Hearing about the whopping figures that bitcoin exchanges are bringing in, one might be led to believe that all businesses in the field are making money hand over fist. Latest figures from Square, however, show that is not necessarily the case. At least not in the short term.
Also Read: Bitcoin Is Not Used by Organized Crime Says Hong Kong Government
SQ Reports Strong Q1
Square Inc (NYSE:SQ), the developer of the mobile payment app Square Cash, has posted its financial results for the first quarter of 2018 on Wednesday, showing overall strong performance. Total net revenue was $669 million, up 45% year over year, and Adjusted Revenue was $307 million, up 51% year over year.
Despite its impressive yearly growth, the company’s stock price fell by about 6% in after-hours trading on Wednesday. Many analysts attribute this drop in SQ shares to the disappointing figures the company presented via its bitcoin-related business. Bitcoin revenue contributed $34.1 million to total net revenue in the first quarter, but cost was $33.9 million resulting in a minor add to adjusted revenue of just $200,000.
Taking the Long View
Square CEO, Jack Dorsey, addressed questions about his take on the bitcoin business in the conference call with analysts following the release of the quarterly report. He thinks that the company has a very different customer base than the majority of bitcoin exchanges so they wanted to initially provide just a safe way to participate in the market. “It’s a demographic that typically would not be able to use other exchanges or would find those complicated and something that we wanted to make super easy, but at the same time, continue to protect and make it safe.”
“In terms of the strategy long-term, the first step we wanted to take is to learn as quickly as possible, to offer something that people would find valuable. And the reason we started this initially is because we did see cash customers wanting to buy crypto, utilizing their cash accounts. So, we made that a little bit easier. But we want to learn what this meant for us as a company and also for our industry and really pushed ourselves a lot to make sure that we were best in class in terms of providing a simple easy of exchange and then we can build off of that.”
Square CEO Jack Dorsey in happier times.
Answering a question about other potential uses for blockchain technology, the CEO said “there is no other technology apart from artificial intelligence and machine learning and deep learning that affects the way we can operate our service and the way we can build our business. We’ve built a service that individuals can use, providing more access to more people around this technology and this implementation. And because we are connected directly to the blockchain and using it every single minute of every single day, we have been able to learn quite quickly and how it could impact the rest of our business as well.”
“There is certainly a ton of applications around creating more efficiencies within our business, but also creating new opportunities as well. So, we are still in a learning phase of where we can apply it in the right way because we don’t just want to purely apply the technology where it doesn’t fit but making sure we are actually solving a real need and a real problem whether that be internal or external. But, we do have a lot of excitement for what it can do. And we are building a significant expertise within the company to do that.”
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Images courtesy of Shutterstock, Square.
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