Square Reports $2.72 Billion in Bitcoin Revenue for Q2 2021
Jack Dorsey’s mobile payment firm Square has released its earnings report for Q2 2021. The report shows notable growth, largely attributed to the Bitcoin revenue derived from Square’s payment solution Cash App.
Cash App generated $3.33 billion in net revenue, of which $2.72 billion was Bitcoin revenue. In other words, Bitcoin made up more than 80% of Cash App’s revenue. Furthermore, Square’s Bitcoin revenue has tripled on a year-over-year basis.
Square’s growth is quite encouraging, yet the company aims to further expand through acquiring Australian “buy now, pay later” provider Afterpay.
A Recap of Square’s Q2 Earnings Report
Jack Dorsey’s payments startup Square garnered a net revenue of $4.68 billion in the second quarter of 2021, up 143% year over year. Cash App accounted for more than 70% of that revenue, bringing a total of $3.33 billion to the company.
In terms of profit, Square generated a gross profit of $1.14 billion, up 91% year over year and 57% on a two-year CAGR basis. The company’s Cash App generated a gross profit of $546 million, which narrates more than 50% of the company’s total profit and is up by 94% on a year-over-year basis.
In general, Bitcoin played the most influential role in the company’s net revenue. Cash App generated $2.72 billion worth of Bitcoin revenue, accounting for around 50% of the company’s total revenue. Cash App also reported $55 million worth of Bitcoin gross profit. Further, Bitcoin earning and gross profit was up approximately 3x year-over-year.
While Bitcoin revenue and gross profit increased YOY, both decreased on a quarter-over-quarter basis, mainly due to the quietness and lack of volatility in the market. In fact, in early July, Bitcoin witnessed its quietest trading week so far in 2021. Bitcoin trading volume dropped to $1.58 billion, the lowest since October 2020.
The report pointed out that volatility has a considerable impact when it comes to Cash App’s Bitcoin revenue and gross profit. The report stated:
“In future quarters, bitcoin revenue and gross profit may fluctuate as a result of changes in customer demand or the market price of bitcoin, particularly as we lap strong growth rates on a year-over-year basis in the second half of 2020.”
Square acquired $50 million and $170 million worth of Bitcoin during Q4 2020 and Q1 2021, respectively. Bitcoin is recognized as an “intangible asset,” which means companies must write down the value of their holdings as an impairment loss once its price drops below the level they have acquired it.
Since Bitcoin has plunged to below $30,000, Square had to record a Bitcoin impairment loss. Consequently, the company has included a Bitcoin impairment loss of $45 million in its earnings report.
Square to Acquire Afterpay
Square aims to further extend its board of services to Australia through the acquisition of the Australian “buy now, pay later” provider Afterpay. According to a report on the matter, Square would acquire the firm for a total of $29 billion.
Melbourne-based Afterpay, which reportedly has more than 11 million users worldwide, gives customers the option to pay for products over four installments, without interest if the payments are made on time. The buy-now, pay-later firm has also shown strong growth, as its sales in Q1 2021 have more than doubled.
CEO Jack Dorsey commented on the acquisition, saying:
“Square and Afterpay have a shared purpose. We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles. Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.”
It is no secret that Jack Dorsey is a strong supporter of Bitcoin. He has said that there is nothing more important in his life to work on than Bitcoin. Moreover, recently Jack Dorsey asserted that bitcoin will be a “big part” of Twitter’s future. He further added that he sees no reason why Bitcoin could not become the “native currency” of the internet.
In addition, Square currently has some Bitcoin projects on hand. Last month, Jack Dorsey revealed his intentions to build an open developer platform primarily focused on Bitcoin. In other words, the company aims to bring DeFi services to Bitcoin. Prior to this, Dorsey unveiled a new hardware wallet for Bitcoin users, mainly aiming to solve Bitcoin UX and UI hurdles.
Do you think Square’s promising growth will push more payment companies towards Bitcoin? Let us know in the comments below.