In Q2, Cash App made $546 million in Bitcoin services. The company’s gross profit rose to $55 million even with a $45 million impairment loss.
Square’s (NYSE: SQ) Cash App has announced a Bitcoin revenue increase of 200% for the second quarter year on year (YoY). The company posted a $546 million Bitcoin services gain, which was a 94% overall YoY increase. The figures also represent a 90% increase in gross profit compared to last year. In the Q2 letter to its shareholders on August 1st, Square stated a total gross profit growth of 91% YoY to $1.14 billion, however, there was also a $45 million impairment loss on Bitcoin held.
According to the report, Cash App’s Bitcoin services recorded a $55 million gross profit rise from $17 million. The peer-to-peer mobile app now has an overall yearly revenue of $2.72 billion, which is up from $875 million. Square believes that the significant rise is due to Bitcoin’s price increase, the company’s Bitcoin activities, and the growth in customer demand.
Compared to Q1, the company’s Bitcoin revenue and gross profit is down 22.3% to about $2,719,500,000. It previously sat at roughly $3.5 billion but was adversely affected by the major 50% drawdown of crypto in May and June.
Accounting rules require that Square reports an impairment loss when Bitcoin falls below the carrying value. In compliance, the company reported a $45 million Bitcoin impairment loss for Q2. Since Bitcoin is an indefinite-lived intangible asset, Square does not have to report increases in value. The company can only post such information after realizing gain upon selling the asset. As of June 30th, Square’s Bitcoin position was $281 million, which is $127 million greater than its carrying value.
Cash App and Digital Payment Bitcoin Services
Cash App has proven to be a lucrative and thriving division of the Square ecosystem. As reflected in the recent quarterly report, the mobile app payment services’ recent numbers have given Square’s overall market capitalization a big boost. Cash App expects to continue taking advantage of the emerging crypto space through diversification and consolidation. Founded in 2009 and led by Jack Dorsey, the company posted an overall adjusted EPS of 66c and adjusted EBITDA of $360 million for the second quarter. In addition, it posted total revenue of $4.68 billion and may currently hold 8,027 BTC, worth $320 million
As reported on Sunday, Square recently announced plans to purchase Afterpay, an Australian installment payment company. The deal would be all-stock (sans cash) and worth $29 billion as of Square’s Friday closing price. According to the release, the acquisition will allow companies to push financial products and services to more customers. This hopes to satisfy customer needs across the board, regardless of the merchant size. If all closing conditions are met, the transaction should end in the first quarter of 2022.
In the release, Jack Dorsey said that both Square and Afterpay have a common purpose. He specifies that both companies want to make the financial space more accessible, inclusive, and fair.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
