• April 12, 2024

Square crushes earnings expectations amid continued growth of Cash App

This report has been updated to correct Square’s gross payment volume metrics.

Square saw another boom in its cash app ecosystem usage, which allowed the payment company to slightly exceed expectations for the first quarter.

Shares of Square
SQ, -3.41%
rose 1.6% after close of trading on Thursday.

The company posted net income of $ 39 million, or 8 cents per share, compared to a net loss of $ 106 million, or 24 cents per share, for the year-ago quarter. After adjustments, Square earned 41 cents per share compared to a 2 cents per share loss last year. The FactSet consensus demanded 17 cents per share of adjusted earnings.

Square had revenue of $ 5.1 billion in the first quarter, compared to $ 1.38 billion a year earlier. This is due to the continued growth of the company’s cash app, which enables peer-to-peer trading in Bitcoin
BTCUSD, + 0.72%
Purchases and stock trading. Analysts tracked by FactSet expected sales of $ 3.34 billion.

The company had transaction-based revenue of $ 960 million, subscription and service revenue of $ 558 million, hardware revenue of $ 28 million, and Bitcoin revenue of $ 3.5 billion.

While the Bitcoin wallet is a huge revenue driver for Square, the company only made gross profits of $ 75 million from that feature.

The company is also doing well with its Cash Card, a debit card that allows users to spend the money in their Cash App wallets. Square saw monthly cash card users grow to over 10 million in March, while weekly active users nearly doubled year over year to averaging 7 million.

The seller of Square’s gross payout increased to $ 29.8 billion from $ 24.7 billion last year. The company is making “significant strides with medium-sized sellers,” said CFO Amrita Ahuja when he called reporters.

The Cash App continues to benefit from growing inflows into the mobile wallet. Customers added around 55% more money to the Cash app in March than in February, Square said in its letter to shareholders.

“A major driver of Cash App’s gross profit growth has been inflows, or the amount of money our customers are pulling into Cash App,” the company said in its letter. One of his goals for the year is to make it easier for customers to do this.

Square is also working on merging its seller and cash app networks. During the first quarter, Square integrated its loyalty program into the Cash app so that customers who purchase items from a seller using Square’s loyalty feature can open the Cash app to manage their rewards.

“[W]We believe this seamless integration will help bring new customers to the Cash app while deepening the seller-buyer connection, ”the company said in its letter to shareholders.

In April, Square saw its GPV sales increase 144% year over year, or 21% year over year, a metric the company provided to compare with pre-pandemic times. The company also found that the Cash app’s gross profit growth slowed year over year in April as the comparable period in 2020 benefited from economic disbursements.

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