By
Bhushan Akolkar
April 23rd, 2024
Digital payments company Block missed analysts estimates for Q1 2022, but reported $1.73 billion in Bitcoin sales via Cash App.
Block, formerly known as Square, (NYSE: SQ) reported its Q1 2022 earnings report late Thursday, which missed analysts’ expectations. According to the payments firm, revenue realized for the period ended March 31st was $3.96 billion. Although it represented a 22% year-over-year (YoY) increase, this figure still fell off the $4.1 billion general consensus estimate according to FactSet.
Furthermore, Block’s total net revenue for the first quarter, excluding Bitcoin (BTC), came in at $2.23 billion, representing a 44% increase YoY. Meanwhile, adjusted earnings per share for the financial services and digital payments company was 18 cents. Like reported revenue, this was also lower than the analysts’ average estimate of 20 cents.
For its Q1 2022 period, Block reported $1.73 billion in BTC sales through its Cash App service. The service is a peer-to-peer mobile payments platform that facilitates money transfers between users. Cash App also allows users to directly buy and sell Bitcoin.
Block’s Cash App Performance for Q1 2022
During the first quarter, Cash App realized a total sum of $2.46 billion in revenue and $624 million in gross profit.
Of the Cash App revenue haul from Bitcoin sales, Block reported that it made around $43 million in BTC gross profit. This represented a $3 million decline from the $46 million of gross profit recorded in the fourth quarter of last year. According to the Jack Dorsey-led company, this was due to the price stability of the leading digital currency during the period. According to Block:
“The year-over-year decrease in bitcoin revenue and gross profit was driven primarily by relative stability in the price of bitcoin during the quarter, which affected consumer demand and trading activity compared to the prior year period.”
“Bitcoin revenue and gross profit were relatively consistent compared to the fourth quarter of 2021. In future quarters, bitcoin revenue and gross profit may fluctuate due to changes in customer demand or the market price of bitcoin,” Block added.
In the preceding quarter, Block also realized $1.96 billion in BTC transactions as well.
The latest figures from the Cash App Bitcoin sales also represent a 51% and 42% YoY decline in Bitcoin revenue and gross profit, respectively. In addition, in its shareholder letter, Block also wrote:
“On a two-year CAGR basis, bitcoin revenue and gross profit grew 138% and 155%, respectively.”
Block did not recognize any impairment losses on Bitcoin in the quarter. In addition, the San Francisco-based payments firm stated that the fair value of its investment in Bitcoin for Q1 was $366 million. The report also recorded the carrying value as $149 million.
Block Shares
There was a 4% upswing in Block shares to $99.50 in after-hours trading on Thursday. The payment platform’s stock initially declined by more than 10% earlier in the day ahead of its financial report. Furthermore, there was also an initial 5% decline in the tech-heavy Nasdaq Composite.