From Cash App To Bitcoin To GPV: Waiting For Square’s 3Q Earnings Report

Cash App. Bitcoin. And, oh yes, gross dollar volumes — and some insight into  how small businesses are faring amid the great digital shift, and in brick-and-mortar locations.

To that end, in anticipating Square’s results, the Street sees revenues of $2.1 billion, earnings of 16 cents a share and gross payments volume of $29.6 billion (which would be up 5 percent according to consensus).

We’re likely to see some of the same narrative play out on Thursday (Nov. 5) after the bell. As noted by PYMNTS in August, the last time the firm reported quarterly results, the firm posted top line growth of 64 percent year over year.

Drilling down a bit, the pandemic has spurred use of the Cash App, where roughly 30 million users are in the installed base, up from 26 million at the end of the year. Square has said there are 7 million monthly active users of its Cash Card (double from the same period in the previous year) and stored funds surged 86 percent.

That comes as gross processing volume (GPV) was down 15 percent in the most recent quarter. The data may show at least some rebound in this metric as some verticals, such as restaurants, have resumed at least some on-premise activities. The Cash App outlook may note some speed bumps, as the tailwind of stimulus payments drops away — and management noted on the last earnings call that that activity on the Cash App was buoyed by government stimulus and unemployment checks.

Drilling Into Cash App 

Management stated that in the second quarter, new cohorts of Cash App customers had higher attach rates to products beyond peer-to-peer payments, such as Cash Card, Boost, direct deposit and bitcoin investing (the company recently invested in $50 million in bitcoin to keep on its balance sheet) — and we’ll see how those attach rates are continuing.

Similarly, the company’s lending division may see some unevenness, where new loan issuance dried up and the company pivoted to helping issue loans tied to the Paycheck Protection Program (volume here in the quarter was $873 million of loans to more than 80,000 businesses).

As to the great digital shift: Management noted on the last earnings call that GPV from online channels was up more than 50 percent year over year to 25 percent of GPV. CEO Jack Dorsey told analysts that “one in three new online sellers onboarded in the second quarter were entirely new to Square, and many of these sellers adopted other parts of our ecosystem, including in-person commerce.” In March, one in 12 sellers were cashless, management said — a tally that grew to one in four sellers by the close of the second quarter. That metric may continue to gain traction in the third quarter.

And in a nod to how seller volumes were trending post the June quarter, management stated that each month from April to July, GPV was up 5 percent year on year.  The easing of COVID related restrictions helped here, according to commentary, with rebounds in food and drink and retail among other verticals.