Square Inc. (NYSE: SQ) reported its most recent quarterly results after the markets closed on Tuesday. However, fourth-quarter earnings weren’t necessarily the biggest news of the report, as the company is “doubling down” in its bet on bitcoin.
Square said that it had $0.32 in earnings per share (EPS) on $3.16 billion in revenue. The consensus estimates had called for $0.24 in EPS on $3.22 billion in revenue. Note that excluding revenue related to its cryptocurrency transactions, revenue only grew 23% to $1.4 billion.
Some of the highlights from the report were that revenue jumped by 141% year over year and gross payment volume rose 92% to $32 million.
In terms of its bitcoin bet, Square said that it spent $170 million to acquire 3,318 bitcoins. Accordingly, the purchase price per bitcoin was just over $51,000. Previously, the company had disclosed a purchase in aggregate of $50 million. As it stands with this report, bitcoin accounts for roughly 5% of Square’s cash and cash equivalents on the balance sheet.
Over the past year, about 3 million of Square’s Cash App users bought or sold bitcoin via the app. Currently, over a million of these customers traded the cryptocurrency in January alone.
Even though bitcoin made up about half of Square’s revenue, it didn’t have much of an impact on earnings. Square’s Cash App notched about $1.76 billion in revenue related to bitcoin, but in turn this was only produced $41 million in gross profit.
The question that lies ahead for Square is how it can capitalize on this growing crypto trend.
Square stock traded down about 9% to $234.02 a share on Wednesday, in a 52-week range of $32.33 to $283.19. Analysts have a consensus price target of $237.37.
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