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Block has released its Q1 2022 earnings report amid an overall slump in Bitcoin price which impacted its Cash App business.
Block (NYSE: SQ), formerly known as Square, recently released its Q1 2022 financial report, which showed a gross profit of $1.29 billion. The Bitcoin (BTC)-proponent financial services and digital payments company also registered $43 million in BTC trading revenue.
According to Block’s Q1 2022 shareholder letter, gross profits surged 34% year over year (YoY) for the period ended March 31st. However, the umbrella company also disclosed a $1.52 billion increase in operating costs for the first quarter. Going by Block’s reasoning, this 70% YoY increase could be due to its acquisition of buy now pay later (BNPL) service Afterpay last year.
Block and Cash App Performance for Q1 2022
The total net value of Block’s revenue for the first three months of the year reached $3.96 billion. Despite this impressive haul, it also represents a 22% YoY decline compared to 2021. Block ascribes this drop to the decline in Bitcoin revenue, as the leading crypto trended downwards during that period. This decline also extended to the operational outing of one of Block’s other businesses, Cash App, for the same period. The mobile payment service, which also serves as Block’s BTC retail outlet, transacted Bitcoin lower than in the preceding quarter. A statement, which touched on this, read:
“Cash App generated $1.73 billion of Bitcoin revenue and $43 million of Bitcoin gross profit during the first quarter of 2022, down 51% and 42% year-over-year, respectively”.
Block’s quarterly report also disclosed that more than 10 million Cash App accounts bought BTC. This underscores Jack Dorsey’s affinity for the largest crypto by market cap, as the Q1 report also had around 81 mentions of Bitcoin. Meanwhile, Cash App does not currently allow users to purchase other popular digital currencies, such as Ethereum (ETH) or Dogecoin (DOGE).
Last month, Cash App revealed a new feature that allowed customers in the US to automatically invest in BTC using the platform. Dubbed, “Paid in Bitcoin,” the service takes a pre-desired portion of the direct deposit paychecks from Cash Card (Visa-powered credit cards by Cash App) and converts it to the crypto. In addition, Cash App also stated that it would not charge anything for this service. Furthermore, the mobile payments service also said there is no limit to the amount staked for BTC conversion. Cash App’s Bitcoin product lead Miles Suter explained that 1% to 100% of direct deposits are always convertible and adjustable.
Block Looks to Non-BTC Revenues
Although its BTC front has been faltering since the turn of the year, Block’s non-BTC revenues are peaking. The company’s ecosystem of other businesses, including Square, Afterpay, Weebly, and Tidal, is not entirely dependent on BTC and showed promising growth in Q1. The Square ecosystem of payment solutions for merchants is particularly noteworthy as it performed well during the first quarter. According to reports, the service registered a gross profit of $661 million for the first quarter. This sum represents an increase of 41% YoY.