Overview of Financial Performance

Square ended the first quarter of 2025 with $9.2 billion in available liquidity, including $8.5 billion in cash, cash equivalents, restricted cash, and investments in marketable debt securities, as well as an undrawn $775 million revolving credit facility. This represents a decrease of $1.5 billion from the end of 2024, primarily due to a $1 billion cash payment to settle maturing convertible notes and $445 million in share repurchases.

The company’s total net revenue for Q1 2025 was $5.77 billion, a 3% decrease compared to the same period in 2024. Excluding bitcoin revenue, total net revenue increased 8% year-over-year. Square’s Gross Payment Volume (GPV), a key operating metric, grew 4% to $56.8 billion.

Revenue and Profit Trends

Square’s revenue performance was mixed in Q1 2025. Transaction-based revenue grew 3% to $1.55 billion, driven by the 4% increase in GPV. Subscription and services-based revenue, which includes products like Cash App and Square Lending, increased 12% to $1.89 billion.

However, bitcoin revenue declined 16% to $2.30 billion. While bitcoin accounted for 40% of total revenue, it generated only 3% of total gross profit. The decrease in bitcoin revenue was due to lower customer demand and volume, partially offset by an increase in the average bitcoin price.

On the cost side, total cost of revenue decreased 10% to $3.48 billion, primarily due to the decline in bitcoin-related costs. Excluding bitcoin, total cost of revenue increased 3%, largely in line with the growth in Square GPV.

Operating expenses increased 6% to $1.96 billion, with higher spending on product development, sales and marketing, and general and administrative functions. This included restructuring costs and increased personnel and infrastructure expenses to support the growth of the business.

Overall, Square reported net income of $188.7 million for Q1 2025, down from $470.8 million in the same period last year. The decrease was primarily due to the $326.8 million remeasurement loss on the company’s bitcoin investment, compared to a $233.4 million gain in Q1 2024.

Segment Performance

Square’s two main business segments - Square and Cash App - showed divergent performance in Q1 2025.

The Square segment, which includes the company’s payment processing and business services, saw revenue increase 7% to $1.85 billion and gross profit grow 9% to $897.9 million. This was driven by continued growth in GPV and the company’s financial services offerings.

In contrast, the Cash App segment revenue declined 7% to $3.88 billion, though gross profit increased 10% to $1.38 billion. The decrease in revenue was primarily due to lower bitcoin sales, which offset growth in Cash App’s financial services products like Cash App Card, Cash App Borrow, and Cash App Pay.

Strengths and Weaknesses

A key strength for Square is the continued growth and adoption of its subscription and services-based offerings, particularly in the Cash App ecosystem. Products like Cash App Card, Cash App Borrow, and Cash App Pay are driving increased engagement and monetization. The company’s financial services segment, including Square Lending, is also contributing to revenue growth.

However, Square’s reliance on bitcoin revenue remains a weakness. While bitcoin drives a significant portion of total revenue, it contributes little to overall gross profit. The volatility in bitcoin prices and customer demand also introduces uncertainty into the company’s financial performance.

Another potential weakness is the increase in operating expenses, particularly in areas like product development and sales and marketing. While these investments are aimed at driving future growth, they are putting pressure on near-term profitability.

Outlook and Future Prospects

Looking ahead, Square’s management remains focused on its long-term business initiatives and believes the company has sufficient liquidity to fund these efforts, as well as its $4 billion share repurchase program.

The company’s ability to continue growing its subscription and services-based revenue, particularly in the Cash App segment, will be crucial. Reducing the reliance on volatile bitcoin revenue and maintaining disciplined cost management will also be important for improving profitability.

Overall, Square appears to be navigating a mixed operating environment, with strengths in its financial services offerings offset by challenges in its bitcoin business. The company’s long-term success will depend on its ability to diversify its revenue streams, control costs, and capitalize on the growth opportunities in its ecosystem of products and services.