third quarter, the company process $13.2 billion in payments, an increased of 39% from the same period last year.

Shares of Square climbed 2% to $11.30 after hours.

For the latest quarter, Square reported a loss of $27.3 million, narrower than its year-earlier loss of $29.6 million. On a per-share basis, the company posted a loss of 9 cents, compared with a loss of 20 cents a year earlier.

Revenue rose 41% to $439 million.

Analysts surveyed by Thomson Reuters expected a loss of 11 cents on $431 million in revenue.

For the current quarter the company expects net revenue between $438 million and $443 million. Analysts expect $441.6 million.

Square's hardware sales almost doubled to $8.2 million. That came with accelerating hardware costs going to $15.7 million from $5.7 million a year earlier, as Square spends to develop and distribute the new devices that work with contactless mobile-phone apps and so-called chip cards with enhanced security features.

Software and data revenue jumped to $35.3 million from $14.7 million, thanks in part to Square Capital, the company's lending arm and an expected source of profitability growth.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

(END) Dow Jones Newswires

November 01, 2016 17:25 ET (21:25 GMT)

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