Bitcoin is growing in popularity – In an emerging bull-run context , several “visionary” companies are rubbing their hands. This is particularly the case with Square, with its Cash App. In its financial report for its third quarter of 2020, the firm indicated that 80% of the revenue generated by the mobile application came from its sales of bitcoins.
Convictions that pay off
It’s no longer a surprise, Jack Dorsey , founder of Twitter and CEO of Square , is a strong supporter of Bitcoin. For several months, the man has established a real strategy around cryptocurrency , through his CashApp company , owned by Square. This application works as a simplified exchange platform. The user can thus buy and exchange Bitcoin Evolution (in particular), by paying a commission on each transaction.
This strategy focused on cryptocurrencies is now bearing fruit, as revealed in the financial report of CashApp , for the 3rd quarter. Indeed, the app demonstrated strong financial results for this quarter on Thursday , largely thanks to the dynamism of Bitcoin. Square said CashApp generated $ 2.07 billion in net revenue and $ 385 million in gross margin in the third quarter. These performances represent increases of 574% (net) and 212% (gross) compared to the previous year.
Bitcoin, CashApp’s new goose that lays golden eggs
But where can these exceptional results come from ? For Square, there is no secret. Bitcoin’s revenue was by far the largest component of CashApp’s $ 2 billion revenue . Beside that, other income streams totaling $ 453 million, or 22% of the total . According to the report, this increase in Bitcoin-related income is linked on the one hand to increasing adoption , but also to the addition of the “Auto-Invest” option . This new application, launched last May, allows users to plan recurring purchases (daily, monthly…) of bitcoins.
In addition, Square also unveils in its report a $ 50 million investment, in bitcoin (4,700 BTC), which is now worth $ 73 million . Hours after the report was released, Square’s stock price rose 6% after hours to settle at $ 184 . This new peak erases the previous record of 190 dollars reached at the beginning of the month. At the same time, Bitcoin rose by a similar amount to reach its highest level in two years at $ 15,880 .
Jack Dorsey’s intuition was correct. These figures testify to a growing adoption, which naturally comes quite mechanically to enrich brokers like Square. Indeed, an increase in transaction volumes leads to an increase in commission income.