Square (NYSE:SQ) stock popped to all-time highs in early November after its third-quarter earnings report absolutely crushed analyst estimates.

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Specifically, Square’s Q3 revenues came in about 50% above expectations, while profits doubled consensus estimates. SQ stock rallied more than 10% in response.

Zooming out, the huge third quarter earnings beat — which follows an equally large second quarter earnings beat in early August — broadly underscores that Square is one of the most relentlessly innovative companies in the world, and that this relentless innovation continues to power huge growth for the company, even when the cards are stacked against it (yes, we are still in the midst of a pandemic).

All evidence suggests that this relentless innovation will persist for the foreseeable future. So long as it does, big growth will remain the norm at Square. So will big gains in Square stock.

Here’s a deeper look.

Defying the Covid-19 Pandemic

We are still in a pandemic. The global economy is recovering, but it’s crawling. Local businesses are reopening, but they are still largely handcuffed. In-person spending is bouncing back, but it’s still down big year-over-year.

Against that backdrop, you’d expect Square — a company whose core business involves selling physical payment card readers to local businesses to process in-person transactions — to be reporting pretty awful numbers.

But that simply is not happening. Instead, Square is reporting its best numbers, ever.

Net revenues in Q3 rose 140% year-over-year, the biggest revenue growth rate Square has reported as public company and much bigger than the 40% to 50% revenue growth rates Square had been reporting throughout 2018 and 2019.

How is that possible? What’s going on here?

Innovation.

Innovation Is the Heartbeat of Square

The plain and simple reality is that Square has leveraged relentless innovation to become much, much more than just a payment card reader over the past few years — and these efforts are showing up in a big way during the pandemic, allowing the company to accelerate growth even in the midst of a challenging economic backdrop.

Since 2015, Square has:

• Built a robust software services ecosystem which includes payroll assistance and management tools.
• Expanded into the e-commerce channel, and developed capabilities so that customers can use Square to facilitate digital sales.
• Developed bank-like services, including Square Capital, to provide loans to customers.
• Created a consumer-facing cashless app, Square Cash, which allows consumers to digitally deposit, store and transfer money.
• Expanded the Square Cash ecosystem to allow consumers to buy-and-sell stocks and even bitcoin through the app, while also attaching usable, physical debit cards to the account.

Now, here we are in 2020, and Square is so much more than just a physical payments processor. The company has created an all-in-one, end-to-end cashless ecosystem for both buyers and sellers that can thrive even when the physical economy is shut down.

The result?

Square has sustained enormous growth. Back in 2014, Square’s revenue growth rate was about 70%. This year, it’s going to come in north of 100%.

In other words, Square has successfully leveraged innovation to expand its addressable market, launch new products and services, and ultimately sustain huge revenue growth at scale, which continues to compound year after year and power enormous gains in SQ stock.

This winning dynamic isn’t going to end anytime soon.

Tons of Long-Term Potential

When you look at Square’s suite of products and services, most of them are still early in their growth ramps.

Square’s payment processor business — while very mature and established — still has tons of runway because there’s a lot of cash running around in the world. As payment cards inevitably replace that cash, Square’s payment volumes will continue to surge. Expansion into the digital channel will also boost growth here.

Meanwhile, Square’s pursuits in the banking sector are strictly limited to small loans today. The company has dreams of expanding its banking functionality dramatically over the next few years.

Cash App is just a few years old. Many of its core features — stock trading, bitcoin buying and the debit card — are even newer. Revenues here are growing by more than 400% year-over-year, so there’s lots of runway left for the Cash App business as mobile payment popularity continues to surge.

Plus, given management’s track record, you have to account for the fact that this management team is probably going to keep innovating over the next few years, launching even more new products and services in hypergrowth markets.

All in all, it’s crystal clear that — much as the company has over the past few years — Square will sustain enormous revenue growth over the next several years, too. This compounding growth at scale will continue to power SQ stock higher… and higher, and higher, and higher.

Bottom Line on Square Stock

Square just may be the most innovative company in the world today. At the end of the day, innovation always wins. Thus, so long as Square keeps innovativing at a relentless pace, SQ stock will keep powering higher.