Square beats expectations in Q3, with revenue of $3.03B vs. estimates of $2.04B, up 140% YoY, Cash App revenue up 174% to $435M, Seller gross profits up 12% YoY
Natalie Gagliordi / ZDNet :
Context & Ripple Effects
A year ago, Square's third quarter looked like steady merchant-payments compounding: $1.27B in revenue, up 44%, on $28.2B of payment volume, with Cash App revenue merely doubling to $159M. By February the story had tilted consumer-ward, with the company reporting Cash App at 24M monthly actives, up 60%.
Today's print completes the flip: total revenue of $3.03B crushed the $2.04B consensus, but the engine is Cash App at $435M (+174%) while Seller gross profit grew just 12%. The subsequent record confirms the pivot stuck — bitcoin trading inside Cash App later added $3.5B of revenue in a single quarter, and by 2023 the company was reporting as Block, with Cash App gross profit exceeding Square's own.
First-order effects
- Cash App's $435M quarter overtakes the seller business as Square's growth driver, forcing investors to price Square as a consumer fintech rather than a merchant-acquiring vendor.
- A 140% YoY top line against a $2.04B estimate — versus 44% growth a year earlier — resets the bar for every subsequent quarter's guidance.
Second-order effects
- With seller gross profit up only 12%, analyst models built on gross payment volume give way to Cash App engagement metrics like the 24M MAUs disclosed in February, which become the watched number each quarter.
- Sustained Cash App monetization opens adjacent revenue lines inside the wallet — most visibly the bitcoin trading that later reaches $3.5B in one quarter.
Third-order effects
- Once the consumer app outgrows the founding business, corporate identity follows: the eventual Block rename and gross-profit-split reporting show a payments company restructuring itself around two ecosystems.
- If the pattern holds, wallet-led growth becomes the template for payments firms — merchant acquiring funds distribution, but the consumer app decides the multiple.
The trend: Consumer wallets are outgrowing their parents' merchant-acquiring businesses, turning payments companies into two-sided fintech platforms.