The economic recovery accelerated payment provider Square’s (NYSE: SQ) Q1 2021 earnings, with gross profit up 79% year-over-year on $5.06 billion in net revenues, a 266% increase year-over-year. Excluding Bitcoin revenue, Square posted total net revenue of $1.55 billion, a 44% year-over-year increase.
Gross profit was $964 million, up from $804 million a year ago. Adjusted earnings before interest, taxes, depreciation and amortization was $236 million, up from $9 million a year ago and $185 million in Q4. Seller gross profit jumped 32% year-over-year to $468 million, up from $427 million in Q4, and Cash App gross profit was $495 million, a 171% year-over-year increase and an increase of nearly $120 million from Q4’s $377 million.
Net income was $39 million; it was $88 million when excluding losses of $29 million related to an investment in DoorDash and $20 million related to an impairment charge of Square’s investment in Bitcoin. The company invested $50 million in 2020 and $170 million in February into Bitcoin.
Adjusted earnings per share was 41 cents on a diluted basis, versus a 2 cent loss a year ago.
In a letter to shareholders, Square said it remains committed to boosting sellers and participated in the Paycheck Protection Program (PPP), facilitating $531 million in PPP loans to more than 57,000 businesses through Square Capital.
“In keeping with our purpose of economic empowerment, we helped reach sellers who are typically overlooked by traditional financial institutions,” the company said. “During the first quarter, the vast majority of our PPP loans were distributed to sellers with fewer than five employees. We see a meaningful opportunity to expand access to banking products for small businesses, and we opened our bank, Square Financial Services, in March to pursue this effort.”
Seller gross payment volume (GPV), which represents the total dollar amount of all card payments processed by sellers using Square, net of refunds, reached $18.1 billion in Q1, growing nearly $5 billion year-over-year.
Square’s Cash App, which is a peer-to-peer money transfer system, continues to grow, and benefited from the stimulus checks sent to American taxpayers. Cash flow into the app in March increased 55% over February, the company said. The Cash App business GPV was $3.4 billion, up 227% year-over-year.
Square processed $33.1 billion in GPV overall in Q1, a 29% increase year-over-year. Transaction-based revenue was $960 million, a 27% increase year-over-year, and subscription and services-based revenue was $558 million, up 88% from Q1 2020.
Square’s investment in Bitcoin netted $3.51 billion in revenue, although Bitcoin profit was only $75 million, it said.
Square Capital facilitated approximately 136,000 loans in the first quarter of 2021, totaling $923 million, up 68% year over year.
Operating expenses in Q1 increased 42% year-over-year to $896 million. Square spent $309 million on product development expenses on a GAAP basis and $204 million on a non-GAAP basis.