In an emerging bull-run context, many "visionary" companies are rubbing their hands. This is notably the case of Square, with its Cash App. In its financial report for the third quarter of 2020, the firm indicated that 80% of the revenues generated by the mobile application came from its sales of bitcoins.
Convictions that pay off
Not surprisingly, Jack Dorsey, founder of Twitter and CEO of Square, is a strong supporter of Bitcoin. For several months now, the man has been implementing a real strategy around cryptography, through his company CashApp, owned by Square. This application functions as a simplified exchange platform. The user can thus buy and exchange Bitcoin (in particular), paying a commission on each transaction.
This strategy geared towards cryptosystems is now bearing fruit, as revealed in CashApp's financial report for the third quarter. Indeed, on Thursday the application demonstrated solid financial results for this quarter, largely thanks to the dynamism of Bitcoin. Square said CashApp generated $2.07 billion in net revenue and $385 million in gross margin in the third lquarter. These performances represent increases of 574% (net) and 212% (gross) over the previous year.
Bitcoin, CashApp's new golden goose for golden eggs
But where can these exceptional results come from? For Square, there is no secret. Bitcoin's revenues were by far the largest component of CashApp's $2 billion revenue. Next to that, other revenue streams totaled $453 million, or 22% of the total. According to the report, this increase in Bitcoin-related revenues is linked to increasing adoption, but also to the addition of the Auto-Invest option. This new application, launched last May, allows users to plan recurring purchases (daily, monthly, etc.) of Bitcoin.
In addition, Square also unveils in its report a $50 million investment in Bitcoin (4700 BTC), which is now worth $73 million. A few hours after the publication of the report, Square's share price increased by 6% outside of trading hours to $184. This new peak erased the previous record of $190 set at the beginning of the month. At the same time, Bitcoin rose by a similar amount to reach its highest level in two years at $15,880.
Jack Dorsey's hunch was right. These numbers indicate a growing adoption, which naturally comes quite mechanically to enrich brokers like Square. Indeed, higher transaction volumes lead to higher commission revenues.
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