Fast growing fintech Square released reports of its revenues for the second quarter of the year, with a revenue of $37 million from Bitcoin transaction.
The revenue and earnings per share (EPS) of Square for the second-quarter report of the year exceeded the Wall Street estimates made at the beginning of the year.
Square leverages crypto to drive Cash App growth
The report shows that Bitcoin trading has been growing at a rapid pace since Square introduced it to the platform at the start of this year.
However, CFO of Square, Sarah Friar when discussing the role of cryptocurrencies in the Fintech’s product and services growth made a strong statement.
“It’s not a major monetization engine. The goal is to continue to drive utility in the Cash App.”
While Bitcoin trading adds a consistent channel of revenue to Square Cash, Friar believes the product’s growth still lies primarily in its peer-to-peer payment functions.
Square has been growing steadily
The Fintech’s revenue spike is the result of a long-term and well-thought-out roadmap. The Square Cash launched crypto trading in late January.
About a month ago, Square became the ninth firm to be approved for crypto treading in New York and received a BitLicense in the process.
Following that, Shares of the firm have surged 88% this year alone and hit a record around $65 in July.
Instinet reported that Square Cash is growing roughly three times faster than PayPal‘s Venmo, with nearly 4 million downloads in May and June.
CEO of Square, Jack Dorsey has suggested that the firm may integrate cryptocurrency into more of its products in the near future.
The Bitcoin revenue is only marginal
The report shows that Square generated $37 million in revenue on Bitcoin in the second quarter, however, the company’s profits from BTC trading have been marginal.
The revenue realized from Bitcoin trading is only marginal as the fintech spent almost as much as it gained to offer free trading of the volatile cryptocurrency on its Square Cash App.
Speaking about the firms second quarter Bitcoin trading revenues with CNBC, CFO Sarah Friar said:
“In order to offer users commission-free transactions, Square Cash must directly purchase Bitcoin AT varying market prices throughout the year. In Q2 2018, Square Cash incurred ~$36.5 million in operational costs for BTC trading.”
Bitcoin may have brought in $37 million for Square in the second quarter, but the company also spent $36.6 million to offer it for trading on the Square Cash App – which leaves the firm with a revenue of $420,000 on the cryptocurrency.
For now, the payments start-up says it’s not relying on crypto to add to its bottom line, however, the numbers above exceeded the projections of Wall Street analysts as the company outperformed on EPS.
The report shows that Square made a total net revenue of $815 million, which represents a growth of 48% over the last year.