Square reports strong growth numbers in Q2
A busy weekend for Square. After it was announced that the company purchased Australia-based fintech firm, Afterpay, in an all-stock deal, it quickly went on and released its Q2 2021 Shareholder Letter. The report showed strong growth numbers for Square’s mobile platform, Cash App.
Square made a gross profit in Q2 of $546 million, showcasing a 91% increase year-over-year. 10% of the gross profit on Cash App was specifically accounted for by Bitcoin. The around $55 million gross profit is a significant increase from the $17M in gross profit last year in Q2 that the company saw in Q2 last year.
Square also saw Bitcoin yearly revenue make huge jumps. Revenue rose over 200% to $2.72 billion versus $875 million last year. Commenting on the relatively small profit margins, Square stresses that driving company profits from Bitcoin transactions are clearly low-priority. Cash App Q2 Bitcoin gross profits reflected only roughly 2% of its total revenue.
The company is obviously in it for the long run when it comes to crypto, right now encouraging accessibility and minimizing fees. According to the shareholder report, Square deducts Bitcoin revenue because their “role is to facilitate customers’ access to the top cryptocurrency.”
More numbers
Since Bitcoin’s price has declined in Q2 versus Q1 of the year, both Bitcoin revenue and gross profit for Cash App went down in Q2. Square forecasts that Bitcoin price volatility in the second half of the year, which also affects customer demand, could impact Cash App profits and revenues from crypto.
Square also reiterated their Bitcoin holdings in the letter. It confirmed their purchase of $220 million worth of Bitcoin in the period between Q4 2020 and Q1 2021. As per accounting rules, the company recorded a $45 million impairment losses on its Bitcoin holdings for the second quarter. While companies are not required to report price appreciation in the specified asset until the position is realized through a sale, they are required to report an impairment loss when the asset’s price drops below its cost basis.
To conclude, Cash App is doing very good beyond Bitcoin and this will eventually drive its Bitcoin profits with increased adoption expected. Cash App revenue excluding Bitcoin in Q2 saw an 87% increase year-over-year and came down at around $600M.
In the beginning of July, Square announced it had started developments for a Bitcoin hardware wallet.
The post Square reports strong growth numbers in Q2 appeared first on iGaming.
Source: igaming
