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Square posts strong Q4, full-year earnings; purchases $170M in bitcoin

Payment services provider sees boost from Cash App division

Payment services provider Square (NYSE: SQ) posted a 52% year-over-year increase in Q4 2020 gross profit of $804 million and up from $794 million in Q3 2020. Total net revenue for the quarter was $3.16 billion, up 141% year-over-year, versus analysts’ consensus of $3.11 billion.

Transaction-based revenue was $929 million in the fourth quarter of 2020, up 12% year over year, and transaction-based gross profit was $394 million, up 26% year over year. Subscription- and services-based revenue was $449 million in the fourth quarter of 2020, up 60% year over year.

Operating expenses were $759 million in the fourth quarter of 2020, up 49% year over year, and non-GAAP operating expenses were $622 million, up 51% year over year.

The company’s mobile payment service, Cash App, powered the rise with a 162% year-over-year increase to $377 million in gross profit, while the Seller ecosystem generated gross profit of $427 million, up 13% year-over-year. Cash App had more than 36 million monthly customers active, a 50% increase year-over-year.

Square announced its earnings results after the market closed on Tuesday. Almost overshadowing the strong earnings was the announcement that it has purchased approximately 3,318 bitcoins at a cost of $170 million. The company previously had purchased $50 million in bitcoin. The total of approximately $220 million represents roughly 5% of Square’s total cash, cash equivalents and marketable securities on hand as of Dec. 31, 2020, the company said.

The reason for the purchase is that Square “believes that cryptocurrency is an instrument of economic empowerment, providing a way for individuals to participate in a global monetary system and secure their own financial future. The investment is part of Square’s ongoing commitment to bitcoin, and the company plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis,” the company said.

Square reported $185 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in Q4, up 57% year-over-year. Net income climbed from $37 million in Q3 to $294 million in Q4, supported by $274 million related to equity investments, including a $255 million gain related to the sale of its Caviar business to DoorDash (NYSE: DASH).

For the full year, Square reported gross profit of $2.73 billion, a 45% increase over 2019. Cash App generated $1.23 billion in gross profit, up 168%, and Seller generated $1.51 billion, up 8%. Total net revenue for 2020 was $9.5 billion, an increase of 101% from 2019. For the full year of 2020, subscription- and services-based revenue was $1.54 billion, up 49% year over year, and subscription- and services-based gross profit was $1.32 billion, up 65% year over year.

For the full year of 2020, operating expenses were $2.75 billion, up 48% year over year, and non-GAAP operating expenses were $2.27 billion, up 53% year over year. Adjusted earnings per share was 84 cents.

“We see compelling opportunities to increase our investments across our Cash App and Seller ecosystems,” Square said in a note to shareholders. “In 2021, we are focusing our investments on customer acquisition and product innovation. We have achieved attractive returns on our sales and marketing investments as customers have turned to our ecosystems to help them in dynamic environments, and we intend on continuing to expand and strengthen our product offerings.”

Cash App

Within the Cash App network, Square reported a 50% increase in peer-to-peer transactions sent per customer compared to 2019, with more than 80 million customers now having used Cash App at some point. Gross profit per monthly transacting active customer reached $41 in Q4, up approximately 70% year-over-year.

“These network effects have complemented our paid marketing campaigns, allowing us to maintain a low acquisition cost of fewer than $5 in 2020 for a new transacting active customer,” Square said.

Square also noted that its Cash Boost rewards program members spent twice as much as other Cash App card members.


Square first invested in bitcoin to provide customers more ways to transact on its platform. In 2020, the company said more than 3 million customers purchased or sold bitcoin on the Cash App, and in January 2021, more than 1 million customers purchased bitcoin for the first time.

Bitcoin revenue increased to $1.76 billion, from $177.6 million a year ago.

Seller ecosystem

Square has continued to build out its Seller ecosystem, and in particular its Seller gross payment volume. GPV represents the total dollar amount of all card payments processed by sellers using Square. In Q4, GPV from omnichannel and online sellers rose to more than half of total Seller GPV, up from one-third just two years ago.

Square offers an interactive kitchen display system that combines all orders — regardless of how they were placed — into a single display, and a QR code self-serve ordering system to help restaurants, for instance, improve their GPV. It also saw an increase in its Square Invoices service, which generated $100 million in gross profit in 2020.

Midmarket businesses also grew in Q4, with gross profit from these businesses increasing 27% year-over-year in Q4. Midmarket businesses used an average of approximately 2.5 Square products each.

Click for more FreightWaves articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at