Twitter CEO Jack Dorsey’s payments company Square released its Q1 2020 earnings report on Wednesday after the close of business and according to this recent report, it seems Bitcoin interest is on the rise.
According to the report, Square’s Cash App saw a little over half (57%) of its total revenues accounted for the trade of the premier cryptocurrency. Cash App generated $528 million in total revenues in the first three months of the year ending March 31st. Bitcoin-attributed figures amounted to $306 million while the remaining sums were attributed to subscription sales and other Cash App fiat services.
Despite the glowing revenue figures, Bitcoin contributed the least to Square’s gross profits of the Q1 2020 period. With Square’s gross profit numbers reported at $176 million, Bitcoin transactions on the Cash App only brought in $7 million. That is, however, about 90% of the gross profit amount the Bitcoin transactions generated for the entire of 2019. In 2019, Bitcoin brought in $8 million.
“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,” Square explained in their May 6th filing.
Despite the modest figures above, the company reported that gross profits from the Cash App have been rising at the rate of 115% year over year. The rising figures can be attributed to the growing demand for bitcoin and consequently the growing customer base of clients who would like to buy and sell bitcoin.
“Bitcoin revenue for the three months [of 2020] increased by $240.6 million or 367%, compared to the three months [of 2019]. The increase was due to growth in the number of active bitcoin customers, as well as growth in customer demand,” the report detailed.
The demand for bitcoin has been on the rise for the past several months following the end of the “crypto-winter” in April 2019. However, the biggest push for the bitcoin demand has come from the current global COVID-19 pandemic according to Dorsey. Dorsey added during an earnings call,
“We have reached a very mainstream influencer audience… And because of the simplicity, because of how we handled the stimulus check and because of everything you can do within the app including buying stocks and bitcoin and Cash Card, we think we’ll benefit and draft off a lot of trust, a lot of love, for what it offers and what it can do. And word of mouth is definitely our friend here.”
The stimulus Dorsey referred to was the economic stimulus offered by the US Federal government towards its citizens to cushion them during these challenging times. Square streamlined the process of diverting these stimulus checks into the Square platform to facilitate investments in either traditional assets such as stocks or bitcoin through the Cash App. Excluded in the earnings call and report are figures for April 2020 which Square reported to have been particularly positive.
“In April, Cash App delivered strong revenue and gross profit growth year over year, and achieved its highest monthly totals for net-new transacting active customers, peer-to-peer volumes, Cash Card spend, Cash Card orders, direct deposit transacting active customers, bitcoin volumes, stock brokerage volumes, and stored funds.”
The coming quarter if off to a great start it seems.
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