Square Q1 earnings beat expectations as Bitcoin drives its revenue with a 1,000% increase

Bitcoin is good for business. Square’s Cash App generated $3.51 billion of Bitcoin revenue during the first quarter of the year, a stunning 1,000% 12 month increase. The company also made $75 million of Bitcoin gross profit over the same period.

Financial services firm Square’s quarterly earnings exceeded expectations set by analysts amid the recent crypto bull market.

According to Global financial data provider Refinitiv, Square would see earnings of 16 cents per share in Q1 2021. However, it ended up earning 41 cents per share for a 2.5x increase. Square turned over $5.06 billion in revenue of which Bitcoin alone collected $3.5 billion.

Square’s quarterly gross profit also went up significantly. It recorded a 79% year-over-year surge to $964 million. Over half of the firm’s profits is coming from its crypto-friendly payment application, Cash App, which made $495 million in the first quarter of the year. This represents a 171% compared to the same period of 2020.

“Bitcoin revenue and gross profit benefited from a year-over-year increase in the price of Bitcoin, Bitcoin activities, and growth in customer demand,” Square noted.

Jack Dorsey, Square’s Chief Executive Officer, emphasized the firm’s mission of supporting Bitcoin to become the native currency of the internet. In the quarterly earnings call he remarked:

“Our focus, first and foremost, is on enabling Bitcoin to be the native currency. It removes a bunch of friction for our business. And we believe fully that it creates more opportunities for economic empowerment around the world.”

U.S. government’s ‘helping hand’

Square’s Chief Financial Officer, Amrita Ahuja, noted that U.S. government stimulus checks were a factor that impacted the recent performance of its payments application.

“We believe our customers had greater spending power from government funds, which drove an uplift in inflows in March,” he said, continuing: “We have since seen a normalization with inflows down 16% in April, compared to March.”

Ahuja further predicted that Cash App will continue to see triple-figure growth numbers in 2021.

Square is an early adopter of Bitcoin and became one of the first firms add the cryptocurrency to its balance sheet when the firm purchased 4,709 BTC for $50 million in October.

Square added another 3,318 BTC in February for $170 million. At time of writing, the firm’s total Bitcoin holdings are now worth around $450 million.