Jack Dorsey-led payments firm Square saw a 51 per cent increase in Q1 revenue to $379 million but a rise in operating expenses widened losses.

Transaction-related revenue accounted for the majority of revenue in the quarter, and this showed impressed growth of 42 per cent to $300 million compared to the same quarter last year.

Even more stellar were sales of Square’s hardware which increased more than seven times to $16 million in Q1, a leap largely attributable to the release of its latest dongle which accepts payment from contactless, including Apple Pay, as well as chip-and-PIN cards.

The contactless and chip reader was responsible for the majority of the increase in hardware sales, the company said.

The device was launched in Australia during the quarter, the fourth market where Square has launched after the US, Canada and Japan.

“The first quarter of 2016 continued to show momentum for our contactless and chip reader. We finished shipping the significant number of pre-orders that we had in the fourth quarter of 2015,” CEO Jack Dorsey told shareholders.

“Looking ahead, we are continuing to plan unique marketing and educational programs for our sellers. We are focused on driving reader adoption in 2016 and beyond.”

However, the launch of a new device brought associated costs in the quarter, which reached $27 million compared to just $4 million a year earlier.

Still, the firm managed to show off a gross profit of $110 million, an increase of 49 per cent, before operating expenses took their toll.

Total operating expenses spiralled up to $207 million from $121 million in the year ago period. Product development expenses were higher ($65 million versus $40 million in Q1 2015), which reflects personnel costs, including share-based compensation.

The company also reported a $50 million litigation charge, included in general and administrative expenses. The charge goes towards settling a legal case that dates back to 2010 with a Washington University professor called Robert Morley. Morley holds patents relating to Square’s payments tech and has been fighting the firm over compensation.

The impact of increased product development and legal costs was to widen losses in Q1 to $97 million from $48 million a year earlier.