Square’s Q2 Bitcoin Sales From It’s Cash App Exceed $125 Million; 90% Growth Over Q1
If you are thinking that adoption of Bitcoin has been hyped and real-world use cases are not increasing, Square payment app has news for you. Their Q2 report for 2019 shows that they posted a record $125.1 million in quarterly bitcoin sales which shows a 240% increase from last year. What’s even more amazing is the fact that their entire earnings were $260 million with Bitcoin being a major portion of the earning pie.
The San Francisco-based company gave a third-quarter profit forecast of 18 cents to 20 cents a share, trailing the average analyst estimate of 22 cents. It said adjusted revenue in the period will be $590 million to $600 million, compared with estimates of $599.5 million
Now, Cash App has reached a meaningful scale and generate revenue from six different sources, namely, instant deposit, cash card, business accounts, P2P transactions with a credit card, Bitcoin and interest on customer’s stored balance. In the second quarter of 2019, Cash App revenue comprised $135 million in subscription and services-based and transaction-based revenue, and $125 million in bitcoin revenue. During the quarter, bitcoin revenue benefited from increased volume as a result of the increase in the price of bitcoin and generated $2 million of gross profit.
There is a reason why the company adjusts and segregates Bitcoin transactions. The report states:
“We deduct bitcoin costs because we consider our role in the bitcoin transactions to be facilitating customer access to bitcoin. Since we only apply a small margin to the market cost of bitcoin when we sell bitcoin to customers, and we have no control over the cost of bitcoin in the market, which tends to be volatile, we believe deducting bitcoin costs is a better reflection of the economic benefits as well as the Company’s performance from the bitcoin transactions.”
In other news from the report, Square is selling its Caviar food-delivery app to DoorDash Inc. for $410 million, as the money-losing payments company searches for profits. This news led to their stocks falling 9% in extended trading.