Square reports mixed Q4 results, reveals a further push into Bitcoin

The digital-payment processor is doubling down on its cryptocurrency ambitions.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Square (NYSE: SQ) reported fourth-quarter revenue that soared 141% year over year to $3.16 billion, along with adjusted earnings per share (EPS) of $0.32. The results were mixed, as analysts' consensus estimates called for revenue of $3.22 billion and EPS of $0.24. Gross payment volume (GPV) rose 92% year over year to $32 million.

The top-line results were skewed by the company's ongoing foray into Bitcoin (CRYPTO: BTC). Excluding revenue related to its cryptocurrency transactions, revenue grew to a more modest $1.4 billion, up 23%.

The numbers were further clouded by its strategic investments and one-time events. Square reported net income of $294 million, a decline of 25% year over year. Excluding gains from equity investments and a one-time gain in the prior-year quarter, net income of $20 million increased by 11%.

Square continued to focus on the impressive growth delivered by its Cash App ecosystem, which generated gross profits of $377 million, up 162% year over year.

The company also doubled-down on Bitcoin, saying it spent $170 million to acquire 3,318 Bitcoins. This resulted in a purchase price of just over $51,000 per Bitcoin. Square had previously disclosed a purchase totaling $50 million. Taken together, the two equate to approximately 5% of the total cash and equivalents on Square's balance sheet.

More than 3 million customers purchased or sold Bitcoin via Square's Cash App last year. As the popularity of cryptocurrency has spread, the number of users purchasing Bitcoin has exploded, with more than 1 million customers making a transaction in January, 2021 alone.

While the cryptocurrency accounts for more than half of Square's revenue, it makes a much smaller contribution to its bottom line. While Cash App generated roughly $1.76 billion in Bitcoin revenue, it resulted in just $41 million in gross profit. This suggests that Square earns just over 2% from each user investment in the cryptocurrency. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Square. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Danny Vena owns shares of Square. The Motley Fool owns shares of and recommends Square. The Motley Fool recommends Bitcoin. The Motley Fool has a disclosure policy.

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