Square winds down costly relationship with Starbucks

SEATTLE — Payment-processing company Square, readying an expected $275 million initial public offering, says it won’t renew a high-profile pact with Starbucks that brought it plenty of business — but big losses.

Eager for a powerful partner when it launched back in 2012, San Francisco-based Square took a $25 million investment from Starbucks and made the coffee company a marquee customer.

But their love affair has unraveled. Starbucks CEO Howard Schultz stepped down from the Square board in late 2013. And Square’s preliminary IPO filing this week sheds light on the financial side of the relationship.

The breakup will take away a significant chunk of its revenue: In the first six months of 2015, Starbucks transactions accounted for $63 million, or about 11 percent, of Square’s total revenue.

But the deal also generated a $14 million loss for Square in those six months.

Accumulated losses since 2012 mean that Starbucks has cost Square a cool $84.5 million, or slightly less than a fifth of the cash it has burned through since then. Shedding Starbucks, however, isn’t likely enough to make Square profitable: Its net losses for the first six months of 2015 amounted to $77.5 million.