Square (SQ) Fiscal Second Quarter Earnings, Stock Surges

Square (SQ) posted its fiscal second-quarter results on Tuesday. Following the announcement of its better-than-expected quarterly earnings results, shares of the company soared as high as 11% in after-trading hours.

The company reported net revenue of $1.92 billion—a 64% surge in the same period a year ago. Square also posted adjusted earnings per share of 18 cents, compared to the 5 cent loss analysts’ expected. Its net loss for the quarter was $11 million on a GAAP basis.

This year’s pandemic has worked in favor of the company as its consumer base has more than doubled, as more people flock to using digital payments.

Square’s CashApp, greatly contributed to boosting the company’s performance in the second quarter. Square saw a gross profit of 167% year-over-year to $281 million, for CashApp. Stored funds of customers on the app also jumped 86% from the previous quarter. As of the end of June, CashApp had 30 million users, compared to the 26 million users at the end of 2019.

CFO Amrita Ahuja said CashApp saw “meaningful uplift”, especially from uses that deposited government stimulus checks. In addition to government stimulus checks, unemployment checks and tax refunds also contributed to boosting performance in CashApp. Ahuja still pointed out that there were still uncertainties concerning continued stimulus.

Square still saw quite a few setbacks in its business with small businesses with brick-and-mortar locations. Many of those businesses were forced to shut down as the pandemic continued to ravage the economy. Gross profit for CashApp fell 9% year-over-year to $316 million.

As shut down restrictions eased and businesses reopened, digital payment platforms increased in demand, as sellers adapted contactless payment options, Square said. In addition to this, a good percentage of Square’s sellers moved online which caused its online payment volume to increase by 50% on-year.

Square Capital, Square’s lending platform saw a significant drop in revenue after stopping giving out new loans for most of the quarter. The loan volume was driven by the Paycheck Protection Program (PPP). The lending arm said it facilitated approximately $873 million worth of PPP loans to more than 80,000 small businesses.

Square’s portfolio strength was anticipated to be reflected in its second-quarter results. Contributing to the performance of the company for the second quarter was its increasing omni-channel offerings, which help sellers to manage their orders front the point of sale, eliminating manual aggregation of online and in-person orders.

Square’s product lines include Square Terminal, Square Invoices, Instant Deposits, Square Register, Cash Card, Square Stand, Square Reader, and Square for Restaurants and APIs.