Cash App, the crypto-friendly arm of global payment processor Square, has been rolling in the Bitcoin money for the past few quarters. However, the company reached a new milestone recently, as it received the most of its revenues from its work on the top digital asset.
Bitcoin-Inspired Revenue Surge
Earlier this week, Jack Dorsey’s payment processor published its financial results for the first quarter of the year with the Securities and Exchange Commission. However, the firm’s crypto-focused subsidiary appeared to have been the star of the quarter.
As Square noted, Cash App made $528 million in revenues for the first quarter of the year. Of that sum, an impressive $306 million came from Bitcoin payment processing. It’s worth noting, however, that the top digital asset still only made a small fraction of Cash app’s profits – $7 million out of a total $183 million profit.
Regardless, this number was a significant upgrade. While Bitcoin profits for Cash App amounted to $7 million, it’s worth noting that the subsidiary made $8 million in profits for the entirety of 2019.
In the statement, Square explained that it had made the distinction to show Bitcoin revenues in line with its core objective of making Cash App more crypto-centric.
“We deduct bitcoin revenue because our role is to facilitate customers’ access to bitcoin. When customers buy bitcoin through Cash App, we only apply a small margin to the market cost of bitcoin, which tends to be volatile and outside our control,” the financial statement explained.
On a revenue basis, Square confirmed that Bitcoin revenues for Q1 2020 increased by $240 million compared to revenues for Q1 2019 – an increase of 367 percent. The company also attributed the growth to both a surge in customer demand and the number of Cash app’s active users.
The revenues also bumped, with $306 million in Q1 2020 compared to $65 million in Q1 2019. The number also almost doubled the $178 million that the company made in Bitcoin profits for Q4 2019. All in all, Square had a solid quarter. The company made $1.38 billion – about 43 percent over what it made in Q1 2019. Gross profits also amounted to $535 million, although the firm made a net loss of $105 million.
The company initially reduced its revenue estimates, as it announced back in March that it had revised figures to an estimated $800 million. At the time, the company pointed out that the coronavirus pandemic had affected its seller gross processing volume. Thus, it adjusted its revenue estimates from $1.344 billion to something in the range of $520 million. Its realized figures crossed that benchmark.
Square has also stepped up in the face of the coronavirus. Last month, Square Capital, another of Square’s subsidiaries, received U.S. Treasury and Small Business Administration (SBA) approval to become a lender under the government’s Paycheck Protection program. The firm joined the PPP with PayPal, another payment processor, and software giant Intuit.