As bitcoin gain declines, Dorsey-led block profit disappoints

As bitcoin gain declines, Dorsey-led block profit disappoints

The company’s bitcoin revenue fell by half to $1.73 billion in the third quarter, owing to a dip in interest from retail traders as bitcoin values fell after a rapid climb last year spurred by popular acceptance. Because of the risk-off atmosphere caused by the Russia-Ukraine war and a more hawkish forecast for Federal Reserve policy tightening, Bitcoin, the largest cryptocurrency, has plummeted 21% so far this year.

On Thursday, Block Inc, the fintech company run by Twitter co-founder Jack Dorsey, failed market expectations for first-quarter profit as demand for bitcoin decreased as cryptocurrency prices fell.

During the quarter, Block closed its $29 billion purchase of Australian buy now, pay later pioneer Afterpay Ltd, creating a transactions giant that competes with banks and tech firms in the financial sector’s fastest-growing business. Afterpay contributed $92 million of gross profit in the period, which was recorded under the Square and Cash app units. That helped Cash App – a service that lets individuals send payments including in bitcoin – post a 26% jump in gross profit.

“We’ve been focused on bringing the demand generation capabilities of Afterpay to Cash App and are in the early days of building out a broader commerce platform,” Chief Financial Officer Amrita Ahuja said. She added that Afterpay’s gross merchandise value – the value of all goods sold – was expected to rise 15% in April.

Shares of Block, formerly known as Square, were 10% higher in extended trading. In the three months ended March 31, Block’s revenue fell 22% to $3.96 billion. The company earned an adjusted profit of 18 cents per share, falling short of analysts’ estimates of 21 cents, according to IBES data from Refinitiv.

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