Merchant services company Square Inc. saw its shares rise 8% in after-hours trading on Wednesday after the company reported fourth quarter financial results.
Square posted a profit of $390.9 million in the fourth quarter ended Dec. 31 compared with a loss of $28.2 million, a year earlier. Excluding one-time items, the company earned 23 cents per share. Analysts had been expecting 21 cents per share, according to IBES data from Refinitiv. Total net revenue rose to $1.31 billion from $932.5 million.
The payments processor said it earned more from its subscription and services business, especially from Cash App.
“We’re very pleased with the success we’ve seen with Cash App,” Chief Financial Officer Amrita Ahuja said on a media call.
Cash App has 1.1 million followers on Instagram, an uncommonly high figure for a financial brand, Ahuja commented. It had about 24 million monthly active customers in December, a growth of 60% from last year, the company said.
Subscription and services-based revenue, which includes earnings from Cash App, saw a growth of 45% to $281.4 million from last year.
CEO Jack Dorsey remarked on the earnings call, “Cash App continues to exceed our expectations, consistently found in the top 15 free apps in the App Store and driving to 24 million monthly active customers as of December 2019, which is up from 15 million in December of 2018. The Cash Card is also at scale being used by over 20% of our monthly active customers.”
Ahuja said on the call, “Cash App was at 24 million monthly actives in December, up 60% year-over-year and has added more new monthly actives each year since launch with December 2019 being its strongest month for new adds. Cash App daily active customers increased at an even faster clip of 80% year-over-year as we’ve enhanced discoverability and navigation to our products as well as added new products like equity investing. Cash App has not only been growing its engaged customer base to an impressive scale, but it has also driven consistent growth in revenue per customer over the past few years. In December, Cash App generated more than $30 in annualized revenue per monthly active customer, excluding Bitcoin, which more than doubled from less than $15 in December of 2017. While this is strong monetization for a consumer app, we believe we have room to grow further by continuing to increase the attach rate on Cash Card and further cross sell new products to come.”
Disclaimer: We have no position in Square Inc. (NYSE: SQ) and have not been compensated for this article.