Square Inc. (SQ) shares hit a new 52-week high of $196.22 in the mid-day trading Friday after the company announced strong financial results for the third quarter, mainly helped by its Cash App business.
The San Francisco, California-based company reported gross income of $794 million for the quarter, well above $500 in the same period last year, and above analysts average estimate of $708 million.
Revenue for the quarter came in at $3.03 billion, significantly higher than $1.27 billion in the year-ago quarter. Analysts surveyed by FactSet had forecasted revenue of $2.04 billion.
If we analyze the sales performance of key businesses, Square’s seller segment generated revenue of $965 million, while its Cash App segment generated revenue of $2.07 billion including bitcoin revenue.
The company allows buying and selling of cryptocurrency through its Cash App, however, being relatively a low-margin, bitcoin does not contribute much to the overall profit.
Speaking on the latest quarterly performance, Mizuho analyst Dan Dolev said in a statement that the results were impressive considering a jump of 212 percent in the company’s Cash App gross profit, and seller gross profit, which rose by 12 percent, compared with a 9 percent drop in the prior quarter.
The company’s Cash App performed quite well in the quarter during the pandemic, as people increasingly used digital ways to send money to each other. The average daily transacting active users on the app almost increased by two folds in the quarter on year-over-year basis. One of the reasons behind the phenomenal growth of Cash App is word-of-mouth advertising from users, who usually recommend their friends to sign up for the app to exchange funds.
Square Inc. (SQ) shares are currently trading around $196, adding more than 20 points. The company’s market value has reached to approx. $86.915 billion following the surge.