Square, a San Francisco-based financial services and mobile payment company, has revealed that its Q3 2018 revenue from Bitcoin (BTC) was about $43 million, up 16% when compared to Q2.
The merchant payment services provider, which has built its reputation and fortune from a range of mobile-based card readers and payment apps, announced the profits in its third-quarter shareholder letter, published on November 8, 2018.
Although Bitcoin (BTC) sales represent only a tiny part of its different segments, it notably contributes to about 5 percent of total revenue. Also notable is that the company just introduced support for BTC in its payment app called Square Cash earlier this year.
However, a summary review of the total earnings shows that crypto revenue has grown by over $6 million in Q3, up from $37 million in Q2, a 16% increase.
Overall, Square’s revenue grew by 51 percent year-over-year, with the company’s letter to the shareholders indicating that total income for quarter three 2018 was $882 million. That includes revenues to the tune of $43 million from bitcoin-related earnings.
According to the letter:
“Excluding bitcoin revenue, total net revenue was $839 million, up 43% year over year.”
A readjustment of the bitcoin revenue against costs shows that actual bitcoin profits for the third quarter were marginally lower, calculated to be about $500,000.
Addressing the shareholders, the firm explains the rationale behind excluding bitcoin costs, noting in part that the firm considers its role to primarily be about “facilitating customer access to bitcoin.”
It also states that the company’s model only applies a small margin to the prevailing BTC market cost when selling to its customers, bearing in mind that it has ‘no control’ over bitcoin prices that are usually affected by market volatility.
It concludes by saying:
“We believe deducting bitcoin costs is a better reflection of the economic benefits as well as the Company’s performance from the bitcoin transactions.”
Despite the marginal profits, bitcoin remains an attractive asset, especially with its technology set to gain further adoption.
Pertinent to the firm is perhaps growth in BTC revenues, for which the answer appears to be the success of Square’s Cash App. The app allows the public to complete digital transactions as well as investing in bitcoin.
At the moment, there have been more than 10 million installs of the app, with expansion efforts seeing the app available in all 50 U.S states.
The firm’s newly-launched Square Terminal, which would allow merchants to accept payments made via credit and debit cards, has seen speculation grow that the company could be considering the integration of bitcoin into its merchant services.
The positive aura surrounding the firm has also been a result of news that Square’s market cap recently surpassed that of Twitter. Incidentally, Jack Dorsey serves as the CEO for both companies.