Square’s Q3 earnings report shows that the payments firm processed Bitcoin (BTC) sales worth over $148 million.
Overall, the company’s revenues for the third quarter of 2019 stood at $1.27 billion, with Cash App revenues at $307 million. BTC sales brought in $148, the company revealed in its shareholder letter released on Wednesday.
Revenue from Bitcoin sales has skyrocketed over 2019, jumping 244% in year-over-year (YOY) sales. The company’s revenues from Cash App in the same period (by Q3 2018) stood at a lowly $43 million.
The increase in revenue from bitcoin sales corresponds to trends related to the number of people accessing Cash App and Cash Card to buy bitcoin.
According to the report, the number of new “first-time” BTC buyers using Cash App has “doubled.” At the same time, orders for the Cash Card have increased significantly, the firm disclosed in the letter addressed to its shareholders.
Bitcoin revenue high but profits still low
Despite an increase in first-time Bitcoin buyers over the quarter, Square’s Cash App bitcoin profits are still low.
Cash App’s total net revenue of $307 million in Q3 saw gross profits of $123 million. Cash App bitcoin revenues in Q2 2019 were $125, twice amounts recorded in Q1.
However, the total net sales of $148 million in Q3 BTC sales came on the back of $146 million in costs. It means that total profit from Bitcoin sales in Q3 amounted to a paltry $2 million.
In this case, the increased adoption of Cash App continues to contrast with overall profits from bitcoin sales. Profits in Q1 stood at $832,000 and increased to $2 million in Q2 and a similar margin in Q3.Net income for Cash App in the third quarter of 2018 was $20 million, and a mere $29 million in Q3, 2019.
Low profits aside, Cash App is building towards becoming a top bitcoin investment gateway for many new buyers. Co-founded by Twitter CEO Jack Dorsey, Square has sold BTC ever since it rolled out the project in November 2017.
Cash App initially targeted fiat transfers but peaked in popularity after users began using it to trade cryptocurrencies.
Recently, the platform announced that it would start charging fees on all bitcoin purchases. Initially, Cash App bitcoin revenues came from price spreads. However, its website recently noted that users may [pay] a fee when buying or selling bitcoin.
That fee, according to the support page, will appear “on the trade confirmation before you complete a transaction.”
Cash App has also recently announced an expansion to its services to allow some users to buy fractions of their favorite stocks with amounts as low as $1. The new offering dubbed Cash App Investing will soon be available to all Cash App users.
BTC currently trades around $9,275 according to data on CoinMarketCap. Analysts say the next few moves will be critical to bitcoin’s price- whether it breaks above $9,500 toward $10k or declines back under $9,000.