Cash App generated more revenue in Bitcoin than in US dollars in the first quarter of 2020.
Square Inc., the company behind the payment service Cash App, released a report on May 6, saying the majority of its revenue came in Bitcoin. The popular mobile payment app of 7 million users generated $306 million in Bitcoin during the first 3 months of the year.
The amount is $222 million higher than the one achieved by other fiat currencies, such as the United states dollar. The Cash App’s total net revenue is $528 million for the first quarter, which is up 98% year over year.
The company explained why it separated cryptocurrency payments from other payments. According to the report, Bitcoin revenue was deducted because of the company’s role to facilitate customer’s access to Bitcoin.
When customers buy Bitcoin through Cash App, we only apply a small margin to the market cost of Bitcoin, which tends to be volatile and outside our control. Therefore, we believe deducting Bitcoin revenue better reflects the economic benefits as well as our performance from these transactions.
The company suggests the number of Bitcoin payments increased due to bigger interest from customers. According to the report, the demand grew as a result of the decrease in Bitcoin’s price. The decrease was mainly connected to the mid-March massive market crash caused by the COVID-19 global outbreak.
Bitcoin less performing on Cash App gross profit
Bitcoin revenue generated a gross profit of $7 million in the first quarter of 2020. This is nearly two times (90%) more compared with the previous quarter. The Square noted that volumes of Bitcoin payments increased 367% year over year.
Despite being the leader on total net revenue, in terms of gross profit Bitcoin falls against other fiat currencies. The leading cryptocurrency generated $7 million of Cash App’s $183 million total profit. However, the amount is solid compared with the $8 million in Bitcoin profit throughout the whole of 2019.
As the document revealed, the first quarter of 2020 was one of the best for Square’s Cash App in terms of new users. For the company allowed to make direct deposits during the COVID-19 pandemic, the numbers of new users obviously increased.
Since new users turned as well to other Cash App services, such as peer-to-peer payments and Bitcoin purchases, the biggest part of the 2020 Q1 revenue came primarily from subscriptions and services.