The Best Quarter Yet, Plus a New Business Nobody Was Expecting
Square's Form 10-Q for the quarter ended June 30, 2021 posts the strongest quarter in the company's history on almost every profitability metric: net income of $203.7 million (versus a $11.5 million net loss a year earlier), operating income of $125.0 million, and Adjusted EBITDA of $359.8 million - each a new high. Total net revenue was $4.68 billion, up 143% year-over-year, though bitcoin revenue ($2.72 billion) still accounted for 58% of that total, continuing the pattern from Q1. GPV grew 88% to $42.8 billion, driven by a genuine reopening tailwind for Seller as pandemic restrictions eased across much of the US.
The quarter's real surprise arrived outside the two established segments: on April 30, 2021, Square acquired an 86.23% ownership interest in TIDAL, the music-streaming service co-owned by musician and Square board-adjacent figure Jay-Z (Shawn Carter), for total consideration of $237.3 million ($176.7 million cash, $50.5 million deferred, and $10.1 million in stock). TIDAL now sits inside a newly created "Corporate and Other" segment alongside other non-core activity, and the filing explicitly frames the rationale around integrating TIDAL into Square's broader creator-economy ambitions rather than treating it as a standalone media investment.
The Prescription
Square should keep funding growth from what's actually working - GPV up 88% on a genuine reopening tailwind, and Cash App/Seller gross profit both compounding well outside the bitcoin distortion - rather than reaching for acquisitions that don't obviously extend either segment's core loop. What it should stop doing is closing a related-party-adjacent deal like TIDAL without addressing the connection to its own CEO's network in the filing's related-party disclosures: spending $237.3 million of a record-profit quarter on a majority stake in a music-streaming company tied to Jack Dorsey's own social circle, while Note 17 stays silent on that relationship, is exactly the kind of self-inflicted governance question a company with this much organic momentum doesn't need to be creating for itself.
Key Financial Metrics
Q2 2021 vs. Q2 2020, consolidated, reported in USD
| Metric | Q2 2021 | Q2 2020 | YoY |
|---|---|---|---|
| Total Net Revenue | $4,680.7M | $1,923.6M | ✅ +143% |
| Bitcoin Revenue | $2,724.3M | $875.5M | ⚠️ +211% (58% of total revenue) |
| Gross Profit | $1,141.1M | $596.8M | ✅ +91% |
| Operating Income (Loss) | $125.0M | $(23.1)M | ✅ swung to a profit |
| Net Income (Loss) | $203.7M | $(11.5)M | ✅ swung to a profit |
| Adjusted EBITDA» | $359.8M | $97.9M | ✅ +268% |
| Free Cash Flow» | $363.1M | n/a - not separately disclosed on a comparable basis | — |
| Balance sheet metric | Jun 2021 | Dec 2020 | Change |
|---|---|---|---|
| Cash and Cash Equivalents | $4,581.2M | $3,158.1M | ✅ +45.1% |
| Total Assets | $13,815.7M | $9,869.6M | ✅ +40.0% |
| Total Liabilities | $11,079.0M | $7,188.0M | ⚠️ +54.1% |
| Total Stockholders' Equity | $2,736.7M | $2,681.6M | ✅ +2.1% |
Free Cash Flow snapped back sharply from Q1's $(131.9) million to a positive $363.1 million this quarter (operating cash flow of $395.6 million standalone, less $32.5 million of standalone capital expenditures) - the working-capital drag flagged last quarter proved temporary rather than a new trend. Total liabilities again grew faster than equity, continuing to reflect customer-funds scaling and the company's outstanding convertible notes rather than any deterioration in credit quality.
Square's best-ever profitability quarter arrived in the same 10-Q that discloses a $237 million acquisition of a majority stake in a music-streaming company co-owned by a name closely tied to the company's own founder - two very different kinds of news sharing the same filing.
Segment Comparison: Cash App vs. Seller vs. Corporate and Other
Q2 2021 vs. Q2 2020
| Metric | Cash App Q2 2021 | Cash App Q2 2020 | YoY | Seller Q2 2021 | Seller Q2 2020 | YoY |
|---|---|---|---|---|---|---|
| Segment Revenue | $3,330.2M | $1,200.3M | ✅ +178% | $1,311.5M | $723.4M | ✅ +81% |
| Segment Gross Profit | $546.1M | $281.1M | ✅ +94% | $585.1M | $315.7M | ✅ +85% |
| Implied Gross Margin | 16.4% | 23.4% | ⚠️ -7pp (bitcoin dilution) | 44.6% | 43.6% | ✅ +1pp |
Corporate and Other - the new home for TIDAL and other non-core activity - contributed $39.0 million of segment revenue and $9.9 million of segment gross profit this quarter, its first as a disclosed line item; there is no prior-year comparable since the segment didn't exist a year ago.
Cash App
Cash App revenue growth (178%) again outpaced Seller (81%), but that gap is almost entirely bitcoin - segment gross profit growth (94%) is much closer to Seller's (85%) once the low-margin pass-through is set aside. The implied gross margin gap between the two segments (16.4% vs. 44.6%) remains the clearest single number showing which business is doing the real economic work per dollar of reported revenue.
Seller
Seller's 81% revenue growth reflects a genuine reopening effect - US shelter-in-place restrictions were easing broadly through Q2 2021, a full-quarter tailwind that Q1's more partial recovery didn't yet have. GPV growth of 88% overall (driven substantially by Seller) confirms this wasn't just a bitcoin-inflated headline.
Key Operational Metrics
Q2 2021 vs. Q2 2020
| Metric | Q2 2021 | Q2 2020 | YoY |
|---|---|---|---|
| GPV | $42,828M | $22,801M | ✅ +88% |
| Bitcoin Investment Fair Value (period-end) | not disclosed separately this quarter - see Q1's $472.0M for the most recent figure | — | — |
Beyond the Usual
An 86.23% Stake in Jay-Z's TIDAL, Bought for $237.3 Million, With Related-Party Overtones the Filing Doesn't Fully Spell Out
Square's acquisition of TIDAL closed April 30, 2021 for $237.3 million in total consideration - $176.7 million cash, $50.5 million deferred, $10.1 million in stock - generating $184.8 million of goodwill, of which approximately $88.5 million is expected to be tax-deductible. The filing frames the deal purely in strategic terms (integrating TIDAL into Square's creator-economy platform), but TIDAL's prior majority owner, Jay-Z, is a figure with substantial public ties to Square's founder and CEO Jack Dorsey - a relationship this 10-Q's Related Party Transactions note (Note 17) does not address in connection with this specific transaction. This isn't evidence of anything improper on its own, but a $237 million acquisition involving a business associated with the CEO's own network is exactly the kind of transaction a reader would expect explicit related-party disclosure to cover, and this filing's related-party note doesn't mention TIDAL at all.
The PPPLF Facility Kept Growing Even as the Original PPP Program Wound Down
PPPLF advances continued climbing past the $764.2 million level reported at Q1 2021, extending the multi-quarter growth trend in Square Capital's role as a PPP-loan-collateralized-lending conduit, well over a year after the original 2020 program's initial urgency had passed.
The Texas Tax Dispute Is Still Open, Now Three Quarters Running
The $38 million Texas Comptroller sales-and-use-tax assessment, unchanged since first disclosed in Q3 2020, remains unresolved with no new developments reported this quarter - the longest-running open item tracked across this backfill so far.
Target Valuation Range
~7.4x EV/TTM Revenue, down modestly from last quarter's ~8.3x. Fairly valued relative to its own recent trading history, though the underlying trailing revenue figure remains heavily bitcoin-inflated - the modest compression says more about a slightly slower bitcoin-revenue contribution to the trailing window than about the business getting genuinely cheaper on a comparable basis.
| Market cap → enterprise value | Q2 2021 (quarter-end) |
|---|---|
| Share price (period-end) | $243.80 |
| Shares outstanding (Class A + B, Jun 2021) | ~459.0 million |
| Market capitalization | ~$111.9 billion |
| Total liabilities | $11.08 billion |
| Less: cash and cash equivalents | $4.58 billion |
| Enterprise value | ~$118.4 billion |
| Peer-multiple sanity check | TTM ending Q1 2021 | TTM ending Q2 2021 | Change |
|---|---|---|---|
| Enterprise Value | ~$109.2 billion | ~$118.4 billion | ✅ +8% |
| TTM Revenue | ~$13.17 billion | ~$15.93 billion | ✅ +21% |
| EV/Revenue | ~8.3x | ~7.4x | ✅ modest compression |
| DCF scenario (illustrative, EV/Revenue-multiple-based) | Key assumption | Implied EV | Implied share price |
|---|---|---|---|
| Bear | Bitcoin revenue decelerates and reopening tailwind for Seller fades faster than expected; multiple compresses to ~5x forward revenue on ~$21B estimated FY2021 revenue | ~$105.0 billion | ~$229 |
| Base | Cash App non-bitcoin growth and Seller recovery continue at a steady pace; multiple holds near ~8x forward revenue on ~$21B estimated FY2021 revenue | ~$168.0 billion | ~$366 |
| Bull | GPV growth accelerates further and TIDAL integration adds a new growth vector; multiple expands to ~10x forward revenue on ~$22B estimated FY2021 revenue | ~$220.0 billion | ~$479 |
| Current (quarter-end close) | — | ~$118.4 billion | $243.80 |
This remains a multiple-based sanity check, not a full discounted cash flow - two consecutive profitable quarters is still a short track record relative to Square's pre-2021 loss history, and the FY2021 revenue estimates above are simple extrapolations rather than verified guidance.
Square, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed with the SEC.