The payments company, founded by Twitter co-founder Jack Dorsey, released its earnings results on Wednesday, reporting revenues of $1.27 billion between July 1 and Sept. 30 of this year.
Though Square’s crypto business remains a niche concern for the publicly traded company, more users are turning to Square’s Cash App as a gateway to bitcoin investing, particularly after the company rolled out a new user interface for the app.
“First-time bitcoin buyers have approximately doubled,” an investor letter published Wednesday read.
Square’s bitcoin revenue represents a 244 percent increase year-over-year, having generated just $43 million in revenue during the third quarter of 2018. However, the company saw $146 million in bitcoin costs this past quarter, resulting in a profit of only $2 million on bitcoin sales for the second quarter in a row.
Cash App as a whole clocked $307 million in revenue in Q3.
In its Q4 guidance, Square predicts that bitcoin and transaction costs will range from $575 million to $585 million. The letter added:
“We are increasing the upper end of our full-year 2019 total net revenue guidance by $110 million due to underlying trends in our Seller and Cash App businesses as well as bitcoin outperformance in the third quarter.”
Square has been selling bitcoin to consumers since November 2017, after adding a purchasing option in its Cash App. The company has seen rapid growth through the feature, generating $125 million in bitcoin revenue last quarter, doubling the revenue generated in the first quarter of 2019.
Despite the uptick in usage, Square has struggled to generate substantial profits through bitcoin, raising a scant $832,000 in Q1 and about $2 million in both Q2 and Q3.
Perhaps in response to this, the Cash App recently introduced a new fee structure for bitcoin purchases. Square’s bitcoin revenues were previously generated via the spread, or the markup on bitcoin’s current market price. Starting this week, Square is breaking fees out of the spread – though it’s unclear if the net cost to bitcoin buyers will remain the same.
Still, year-over-year, Square has been rapidly increasing the amount of bitcoin it has sold, having raised $34 million in bitcoin revenue during the first quarter of 2018 and $37 million in Q2.
The company also created a Square Crypto team to fund bitcoin protocol development apart from Cash App’s commercial concerns.