San Francisco-based Square reported third quarter earnings, topping both revenue and earnings estimates by analysts.
The company reported an adjusted 34 cents a share for earning which represented a 36% growth from a year earlier. Gross profit also increased 59% and hit $794 million. Analysts had been expecting $707 million in revenue and only a 16 cent profit.
Square said net revenue jumped 140% to 3.03 billion citing that more Cash App users bought and sold digital cryptocurrency Bitcoin.
CEO Jack Dorsey said on the earnings call, “We expect to reach more than 50 million people in the U.S. through our campaigns in the second half of 2020. Now moving on to Cash App. With Cash App, we’ve continued to find ways to make financial services more relatable and accessible for individuals.”
He added, “We have seen strong adoption across the Cash App ecosystem, including our stock brokerage products, which have seen the fastest adoption of any product to date. Since launching it less than a year ago, more than 2.5 million customers have bought stocks using Cash App, and billions of dollars have been traded by the end of the third quarter. With the stock products, we’re focused on expanding access to investing for more customers, many of whom likely have never purchased stocks before. This quarter, we launched Auto Invest, which allows for dollar-cost averaging from recurring daily or weekly purchase of Bitcoin or stocks.”
CFO Amrita Ahuja remarked on the call, “Cash App delivered incredible gross profit growth of 212% year over year. The $385 million in gross profit Cash App generated was more than triple what it did in the third quarter of 2019. Cash App’s results highlight our ecosystem’s ability to help customers manage their finances. Looking at the three main drivers: first, we continue to see the strong acquisition of new customers to our platform each month, with our highest number of new customers added in a quarter.”
For the quarter, subscription and services-based revenue climbed 60% to $448 million while estimate were for $398.5 million.
Gross payment volume, or GPV, from merchant customers rose 9% to 31.7 billion while analysts projected GPV of $30 billion amid Square’s exposure to restaurants and small businesses.
Adjusted earnings before interest, taxes, depreciation and amortization, known as EBITDA, grew 38% to $181 million. Analysts were anticipating adjusted EBITDA of 96.1 million.
“Since last quarter, we announced two strategic investments that aligned with that purpose. The first was the hundred-million investment in support of minority and underserved communities and toward our commitment to ending racial justice. The second was a $50 million investment into Bitcoin, which we believe will be the native currency of the Internet and help people around the world better participate and thrive in the economy,” said Dorsey.
Shares of the stock have seen gains of 180% in 2020 as of Thursday’s regular session close.
Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.