Square, Inc. (NYSE: SQ) announced its 2021 Q1 earning results on May 6th, 2021. According to the announcement, total net revenue was up 266.2% (3 months, YoY). The operating income and net income returned to the black. In addition, the adjusted EBITDA was up x25.4 (3 months, YoY). Moreover, the Cash App revenue was up 665.6% and the Seller revenue was up 19.2% (3 months, YoY). Reviewing the growth by revenue source, Bitcoin revenue was up x11.5 followed by subscription revenue of up 88.3% (3 months, YoY).
Gross margin was down 199bp from 39.0% in 2020 Q1 to 19.1%. This is due to significant increase in Bitcoin revenue having extremely low margin. On the other hand, the Seller segment’s margin was up 43bp from 41.7% in 2020 Q1 to 46.0%.
Square is trying to strengthen its overseas business. According to the announcement, Square launched several new services to enable more contactless commerce in Japan, the UK, and Australia.
We believe that Square needs to boost high-margin revenues such as the subscription revenue for its future growth.
- Watanabe & Brothers’ Investment is holding shares of Square, Inc.
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