Square (SQ) Gross Profit Growth Accelerates to ~80% - Wells Fargo

Wells Fargo analyst Timothy Wayne Willi reiterated an Equal Weight rating on Square (NYSE: SQ) after gross profit grew 79% to $964MM during Q1 (up from 52% growth during Q4 2020). Cash gross profit grew 171% while Seller gross profit grew 32%. The strong outperformance in gross profit coupled with lower operating expense, driven in part by lower credit losses, resulted in significant upside to EBITDA at $236MM, well ahead of the $100MM estimate.

The analyst commented "While we believe the underlying fundamental drivers of the businesses remain robust (new seller and consumer acquisition, increased engagement across a growing number of products and solutions,and international expansion), it is difficult, in our view, to measure the full impact of stimulus on Q1 results across SQ's businesses. While we would expect some moderation in Cash gross profit growth as this round of stimulus fades and comparisons become more challenging in the months ahead, we would note the new customers and increased attachment of solutions as a result of stimulus are likely to drive significant long-term value for the Cash business".

For an analyst ratings summary and ratings history on Square click here. For more ratings news on Square click here.

Shares of Square closed at $223.96 yesterday.

You May Also Be Interested In

• IBM tumbles on soft Q1 revenue; announces HashiCorp $6.4bn acquisition
• AZZ, Inc. (AZZ) Announces Proposed 4M Share Offering
• RTX Corp. (RTX) PT Lowered to $119 at Wells Fargo