Square has released its Q1 2021 earnings report.
The official report reveals that gross profit was $964 million, up 79% from last year’s first quarter.
But the most striking figure concerns the revenues generated thanks to bitcoin-related services.
In fact, the report reads:
“In the first quarter of 2021, total net revenue was $5.06 billion, up 266% year over year, and, excluding bitcoin revenue, total net revenue was $1.55 billion, up 44% year over year”.
In other words, of the $5 billion in revenue, 70% came from bitcoin-related services in Q1 2021.
The report also reveals that Q1 2021 resulted in significant growth in bitcoin-related revenues compared to Q1 2020, with $3.51 billion up about 11 times from last year. However, the gross profit generated from this revenue was only $75 million, or about 2% of the related revenue.
Square’s earnings thanks to Bitcoin
So Square’s bitcoin-related services generate huge revenues, but little profit. Indeed, although they account for 70% of total revenue, they only account for 8% of profits.
After the publication of this report Square’s share price rose by 6%, as they more than doubled analysts’ expectations. For example, earnings per share of 41 cents is more than double the 16 cents analysts expected.
The 266% increase in revenue is mainly due to the fact that it has enabled the buying and selling of bitcoin via its Cash app. In the letter announcing these results, the company said that bitcoin-related revenue and gross profit benefited mainly from the recent significant increase in the price of BTC.
Finally, it stated that between the end of 2020 and the beginning of 2021 it purchased bitcoin and invested a total of $220 million to add to its corporate balance sheet.
In total, Square now owns bitcoin worth $472 million as of 31 March 2021.
Jack Dorsey’s company is very active in the crypto sector, but in particular in relation to Bitcoin of which they are strong supporters. The newly released numbers seem to prove them right.