Shares of Square (NYSE:SQ) leaped nearly 10% on Thursday, following the financial services company's first-quarter earnings release.
Square's revenue surged 44% year over year to $1.38 billion, besting Wall Street's estimates for $1.3 billion. The gains were fueled in part by a 197% surge in Cash App revenue to $528 million. But Square posted a net loss of $106 million, as it ramped up its reserves for transaction and loan losses due to the coronavirus pandemic.
"We recognize that the macroeconomic environment is having a significant impact on people around the world, including many of our customers," CEO Jack Dorsey and CFO Amrita Ahuja wrote in a shareholder letter. "This may cause a variety of outcomes for our financial results in upcoming quarters, depending on the length and severity of the impact from COVID-19, and we expect a material impact to our second-quarter results."
Square noted that its seller gross payment volume (essentially, the total dollar amount of card payment transactions it processes for its merchants) fell 35% year over year in April due to the impact of COVID-19.
To stem the decline, Square is helping its customers transition their businesses to the internet. The company saw an acceleration in its Square Online Store product as stay-at-home orders forced people indoors.
Square says its e-commerce tools can help sellers quickly design and build their own online store and automatically link inventory and other data from their existing retail stores. It's also offering curbside pickup and delivery solutions to further ease sellers' transition to a post-coronavirus online model. Dorsey and Ahuja said merchants are quickly adopting these tools, and the early trends are encouraging.