Square, Inc. (SQ) reported first-quarter 2021 earnings this week, and the company revenues vastly surpassed the analyst’s expectations. Quarterly revenues to start the year came in at over $5B USD, compared to average analyst projections anticipated $3.37B. In the last quarter of 2020, the company purchased $50M worth of BTC and followed that purchase up with another $170M worth of BTC in the first quarter of this year.
Cash App & Crypto
Square’s mobile-driven app, Cash App, saw fruitful engagement with Bitcoin on the app. Bitcoin volume multiplied year-over-year for the firm, going from $306M a year ago to over $3.5B in this past quarter. Profits realized from crypto transactions over the quarter totaled $75M.
Cash App is not focused on burdening consumers with crypto transaction fees, and while the gross profit on these transactions may seem small relative to total transactions (approximately a 2% margin), crypto gross profits accounted for nearly 8% of the firm’s total gross profit.
These profits helped Square overachieve on profits per share as well, reporting 41 cents versus analysts anticipated 16 cents per share. Quarterly gross profits totaled $964M for the first quarter, an increase of 79% year-over-year.
Cash App itself brought in $495M in quarterly gross profit, up 171% year-over-year.
Related Reading | How Coinbase, Square, and Fidelity Will Support Bitcoin
Square’s Crypto Purchases
Arguably the juiciest meat on the bone for Square with regards to crypto was the company’s direct BTC purchases. After buying roughly $220M of BTC over the past two quarters, the company reported at the end of the first quarter that the fair market value of their Bitcoin investment was $472M.
Square has supplemented these purchases with other broader initiatives as well, including the launch of COPA, the Cryptocurrency Open Patent Alliance. COPA is geared towards ensuring open access patents around crypto technologies.
BTC has been a driver this year for Square's growth this year | Source: BTC-USD on TradingView.com
Square’s CEO Jack Dorsey has shown an optimistic perspective with regards to Bitcoin and broader crypto in the past, and the recent earnings call echos his previous sentiments. Dorsey stated on the call that the firm envisions Bitcoin as having the potential to be the internet’s native currency and that Square wants to “further that as much as we can”.
Dorsey also cited crypto enabling “more opportunities for economic empowerment” and the ability to facilitate transactions with less friction. All the while, the firm still acknowledged that volatility and consumer preferences can make for a bumpy ride; however, Square remains committed and optimistic especially around Bitcoin, describing it as “an instrument of global economic empowerment” on the recent earnings call.