The share jumped 11% in after-hours trading and more than doubled this year as consumers flock to digital payments during the pandemic.
Its peer-to-peer Cash app, a competitor to PayPal’s Venmo, helped Square’s performance in the second quarter. The app’s gross margin increased 167% year-over-year to $ 281 million. Funds in storage, or the amount of money customers keep on the app, jumped 86% from the previous quarter. The app had 30 million users in June, up from 26 million at the end of last year, according to the company.
Cash App has seen “a significant increase” in the share of its users depositing government stimulus checks, CFO Amrita Ahuja said on a call with reporters Tuesday night. Unemployment checks and tax refunds were also “favorable winds” which boosted the momentum of the Cash app. But there is still “uncertainty” around the continued stimulus, these trends may “normalize” as a result, Ahuja said.
Despite the growth of Cash App, the company is heavily indexed to small businesses, such as cafes and restaurants, through its in-person payment terminals. Many of these physical businesses have been forced to close their doors amid the pandemic. Gross profit from Square’s core selling business fell 9% year-over-year to $ 316 million. Square’s second quarter gross payments volume fell 15% year over year.
Payment trends improved each month during the quarter as Covid-19 related outages eased and sellers adjusted to contactless commerce, Square said.
A large part of its sellers have also moved online. Square’s payment volume from online channels grew 50% year over year, the company said. Online, it accounted for over a quarter of sellers’ payment volume, up from 14% a year ago.
Square’s lending arm, Square Capital, reported a significant drop in revenue after suspending most new loans for the quarter. Instead, Square Capital loan volume has been driven by the Paycheck Protection Program, or PPP. Square said it has facilitated more than 80,000 PPP loans totaling $ 873 million.
The company was due to release its results after the bell on Wednesday, but released its figures a day earlier after Bloomberg News announced the figures ahead of time.