(Reuters) - Square Inc SQ.N shares rose 7% in extended trading on Thursday after the company's third-quarter profit beat estimates, helped by growth in online payments and its consumer business Cash App.
Excluding one-time items, Square earned 34 cents per share, compared with analysts’ average estimate of a profit of 16 cents per share, according to IBES data from Refinitiv.
The company, which is best known for its signature credit card readers that enable small businesses to turn smartphones into payment terminals, saw payment volumes rebound in the third quarter.
Square had seen gross payment volumes decline earlier in the year, as small businesses were forced to close their doors because of coronavirus restrictions.
The company, led by Twitter Inc TWTR.N Chief Executive Jack Dorsey, processed a total of $31.7 billion in payments in the third quarter, up 12% from a year ago.
“We have seen strong growth in our online channels and we saw that continue into October as well,” said Square chief financial officer Amrita Ahuja on a call with journalists.
In international markets, seller payment volumes grew 46% in the third quarter of 2020.
Square’s lending business has been struggling to recover from the impact of the pandemic. Square Capital facilitated approximately 35,000 loans in the third quarter, worth $155 million, down 72% from last year.
Still, investors have been very optimistic about the company’s prospects, with the stock rising more than 178% since the start of the year.
Investor excitement has in part been driven by the success of its fast-growing consumer business Cash App.
Cash App gross profit was $385 million in the third quarter, up 212% since last year.
The company has been adding services to the digital wallet, such as bitcoin and stock trading.
“We have seen strong adoption across the Cash App ecosystem, including our stock brokerage product, which has seen the fastest adoption of any product to date,” Dorsey said on a call with analysts.
Like other digital payment companies, Square’s consumer arm has benefited from coronavirus lockdowns, which led more individuals to transact online.
Square’s net income rose 24% to $36.5 million, or 7 cents per share, in the quarter ended Sept. 30.
The company said revenue in the quarter more than doubled to $3.03 billion, beating estimates of $2.07 billion.
Reporting by Niket Nishant in Bengaluru and Anna Irrera in London.; Editing by Vinay Dwivedi and Sam Holmes
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