Square jumps on the emerging trend of "buy now, pay later" with its acquisition of Afterpay, setting a new record; reports Bitcoin losses in financial statements.

Twitter co-founder Jack Dorsey's payment platform Square has released its second-quarter financial report, with a net revenue of $4.68 billion, a 143% increase from last year. However, its Bitcoin business revenue has slightly decreased. At the same time, Square has announced the acquisition of Australian fintech startup Afterpay.

Doubled Growth Compared to Same Period Last Year

According to the Q2 earnings report released on August 1st, the total net revenue was $1.96 billion, an 87% increase from last year, excluding Bitcoin business revenue. The gross profit of its subsidiary, Cash App, was $55 million, a 223% increase from last year.

Although Cash App's gross profit nearly tripled in the second quarter compared to last year, it saw a slight decline from the first quarter. Square pointed out in the financial report that this was significantly influenced by the stability of Bitcoin prices, as the price volatility in previous quarters greatly impacted user transaction behavior.

Recognizing Bitcoin Losses in Q2

Furthermore, Square purchased $50 million and $170 million worth of Bitcoin in October last year and February this year, respectively. The financial report recognized a Bitcoin loss of $45 million in the second quarter.

However, the fair value of Bitcoin held by Square was $281 million, exceeding the cost by $127 million. The recognized loss refers to the second quarter when the price of Bitcoin was around the $50,000 level.

Embracing the BNPL Trend

On the same day, August 1st, Square also announced the acquisition of Australian fintech startup Afterpay, which focuses on "buy now, pay later (BNPL)" payment solutions.

According to Square's press release, Afterpay will be acquired through an all-stock transaction. Based on the closing price of $247.26 on July 30th, the acquisition is valued at nearly $29 billion.

Square expects Afterpay to accelerate the development of Cash App, planning to integrate it into existing seller and Cash App business units. This will enable even smaller businesses to offer BNPL at checkout, allowing Afterpay users to manage installment payments directly within Cash App and explore related BNPL promotional offers.

Jack Dorsey stated:

We built Square to make the financial system more fair, inclusive, and accessible. Afterpay has a trusted brand that aligns with these principles and delivers a better experience for both consumers and merchants. We are excited to integrate Afterpay into our Cash App and Seller ecosystems to provide even more compelling products and services for merchants and consumers.

Repeatedly Failing to Reach New Highs

Square's stock price has risen by approximately 11.80% this year, reaching a historical high of $283.19 in February. Despite continuous business growth, the stock price has attempted to surpass historical highs several times without success, including $278.13 in April and $267.77 at the end of July.

Afterpay, established in 2014, shareholders will receive 0.375 shares of Square stock for each ordinary share held after the acquisition. After the news of the acquisition, Afterpay's APT stock price surged by nearly 30%.

This acquisition also set a new record in Australia, surpassing the previous record in 2018 when real estate company Unibail-Rodamco acquired global shopping center operator Westfield from Westfield Group for $16 billion.