Square’s share price jumped over 6% in after-hours trading on Thursday after the payment giant announced first quarter earnings that more than doubled Wall Street expectations. The company’s earnings per share came in at 41 cents versus the 16 cents analysts had predicted, while revenue grew 266% year over year to $5.06 billion.
That eye-popping jump in revenue came primarily from Square’s move to let customers buy and sell Bitcoin by means of its Cash App. Excluding the revenue, which grew 11-fold year-over-year, the company’s pulled in a total of $1.55 billion for the quarter.
“Bitcoin revenue and gross profit benefited from a year-over-year increase in the price of bitcoin, bitcoin actives, and growth in customer demand,” said the company in a letter announcing the results.
Square noted that it earns 2% on Bitcoin transactions and that its total profit from the cryptocurrency came to $75 million for the first quarter.
Like PayPal and other fintech giants, Square is enjoying an economic tailwind from cryptocurrency but also from larger pandemic-related trends that have spurred consumers to drop cash in favor of e-commerce and digital wallets. Square has seen the largest growth in its business come from crypto and Cash App activities, but it also has a number of other thriving business units, including its merchant terminals and business loan operations.
In late 2020 and early 2021, Square purchased a combined $220 million worth of Bitcoin to add to its corporate balance sheet. Ironically, however, those purchases forced the company to report a $20 million impairment on its books for the current quarter. Even though the market value of Square’s Bitcoin hoard came to $472 million on March 31, a quirk in accounting rules means companies must report a loss when the price of cryptocurrency drops below the purchase price—but they are not allowed to report a price increase.
Also on Thursday, Twitter—a company that has the same founder and CEO as Square—announced a new “tip jar” feature on the platform that lets users pay each other with a variety of platforms including Venmo and Cash App. The new feature appears to be a natural fit for crypto payments, especially given the close ties between Twitter and Square. Square did not mention the Twitter feature in its earnings report, however, while Twitter did not immediately respond to a question of when or if the tip jar would include a crypto option.
Square stock was trading at $230 as of 5:45pm ET on Thursday, up from $223 at market close.