Square has reported $528 million in revenues in Q1 200, according to a shareholder letter issued by the firm on May 6th. Notably, around 60% of this was attributed to Bitcoin which contributed $306 million of the cash app revenue.
A mobile payments company, Square has been gaining significant market share according to these recent stats. The company’s year-to-year net revenue has grown by 44%, or $1.3 billion in the first quarter, while the gross profit rose by 36%.
The cash app, led by Twitter CEO Jack Dorsey also recorded the record-high new active users in March. The report says that this was largely from the shifts in consumer behavior; a product of marketing and user convenience.
Square’s Bitcoin Stats
The shareholder letter narrows down the BTC statics within Square’s ecosystem noting that this is a core business for the app:
“We deduct bitcoin revenue because our role is to facilitate customers’ access to bitcoin. When customers buy bitcoin through Cash App, we only apply a small margin to the market cost of bitcoin, which tends to be volatile and outside our control.”
Given these figures, BTC did not yield a big percentage of the gross profit as expected from the $306 million revenue figure. Square’s total profits in the first quarter totaled $183 million but the contribution from the Bitcoin business stood at a mere $7 million.
This is a noteworthy improvement compared to a total of $8 million in profit within the whole of 2019. In a recent filing with the SEC, Square highlighted a 367% revenue jump from BTC:
“Bitcoin revenue for the three months ended March 31, 2020, increased by $240.6 million or 367%, compared to the three months ended March 31, 2019. The increase was due to growth in the number of active bitcoin customers, as well as growth in customer demand.”
Despite this boost from Bitcoin, investors have not been particularly favorable with the changes to EBITDA over the past quarter. Jack Dorsey has come out in defense of this drop, citing the COVID-19 pandemic as a factor. He also recently said that the April figures have been quite impressive compared to March when economies took the biggest hit.
Stimulus Check Cutting Edge
Dorsey noted that the firm's recent success could be tied to its convenient ecosystem for handling stimulus checks amidst uncertainty. Speaking on an earnings call, he added that the firm’s collaboration with Twitter and Spotify has helped them achieve a mainstream influencer audience:
"And because of the simplicity, because of how we handled the stimulus check and because of everything you can do within the app including buying stocks and bitcoin and Cash Card, we think we'll benefit and draft off a lot of trust, a lot of love, for what it offers and what it can do. And word of mouth is definitely our friend here."