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Square’s quarterly profits more than doubled projections, due to Bitcoin’s spectacular surge.
Square Inc, a financial services company headquartered in the United States, estimates that its quarterly profits more than exceeded investor forecasts due to strong demand for cryptocurrency properties.
Refinitiv, a global financial data provider, estimated Square will gain 16 cents per share in the first quarter of 2021, but the company ended up receiving 41 cents per share. Square’s revenue was $5.06 billion, far above Refinitiv’s estimate of $3.36 billion.
Bitcoin alone generated $3.5 billion in sales, representing a 1,000% growth in just 12 months.
Square’s quarterly gross profit also surged 79% year-over-year to tag $964 million. More than half of the firm’s profits can be attributed to its crypto-friendly payment application, Cash App, which drove $495 million in gross profits — a 171% increase when compared to Q1 2020.
Though Bitcoin revenue was in the billions, the cryptocurrency accounted for 2% of the firm’s overall operating profit, accounting for $75 million.
“Bitcoin revenue and gross profit benefited from a year-over-year increase in Bitcoin price, Bitcoin activities, and growth in customer demand,” the company said.
During an earnings call, Square CEO, Jack Dorsey, emphasized the firm’s mission of supporting BTC to become the native currency of the internet, stating:
“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.”
Despite Square’s prediction that Cash App would continue to see triple-digit year-over-year growth in 2021, Amrita Ahuja, the company’s CFO, noted that government stimulus possibly aided the payments app’s recent results.
“We believe our customers had more spending power from government funds, which drove an increase in inflows in March,” he added, adding that “we have since seen a normalisation, with inflows down 16 percent in April compared to March.”
Square was one of the first companies to spend a part of the treasury in Bitcoin, purchasing 4,709 BTC for $50 million in October.
While the company’s first BTC purchase is now worth $263.7 million, it is down $20 million on a subsequent 3,318 BTC purchase in February for $170 million. The company reportedly has $472 million in BTC on hand.