In today's video, I look at Square (SQ -5.04%). The company just reported earnings, and the stock price is up. Below I share why I believe Square's earnings were strong.
Three reasons Square's earnings were strong:
- Seller ecosystem gross profits are up 32% year over year, and are also up quarter over quarter. Gross payment volume (GPV) is also increasing. For Q1 2019, it was $22 billion, for Q1 2020 it was $24.7 billion, and for Q1 2021 was $29.8 billion. The most significant growth of GPV is coming from the development of sellers with more than $500,000 in annualized GPV.
- Square continues to innovate methods to drive users from the seller ecosystem to the Cash App ecosystem and vice versa. The most recent example is integrating the Square Loyalty Program with Cash App. This integration not only creates a flywheel effect for seller and buyer discovery, but it is also meant to increase engagement and retention of Square products.
- The Cash App gross profits are up 171% year over year, and are also up quarter over quarter. The strength of the Cash App business has made this segment's gross profits more than 50% of the company's total gross profits.
Click the video below for my full thoughts.
*Stock prices used were the premarket prices of May 7, 2021. The video was published on May 7, 2021.