Square Earnings Beat Estimates With Focus on Growth in Cash App

(Bloomberg) -- Square Inc. reported earnings that beat analysts’ estimates in the fourth quarter and showed significant growth in its payment app.

The company, helmed by Jack Dorsey, started out offering a phone dongle so that small businesses could accept credit card payments but is now seeing surging use of its peer-to-peer payments product known as Cash App. More people are using the app to send money to other people in their network, such as friends or landlords. And in the fourth quarter Square also launched fractional equity investing, creating an accessible way for people to get into the stock market. The product has proven popular with customers, who buy on average about $20 of stock every time they make a purchase, according to the company.

“We’ve added more monthly actives each year in Cash App’s existence,” Chief Financial Officer Amrita Ahuja said in an interview following the earnings release. “There are a number of different ways now that you can participate in the Cash App ecosystem.” Ahuja said December 2019 was the biggest monthly addition of users Cash App has ever had.

The San Francisco-based company said the Cash App had about 24 million monthly active users as of December, up 60% from a year ago, and generated $361 million of revenue and $144 million in profit.

The shares, which have gained 22% so far this year, jumped 8% in extended trading.

Square has also been adding additional features such as a debit card with rewards, and the ability to buy or sell Bitcoin.

In the fourth quarter, the company reported net income of $390.9 million, or 83 cents a share. That compares with a loss of $27.7 million or 7 cents a share, a year earlier. Excluding some costs, earnings per share rose to 23 cents from 14 cents a year earlier and beat analysts’ average estimate of 21 cents, according to data compiled by Bloomberg. Total net revenue was $1.31 billion.

For the current period, Square said it expects adjusted earnings per share of 16 cents to 18 cents, better than analysts’ projection of 15 cents.

Gross payment volume for the quarter was $28.6 billion, edging out estimates of $28.5 billion.

To contact the reporter on this story: Julie Verhage in New York at jverhage2@bloomberg.net

To contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Molly Schuetz

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