Other services and competition
To be sure, the company said it typically sees stronger sequential revenue growth in the second quarter. But Canaccord Genuity analyst Michael Graham said the results continued the strong growth pattern of prior quarters, calling Square Capital a "shining example" validating Square's ability to cross-sell services.
"Fast access to capital is a core differentiator for our product," Friar said.
Outside of Square's core payments business, it also has a small-business loan division and food delivery business, Caviar. Other companies in those two spaces, like LendingClub and SpoonRocket, have faced difficulties, Pacific Crest notes.
"Short term it's a great victory, long-term it's a problem," Vivek Wadhwa, a distinguished professor of engineering at Carnegie Mellon University told CNBC's "Squawk Alley" on Thursday."Square faces massive competition from everywhere ... there are a lot of new technologies that could be developed that could hurt the company in its core products. And then the other businesses it's getting into — also susceptible to major competition."
But Pacific Crest analyst Josh Beck noted the company seemed to be bucking challenging industry trends.
"We haven't been experiencing the challenges our competitors are mentioning," Dorsey said on the call.
"Caviar's growing at a very hefty rate," Friar added.
Square extended $189 million in Square Capital during the quarter, up 123 percent year over year, the company said. Friar said that Square gives sellers access to capital that a bank could not provide profitably.
"Square Capital's competitive advantages continue to attract additional institutional investors, with five new investors added to the program during the second quarter," Square said, citing the data they can provide on businesses day-to-day operations as a boon that eliminates the lengthy loan application process.
Meanwhile, American Express has announced plans to grow small-business lending, while Wells Fargo, Chase, Bank of America and U.S. Bank are catching up on peer-to-peer payment technologies like Square Cash. Still, the threat from American Express may have been overblown, BTIG's Mark Palmer wrote in a research note before the earnings report.
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