Like many companies dealing with the economic fallout of the ongoing pandemic, Square (SQ -1.92%) has taken the step of cutting its guidance for the first quarter, but the news wasn't as bad as many feared, sending the stock up more than 20% during Wednesday's trading.

The company said that during the first two months of 2020 (largely before the acceleration of the COVID-19 coronavirus outbreak), Square saw gross profit increase 47% year over year. Seller ecosystem profits climbed 32% compared to the prior-year quarter, while the Cash App ecosystem delivered gross profit that soared 118%. 

A customer inserting a credit card into a Square point-of-sale terminal.

Image source: Square.

However as the global pandemic spread, Square saw a significant decline in gross payment volume (GPV), which has fallen 25% year over year during the recent 10-day period, with declines accelerating more recently.

As a result, Square is now expecting net revenue in a range of $1.30 and $1.34 billion, with gross profit of between $515 million and $525 million, down from $1.35 billion and $555 million, respectively, at the midpoint of its guidance. The company also said, "Given the uncertainty around COVID-19, Square is withdrawing its full-year 2020 guidance and expects to provide a further update on its first quarter 2020 earnings call in May."

Square highlighted the enormous opportunity represented by its Cash App. The payment app, which allows users to send and receive money to other users, represents a $60 billion market for Square. Some of that growth is happening now, as CEO Jack Dorsey said Cash App had a record number of new customers using the app in just the past week.