Square and PayPal earnings bring good (and bad) news for fintech startups

Earnings season is racing past us, with the big ride-hailing companies’ numbers in, all of the Big Five having wrapped their reporting and lots of SaaS numbers in the market. But amidst all the noise, The Exchange has kept an eye on two companies in particular: PayPal and Square.

We’re not really concerned with their overall revenue and profit metrics. Instead, we’ve been hunting around in their numbers for hints and notes about what is going on inside of fintech itself. Why? There are a host of hugely valuable fintech unicorns that have to go public in the future that also share some market space with one or both of our public charges.

What can we learn from looking at what PayPal and Square reported to their own investors?

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Lots, it turns out.

As TechCrunch reported when PayPal dropped its Q3 numbers, the public company had bullish results from its Venmo service, payment processing and consumer activity metrics. The numbers pointed to strong consumer adoption of fintech services during the pandemic, something that we presumed was not unique to PayPal itself, but was likely indicative of a generally warm environment for consumer fintech services.

Square continued the trend, posting a set of results that contains nearly all positive data for consumer fintech activity — with one critical caveat for Q4 that we’ll get to at the end.

Still, what the majors tell us about the fintech space indicates a warmth in activity that explains why Chime, Robinhood and others have had such fun in 2020, accreting tectonic capital to keep their growth hot.

Digging through Square’s earnings gives us a window into consumer payment activity, card usage, stock purchases and more. Let’s see what we can learn, and to which unicorns it might apply.

A very fintech 2020

Let’s start by talking about the broader fintech market before niching down.