Square Disappoints with Q3 Results as Bitcoin Demand Falls

Square (NYSE: SQ), the payments company led by Twitter Founder Jack Dorsey, has published disappointing financials for the third quarter of 2021 as Bitcoin demand slipped. Its gross profit in the period jumped by 43 percent from the previous year to $1.13 billion.

Cash App alone generated $512 million in gross profit, which is 33 percent higher year-over-year but over 6 percent lower than the previous quarter.

While the net revenue of the company came in at $3.84 billion and is 27 percent higher than the previous year, it generated another $1.81 billion from Bitcoin. Though the Bitcoin revenue jumped by 11 percent year-over-year, there was a significant drop from the previous quarters.

The platform brought in $2.72 billion from Bitcoin transactions in the second quarter, registering a growth of 200 percent. Square’s Bitcoin revenue usually looks astronomically high as the company reports all of its Bitcoin sales as revenue.

The company’s gross profit from Bitcoin, which is the sum of fees collected for Bitcoin transactions, came in at merely $42 million for the latest quarter.

While Bitcoin revenue of the company for the quarter represents 47 percent of its total sales. It only contributed to 3.7 percent of the quarterly gross profit. 

Focused on Bitcoin

Square first introduced its Bitcoin buying and selling services to its Cash App customers in 2018 and grew over the years. Its Chief Financial Officer, Amrita Ahuja said that the company is now trying to build other Bitcoin products other than trading services. However, she clarified that the focus of the company is specifically on Bitcoin, not other cryptocurrencies.

The payments company ended the quarter with an EBITDA of $233 million. Though the figure was 28 percent higher than the previous year, there was a sharp fall from the previous quarter’s $360 million.