(Reuters) - Payments processor Square Inc beat analysts’ estimates for quarterly profit on Wednesday, as it earned more from its subscription and services business, especially from its Bitcoin-friendly Cash App.
The San Francisco-based company, best known for its signature small white credit card readers that are plugged into smartphones, has been aggressively expanding into a wider range of financial services, ranging from lending to accounting software.
Subscription and services-based revenue, which includes Square’s earnings from selling software, jumped 68% to $279.8 million in the third quarter ended Sept 30, with Cash App revenue more than doubling to $159 million.
Square’s Cash App, which directly competes with PayPal Holdings Inc’s Venmo app, allows users to send money to each other for free. The app charges fees to businesses when users choose to instantly deposit money from the app into their bank accounts, rather than wait several days.
Gross payment volume, the total dollar amount of all card payments processed by sellers, rose 25% to $28.23 billion in the quarter. GPV from larger sellers accounted for 55% of total, while GPV from mid-market sellers - their biggest client base - accounted for only 27% of the total. Transaction-based revenue rose nearly 25%.
Square has been attracting larger merchants through its newer products such as its lending services unit, Square Capital, and CashApp.
The company, founded and led by Twitter Inc Chief Executive Officer Jack Dorsey, said net income rose to $29.4 million, or 6 cents per share, in the quarter ended Sept. 30, from $19.6 million, or 4 cents per share, a year earlier. (bit.ly/2Nq3jAx)
On an adjusted basis, the company earned 25 cents per share, while analysts, on average, had expected a profit of 20 cents per share, according to IBES data from Refinitiv.
Total net revenue rose to $1.26 billion from $882.1 million.
Shares of the company were up 4.35% at $64.01 in after-hours trading.
Reporting by C Nivedita in Bengaluru; Editing by Shailesh Kuber