Square saw its shares skyrocket Tuesday (Aug. 4) night after the San Francisco-based financial services company posted better-than-expected quarterly results for its mobile payment app.
CNBC reported the company had $1.92 billion in net revenue for the second quarter (Q2) — that’s a 64 percent increase compared to the same period one year ago.
Adjusted earnings per share were 18 cents.
Analysts at Refinitiv, the London-based global provider of financial market data, had predicted a 5 cent loss. Square’s net loss for the Q2 was $11 million on a GAAP basis.
The stock jumped 9 percent in after-hours trading to $149.43 Wednesday (Aug. 5), up from $136.83 at the close Tuesday (Aug. 4).
Gross profit for the app rose 167 percent compared to Q2 last year to $281 million. Stored funds, another indicator of its strength which reflects how much users keep on the app, increased 86 percent from the first quarter.
The app boasted 30 million users in June — that’s up from 26 million at the close of 2019.
Chief Financial Officer Amrita Ahuja told reporters on a call Tuesday night Cash App saw meaningful uplift from customers who deposited government stimulus and unemployment checks. In addition, he said tax refunds provided the tailwinds that drove momentum in the Cash App.
But not all the news was good.
Square’s gross profit for its core seller business fell 9 percent in Q2 compared to last year to $316 million. And Square’s gross payments volume in Q2 dipped 15 percent year over year.
Ahuja also noted on the call that there is uncertainty around the latest stimulus package that has yet to be agreed on by Congress.
While there was growth in Cash App, Square remains heavily indexed to small businesses including cafes and eateries through the company’s payment terminals.
Square Capital, the company’s lending division, reported a drop in revenue after it stopped issuing most new loans in the quarter. Instead, Square Capital loan volume was driven by the Paycheck Protection Program, which provided $873 million to more than 80,000 small businesses.
In May, PYMNTS reported Square launched an alternative to PayPal with a new payment tool designed for small businesses looking to move from brick-and-mortar to eCommerce.
As COVID-19 has forced shutdowns and social distancing, web sales have been on the rise, and many entrepreneurs are moving their business models online.