Square Earnings Handily Top Forecasts on Digital Explosion

Revenue surges nearly four times as pandemic lockdowns drive demand for alternate payment services.
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Square  (SQ) - Get Report shares rose in after-market trading Thursday, after the rising financial services star blew away earnings forecasts for the first quarter amid explosive growth in digital transactions.

Revenue soared almost four times in the quarter to $5.057 billion from $1.381 billion last year. The FactSet analyst consensus called for $3.34 billion in the latest quarter.

Profit totaled $39 million, or 8 cents a share, in the first quarter, swinging from a loss of $105.89 million, or 24 cents, a year ago. The analyst consensus called for a loss of 10 cents in the latest quarter.

Square shares stood at $228.65, up 1.95% in after-hours trading. They have gained 28% in the last six months, thanks to the surge in e-commerce driven by pandemic lockdowns. But they have slid 16% in the past month amid valuation concerns.

“We delivered strong growth at scale during the first quarter of 2021,” the company said. “Gross profit grew 79% year over year to $964 million.

“In our seller ecosystem, gross profit was up 32% year over year in the first quarter. Our Cash App ecosystem delivered gross profit growth of 171% year over year.

On Wednesday, TheStreet.com’s Brent Kenwell discussed whether a strong earnings report would boost Square’s stock.

On March 31, Square was upgraded at Keefe, Bruyette & Woods to outperform from market perform. The stock has 17% potential upside from KBW analyst Steven Kwok’s $250 price target, he said in a commentary.

“While we might not be catching the bottom of the growth to value trade ... Square is a long-term winner within the underserved market,” Kwok said.