Block sees higher gains despite declining bitcoin sales
Online payments giant Block on Thursday reported strong fourth-quarter revenue and gross profit growth, as its mainstays, digital wallet CashApp and business payments platform Square, posted big gains.
The company had gross profit of $1.66 billion in the fourth quarter of 2022, an increase of nearly 40% from nearly $1.2 billion in the fourth quarter of 2021. Revenue was $4.65 billion, a Jump from $4.1 billion in the same quarter of 2021. CashApp and Square drove most of those gains, as CashApp saw a staggering 64% year-over-year increase in gross profit and Square’s 22%.
In after-hours trading, shares were up about 8% from $74 to $80.
The company reported quarterly earnings per share of 22 cents, compared to an estimate of 30 cents per share by analysts polled by FactSet. However, Block beat forecasts for revenue and gross profit.
“As we look to 2023 and beyond, we are focused on balancing growth and efficiency and will prioritize speed, agility and accountability,” Block CEO Jack Dorsey and CFO Amrita Ahuja wrote in a letter to the shareholders.
However, the prospects for the company’s entry into Bitcoin were tepid. Block invested $220 million in bitcoin in 2020 and 2021, but the company’s bitcoin holdings were valued at just $133 million at the end of 2022.
Bitcoin trading business on CashApp also declined. Total revenue from bitcoin sales on CashApp in the fourth quarter was $1.83 billion, compared to $1.96 billion in the same quarter of 2021, and cryptocurrency gross profits declined about $46 million year-over-year Dollars back to $35 million, just a fraction of the block’s total gross profit.
In 2018, Dorsey, a notable Bitcoin evangelist, announced that CashApp users would be able to buy and sell Bitcoin through the digital wallet. And more than two years later, the company formerly known as Square made significant investments in cryptocurrency. To reflect his company’s dedication to crypto, Dorsey then announced that the payments titan would change its name to Block. Since then, he has continued to double bitcoin.
Dorsey announced this Creation of TBD, a block subsidiary that soon released a white paper detailing plans to build a decentralized bitcoin trading exchange. Following FTX’s fall, Block also announced that it is developing a new wallet that will allow its customers to hold Bitcoin themselves, rather than having third parties manage tokens. And the company even recently invested in a bitcoin mining company that says it’s trying to bring cheap energy to countries like Kenya and Malawi.
Learn how to navigate and build trust in your organization with The Trust Factor, a weekly newsletter exploring what leaders need to succeed. Login here.
