Square saw triple-digit year-over-year increases in Bitcoin sales despite a quarterly revenue decline.
In a letter to shareholders for the second quarter released over the weekend, Square said its Bitcoin-related services revenue was up 200% year over year, but was down quarter over quarter due to market trends.
Square said the cash app generated $ 2.72 billion in bitcoin revenue and $ 55 million in gross bitcoin profit in the second quarter of 2021.
Overall, Square’s cash app generated $ 3.33 billion in revenue and $ 546 million in gross profit, according to the shareholders’ letter. Excluding all Bitcoin-related revenue, Cash App had revenue of $ 606 million for the quarter.
However, last quarter’s bitcoin bear market, with bitcoin prices falling significantly in May and hovering in the low of $ 30,000, hit Square’s quarterly revenue growth hard. The company said the “relative price stability” of crypto after the crash weighed on traders, with Square posting a $ 45 million loss on its books as Bitcoin’s value fell. below its purchase price.
“Bitcoin’s revenue and gross margin may fluctuate over the next few quarters due to changes in customer demand or the market price of Bitcoin,” said Square.
For the quarter ended June 30, the company’s “fair value” bitcoin was $ 281 million, according to its shareholders’ letter. Square bought 3,318 Bitcoin for $ 170 million in February.
Acquisition after receipt of payment
Separately, Square announced that it has launched a $ 29 billion acquisition of Afterpay based in Austria, paying $ 92.65 per share.
Afterpay offers a “buy now, pay later” service that enables consumers to finance the purchase of retail products at lower interest rates than credit cards. This service is expected to be integrated with the Cash App Merchant Suite and allow users to set up credit lines similar to PayPal’s Pay Later feature.
In a note, Michael Del Grosso of Compass Point Research gave Square a “neutral” rating, questioned the $ 29 billion purchase price, and wondered if there wasn’t an “other way to get this deal.”