The San Francisco-based FinTech firm Square, Inc. has reported that its shares have jumped 11% after the firm has posted its second quarterly results, saying that its better-than-expected as well as a growth in its consumer payments app.
Square’s second-quarter report shows a $1.92 billion in its net revenue, which is a 64% year-over-year jump. This figure has adjusted per-share value at 18 cents, which is a far better than the 5 cent loss analyst polled predicted by Refinitiv, the global offerer of financial market data. The firm’s net loss recorded at $11 million on a GAAP basis.
After the second-quarter results announcement, Square’s stock has jumped around 11% in after-hours trading. Besides, its shares have doubled down this year as users opted for the digital payments during the pandemic.
Square’s peer-to-peer Cash App, which competes with PayPal’s Venmo, has helped a lot to drive Square’s performance in the second quarter.
Cash App’s gross profit has risen to 167% year-over-year to $281 million. The stored funds or the allotted money that customers keep on the app have also jumped 86% from the prior quarter. As of June, Cash App had 30 million users, i.e., raised in number from 26 million recorded at the end of 2019, as per the company.
On the phone call, Square’s CFO Amrita Ahuja said that Cash App had seen a ‘meaningful uplift’ from its users depositing government stimulus checks. However, unemployment checks and refunds of tax were also ‘tailwinds’ that drove velocity in the Cash App.
But there is yet unpredictability around the continued prompt; as a result, these trends could normalize, Amrita Ahuja said.
In spite of the growth in Cash App, the firm is heavily indexed to small businesses like restaurants and coffee shops, through its in-person payment terminals. Several brick-and-mortar businesses were forced to shut their doors amid the ongoing pandemic. Square’s gross profit core seller business fell 9% year over year to $316 million. In the second quarter of Square’s gross payments volume has dropped 15% year-on-year.
Square stated that the payment trends improved every month in the COVID-19 quarter–related lockdown eased, and sellers adapted to contactless commerce.
A huge group of its sellers has also moved online. The company said that Square’s payment volume from online channels was hiked to 50% on-year. Online made up over a quarter of seller payment volume, risen from 14% in 2019.
After pausing most new loans for the COVID-19 quarter, Square Capital- Square’s lending arm has reported a significant drop in revenue. The Paycheck Protection Program or PPP drove square Capital loan volume. the fintech firm stated that Square has facilitated PPP loans to over 80,000 small businesses at approximately $873 million.
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