Square Q2 Earnings Preview: Will P2P, Digital Transactions Increase?

Square is expected to publish impressive revenue growth in their second-quarter earnings report on Thursday (July 31), due largely to increased transaction revenue.

The company’s revenue growth can be attributed to its expansion in cryptocurrency, person-to-person transactions through Cash App and digital payments, leading to an increase in gross payment volume (GPV), according to analysts.

Square struggled with a weak reported GPV last quarter, which caused stocks to fall after earnings were released, despite an otherwise strong report that demonstrated revenue growth from increased transactions, subscriptions and services, and bitcoin usage.

The company also released Q2 guidance in last quarter’s report, which forecasted lower than expected revenue, although P2P and digital payments have continued to expand. Cash App reported that volume grew 2.5 times year over year.

In May, Square’s Cash App downloads increased by 2.2 million, far greater than Venmo’s 1.7 million, despite a report from Square that same month that showed most small business owners are skeptical of ever going cashless.

The company has continued to expand the app’s bitcoin capabilities by allowing some users to deposit their cryptocurrency. Previously, they could buy, sell and transfer bitcoin through the app.

Square’s first-quarter report also indicated the company’s ability to create an ecosystem that incorporates new sellers while maintaining relationships with established ones, which could help push up their GPV this quarter. It also pointed to expanded service offerings as a means of drawing in new sellers to the platform.

The company has expanded its small business offerings in several ways this quarter. It partnered with Invoice2go in April, enabling SMB owners to easily apply for loans through Invoice2go’s app.

In May, Square announced a deal with Postmates that will allow sellers on its platform to offer customers delivery options. And in June, the company introduced a new set of order management integrations for Square for Restaurants, which will streamline orders from Postmates, Grubhub and management platform Chowly directly to the restaurant’s point of sale.

Square also partnered with The Entrepreneurial Refugee Network to help business owners who are refugees to use mobile and card payments in their businesses, providing card readers and waiving transaction fees for users.

Square will release its earnings report at 5:00 p.m. EST on Thursday (July 31).