Refinitiv, the global financial data provider, had forecast that Square would record earnings of $0.16 per share in the first-quarter, but the payment processor posted earnings of $0.41 per share. Square recorded $5.06 billion in revenue, eclipsing forecast of $3.36 billion made by Refinitiv.
Notably, Bitcoin single-handedly generated revenue of $3.50 billion, reflecting a surge of 1000% in a matter of 12 months. Square’s quarterly gross profit also jumped 79% y-o-y to hit $964 million.
Over 50% of the company’s profits can be ascribed to its crypto supporting app, named Cash App, which generated gross profits of $495 million, an increase of 171% compared with Q1 2020.
Even though Bitcoin generated billions, the crypto accounted for only 2% of the Square’s aggregate gross profit with $75 million. The firm noted “Bitcoin revenue and gross profit benefited from a year-over-year increase in the price of Bitcoin, Bitcoin activities, and growth in customer demand.”
Furthermore, Jack Dorsey, CEO of Square, during the earnings call, stressed the company’s objective of backing Bitcoin to transform into the native crypto of the internet. He stated:
“Our focus, first and foremost, is on enabling […] Bitcoin to be the native currency. It removes a bunch of friction for our business. And we believe fully that it creates more opportunities for economic empowerment around the world.”
In spite of issuing a forecast that Cash App will record triple digit growth on y-o-y basis this year, Square’s CFO Amrita Ahuja pointed out that the government stimulus will probably get pushed up due to the latest upbeat performance of its payment app.
He stated: “We believe our customers had greater spending power from government funds, which drove uplift in inflows in March. We have since seen normalization with inflows down 16% in April, compared to March.”
Square has turned out to be one of the foremost companies to use a portion of its treasury funds to invest in Bitcoin. The firm bought 4,709 Bitcoins for $50 million in October 2020. While the value of Bitcoin bought by the firm in the first phase is now $263.70 million, the second phase involving accumulation of 3,318 Bitcoins with an investment of $170 million is now running in a loss of $20 million. Overall, the firm possesses Bitcoins worth $472 million.