Jack Dorsey’s Square reports disappointing third-quarter sales due to a drop in Bitcoin-related revenue
Square Inc., the digital-payments company run by Jack Dorsey, reported disappointing third-quarter sales, held back by a drop in Bitcoin-related revenue from its Cash App compared with the previous period. Shares slipped in late trading.
Overall sales were $3.84 billion, up 27% from a year earlier but less than the average analyst estimate of $4.51 billion, according to data compiled by Bloomberg. Gross profit, which includes fees taken from Square’s Cash App and Seller businesses, was $1.13 billion in the period, an increase of 43% from a year earlier, but little changed compared with the second quarter.
While revenue from sales of Bitcoin was $1.82 billion, representing 47% of Square’s total sales, those transactions contribute little to the company’s bottom line. Sales of the cryptocurrency generated just 3.7% of Square’s gross profit in the third quarter, the company said Thursday in a statement.
Bitcoin transactions through Cash App have grown tremendously over the past two years, but Bitcoin revenue can be a deceiving metric. Square reports all Bitcoin sales as revenue, Chief Financial Officer Amrita Ahuja said, which is why that number can look very large and is dependent on things like price volatility. Bitcoin gross profit, though, represents the money Square collects via fees from Bitcoin transactions, and is a better reflection of that part of Square’s business, she added.
Shares of San Francisco-based Square fell about 5% in extended trading. The stock is up 14% so far this year.
Ahuja said the company is trying to build other products and features related to Bitcoin beyond buying and selling the currency. Chief Executive Officer Dorsey, who also runs Twitter Inc., is a major Bitcoin proponent, and tweets about the currency often. Square acquired $170 million worth of Bitcoin in February 2021.
When asked whether Square plans to add the ability to buy other cryptocurrencies within Cash App, she said, “we’re focused on Bitcoin.”
Square also expanded its Cash App offering to teenagers in October, a move that gives the company access to as many as 20 million teens in the U.S. alone, Ahuja said. Cash App had 40 million monthly customers in total as of June.
“Those folks will represent a larger portion of spend in the coming years,” she said. “We can now meet an individual earlier on in their financial journey and grow with them over time.”
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