Square’s Cash App Q2 Bitcoin Revenue Rose 200%, Takes $45M Bitcoin Impairment Loss

Square, the company led by Twitter co-founder and CEO Jack Dorsey, said its Cash App service’s bitcoin revenue in the second quarter tripled to $2.72 billion from $875 million a year earlier, while its bitcoin gross profit jumped to $55 million from $17 million.

• Bitcoin revenue and gross profit benefited from year-over-year increases in the price of bitcoin and bitcoin activities and growth in customer demand, the payments services company said in its second-quarter financial letter to shareholders, which was released Sunday evening.
• Bitcoin revenue and gross profit declined from the first quarter, mainly because of relative price stability, which affected trading activity compared with prior quarters.
• Future quarters may see fluctuation in bitcoin revenue and gross profit as a result of changes in customer demand or market price, the letter says.
• During the second quarter, Square recognized an impairment loss of $45 million on the bitcoin the company holds. Because bitcoin is accounted for as an indefinite-lived intangible asset, if the value of bitcoin falls below the carrying value, an impairment is required.
• As of June 30, the fair value of the company's bitcoin investment was $281 million, $127 million greater than the carrying value. The company purchased its bitcoin for $50 million in last year's fourth quarter and $170 million in the first quarter.
• Overall, the company posted second-quarters adjusted earnings of 66 cents per share, adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $360 million and total revenue of $4.68 billion. The earnings per share and Ebitda were more than doubled analysts' estimates of 31 cents as $178 million, according to FactSet.
• Separately, Square announced on Sunday that it agreed to buy Australian installment payment company Afterpay in an all-stock deal worth $29 billion based on Square's closing price on Friday.